Agenda Report
Fullerton City Council
MEETING DATE: SEPTEMBER 19, 2023
TO: CITY COUNCIL / SUCCESSOR AGENCY
SUBMITTED BY: EDDIE MANFRO, DIRECTOR OF HUMAN RESOURCES PREPARED BY: CHRISTINE PILAPIL, HUMAN RESOURCES MANAGER I SUBJECT: 2024 GROUP INSURANCE PLAN RENEWAL AND PROPOSED AMENDMENT TO BURNHAM BENEFITS INSURANCE SERVICES AGREEMENT
SUMMARY
This report provides the 2024 renewal rates for the City’s fully insured Group Insurance and Benefits programs required under collective bargaining agreements with the exception of the Cigna Employee Assistance Plan and the Cigna Minimum Value Health Maintenance Organization, which provide a minimum value plan implemented to meet the requirements of the Federal Patient Protection and Affordable Care Act (ACA).
RECOMMENDATION
Receive and file 2024 Group Insurance Plan Renewal.
Approve and authorize City Manager, or designee, to execute and administer Amendment No. Two to the Burnham Benefits Insurance Services Agreement as well as take any actions necessary to implement and administer the agreements.
CITY MANAGER REMARKS
The City Manager recommends that City Council approve amendment No. Two to the Burnham Benefits Insurance Services Agreement.
PRIORITY POLICY STATEMENT
This item matches the following Priority Policy Statement:
Fiscal and Organizational Stability.
FISCAL IMPACT
The City has budgeted the fully insured employee Group Insurance and Benefits programs in the Group Insurance Fund (Fund 66) internal service fund. Staff anticipated Cigna medical premiums would increase by 7.5% and Kaiser by 1.95% for Fiscal Year (FY) 2023-24 and included the increases in the FY 2023-24 Adopted Budget. All other insurance premiums, such as Dental and Vision and other coverages, will remain flat for 2024.
Exercising Amendment No. Two to the Burnham Broker Services Agreement maintains the Burnham rates for services from January 1, 2024 through December 31, 2024 at 2023 rates. Staff included $77,250 for this agreement in the FY 2023-24 Adopted Budget.
DISCUSSION
The City of Fullerton provides a comprehensive set of health benefits, including medical, dental, vision, life and disability coverage, for eligible active employees as well as access to medical and dental group coverage for eligible retirees. The City determines contributions through collective bargaining.
The City utilizes a benefits broker to provide benefit program assessment and review, renewal analysis and negotiation, claim utilization review, carrier performance monitoring and support and consultation of health benefit trends and legislative compliance. Burnham Benefits Insurance Services (Burnham) has provided health benefits broker services to the City since 2019.
Burnham issued a Request for Proposal (RFP) on behalf of the City for the 2024 renewal period to ensure the City continues receiving competitive rates and ensure the City’s strategic objectives to manage long-term costs. The City received proposals from Aetna, Health Net, VEBA pool and the current City carriers. Anthem Blue Cross, Blue Shield and United Healthcare declined to provide a proposal as they were not able to provide competitive rates due to high utilization.
Staff had discussions with Burnham and outside consultants regarding exploring cost and design differences between the City’s medical plan offerings and other pooled plans such as CalPERS health and determined to remain status quo with the City-sponsored medical plans after an extensive review of all options and costs. Remaining with the current medical providers caused the least disruption and impact to employees.
City Sponsored Programs
Cigna initially proposed a 12.95% increase which Burnham negotiated down to 7.5%. Kaiser set a 1.95% increase and remained during negotiations. Less favorable medical and prescription drug claims experience from February 2022 through January 2023 primarily accounted for the Cigna increases. Delta Dental and VSP programs run favorably with no increases for 2024. There are no increases to Life Insurance, Accidental Death and Dismemberment Insurance and Long-Term Disability, as they have rate guarantees through 2024.
