Agenda Report
Fullerton City Council
MEETING DATE: SEPTEMBER 17, 2024
TO: CITY COUNCIL / SUCCESSOR AGENCY
SUBMITTED BY: ERIC LEVITT, CITY MANAGER
PREPARED BY: EDDIE MANFRO, DIRECTOR OF HUMAN RESOURCES
SUBJECT: 2025 GROUP INSURANCE PLAN RENEWAL
SUMMARY
This report lists 2025 employee group insurance and benefits programs renewal rates. Collective bargaining agreements require all plans in the report except the Cigna Employee Assistance Plan and the Minimum Value Health Maintenance Organization which the City offers per the Federal Patient Protection and Affordable Care Act (ACA).
PROPOSED MOTION
Receive and file 2025 Group Insurance Plan Renewal.
Approve and authorize City Manager, or designee, to execute and administer all actions necessary to implement and administer agreements.
ALTERNATIVE OPTIONS
Approve the Proposed Motion
Other options brought by City Council.
STAFF RECOMMENDATION
Staff recommends the Proposed Motion.
CITY MANAGER REMARKS
The City Manager recommends approval of the proposed insurance plan renewal.
PRIORITY POLICY STATEMENT
This item matches the following Priority Policy Statement:
Fiscal and Organizational Stability.
FISCAL IMPACT
The City budgeted the employee group insurance and benefits programs in an internal service fund in the Group Insurance Fund (Fund 66) and allocated sufficient funds in the Fiscal Year 2024-25 Adopted Budget.
BACKGROUND AND 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.
Human Resources staff, the City benefits broker (Burnham) and the Medical Advisory Committee comprised of City employees representing bargaining units review City benefit plans annually to determine the best options and associated rates and manage overall employee and employer costs and satisfaction.
City Sponsored Programs
Cigna initially proposed a 5.5% increase which Burnham negotiated down to 4.0%. The Kaiser renewal decreases 1.63%. Cigna based its renewal on medical and prescription claims and premiums from April 2023 to March 2024. The Delta Dental HMO remained flat for 2025, however, the premium had a slight 1.6% increase to add orthodontic coverage to the Delta PPO plan. VSP decreased by 1.7% and includes an increase in frame allowance. Basic and Supplemental Life Insurance and Long-Term Disability have no increases as they have rate guarantees through 2026. The City Employee Assistance Plan (EAP) with Cigna Behavior Health, Flexible Benefit Plan (commonly known as FSA) and COBRA Administration with IGOE Administrative Services will renew without increases.
The following table reflects the initial proposal and the final negotiated increase or decrease for 2025 group insurance rates:
Plan
2025 Initial Proposed Renewal Increase
2025 Final Negotiated Renewal Increase/(Decrease)
Cigna
5.5%
4.0%
Kaiser
-1.63%
-1.63%
Delta Dental HMO
0%
0%
Delta Dental PPO
1.6%
1.6%
VSP
-1.7%
-1.7%
LTD
0%
0%
Life/AD&D
0%
0%
Attachment 1 includes monthly premiums for all City-sponsored benefit plans for 2025. Collective bargaining determines City contributions which vary by bargaining group or employee unit.
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 Employees and Executive Employees may receive health coverage through a City-sponsored program. The FMA, FMEF, Executive employees and Confidential employees have flat rate City contributions that vary by agreement for each program. Employees in these groups will absorb all increases to premiums for 2025. The City and the FPMA, FPOA-PSU and FPOA-D share increases or decreases to premiums equally (50% / 50%).
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 who work, on average, 30 or more hours per week. The plan meets the ACA test for affordability and minimum essential coverage. Resolution No. 2020-104 sets the monthly employee contribution for this plan at approximately $104.00.
Dental Insurance
The City provides two Delta Dental plan options to regular employees. The City contribution is limited to 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 on collective bargaining agreements.
Long Term Disability (LTD) and Short Term Disability (STD) The City contracts with The Standard Insurance Company for LTD and STD coverage. The plan covers non-safety employees only. Collective bargaining agreements determine coverage eligibility. Employees may purchase voluntary STD at their own expense.
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 receive health coverage through PEMHCA benefit plans, which governs the CalPERS Health Program. The CalPERS Board of Administration negotiates program rates and approved the 2025 rates at a 10.79%. overall premium increase. The CalPERS HMO plans have an 8.72% average premium increase and the PPO plans have a 9.82% overall increase. Blue Shield of California will administer CalPERS PPO plans.
The Peace Officers Research Association of California (PORAC) plan is 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 4.75% for region 2 and 3 and increased to 4.73% for Out of State plans.
FFMA and FFA employees may participate in other City-sponsored programs as requires by bargaining unit agreement.
Attachments:
Attachment 1 – City Sponsored Program Premiums
cc: City Manager Eric J. Levitt
Group Insurance Program Renewals
September 17, 2024 - Page 2