The following table reflects initially proposed and the final negotiated increase or decrease for 2024 group insurance rates.
Plan
2024 Initial Proposed Renewal Increase
2024 Final Negotiated Renewal Increase/(Decrease)
Cigna
12.95%
7.5%
Kaiser
1.95%
1.95%
Delta Dental HMO
0%
0%
Delta Dental PPO
0%
0%
VSP
0%
0%
LTD
0%
0%
Life/AD&D
0%
0%
Attachment 1 includes monthly premiums for all City sponsored benefit plans for 2024. City and employee contributions vary by bargaining group or employee unit as determined through collective bargaining.
Employees represented by the Fullerton Management Association (FMA), Fullerton Municipal Employees Federation (FMEF), Fullerton Police Management Association (FPMA), Fullerton Police Association-Police Safety (FPOA-PSU), Fullerton Police Association-Dispatchers (FPOA-D), Confidential and Executive Employees may receive health coverage through a City- sponsored program.
Minimum Value Plan (MVP) for Non-Regular Employees
The City provides the Cigna Minimum Value HMO plan to eligible non-regular employees in compliance with the ACA. Eligible non-regular employees are temporary employees that work 30 or more hours per week on average. The plan meets the ACA test for affordability and minimum essential coverage. Resolution No. 2020-104 sets the monthly employee contribution for this plan is set at $101. The City has one employe on the MVP.
Detal Insurance
The City provides two dental plan options to all regular employees through Delta Dental. The City contributes the maximum of the employee-only premium or $25 per month for either plan for most employees as determined by collective bargaining agreements.
Life / AD&D Insurance
The City contracts with The Standard Insurance Company for Life / AD&D coverage. Basic life insurance coverage amounts vary based collective bargaining agreements.
Long Term Disability (LTD)
The City contracts with The Standard Insurance Company for LTD coverage. The plan covers non-safety employees only. Collective bargaining agreements determine eligibility for coverage limits.
Vision Insurance
Collective bargaining agreements determine eligibility for benefits under this plan.
Public Employees’ Medical and Hospital Care Act (PEMHCA) / California Public Employees Retirement System (CalPERS) Health Program Employees represented by the Fullerton Fire Management Association (FFMA) and Fullerton Firefighters’ Association (FFA) may recieve health coverage through benefit plans offered by PEMHCA which governs the CalPERS Health Program. The CalPERS Board of Administration negotiates rates in this program and approved the 2024 rates at an 10.77% premium increase. The CalPERS HMO plans have an average 10.50% premium increase and the PPO plans have a 12.17% overall increase.
The City uses the Peace Officers Research Association of California (PORAC) plan as the baseline plan to establish City contributions for all plans available through CalPERS. The City and the FFMA and FFA share increases or decreases to premiums (40% / 60% respectively). The PORAC plans increased by 12.93% for Region 2 and 3 and increased to 12.94% for Out of State plans.
FFMA and FFA employees may participate in other City sponsored programs as required by their bargaining unit agreements other than health.
Broker Services
Burnham has served as the City’s health benefits broker since 2019. The City executed Amendment No. One in 2022 to extend Burnham’s services through the end of 2023. Burnham managed the renewal process for the 2024 group insurance rates and aggressively negotiated on behalf of the City to the ensure the most comprehensive and financially competitive benefits package. Staff continues to be pleased with the level of service provided by Burnham.
Staff requests to execute Amendment No. Two with Burnham to extend their services through December 31, 2024 as Amendment No. One will end on December 31, 2023. Burnham’s fees will remain flat for 2024. Staff will conduct a Request for Proposals or RFP for broker services in 2024.
Attachments:
Attachment 1 – City Sponsored Program Premiums
Attachment 2 – Executed Amendment No. One
Attachment 3 – Proposed Amendment No. Two
cc: City Manager Eric J. Levitt
Group Insurance Programs Renewals
September 19, 2023 - Page 2