24 October 6, 2026
Honorable Mayor and City Council
City of Long Beach
California
RECOMMENDATION:
Recommendation to authorize the City Manager, or designee, to approve the 2027 calendar year Benefits Package rates, employee contribution amounts and plan updates for active employees and retirees on the following plans; Anthem Blue Cross, the City’s third-party administrator for the Preferred Provider Organization (PPO) and the Health Maintenance Organization (HMO) group health plans, and Medicare Supplement plan; UnitedHealthcare Medicare Advantage PPO Plan; Scan Health Plan for the Medicare Advantage Plan; and Vision Service Plan (VSP) for the vision plan; CVS Caremark as the Prescription Benefit Manager (PBM) for the Prescription Drug Plan for the PPO and HMO plans; Delta Dental for the fee-for-service dental plan (DPPO) and Delta Dental USA (HMO plan); The Standard Insurance Company for employer-paid life insurance, voluntary life insurance, and short- and long-term disability insurance; Union Mutual Life Insurance Company (UNUM), through Larry Lambert & Associates Insurance Services, for long-term care insurance; Health Advocate (HA) for the Employee Assistance Plan and 360Support, a suite of resources designed to streamline healthcare navigation, and Carrum Health as a third-party administrator for eligible surgeries to be performed through a Centers of Excellence facility and approve an agreement with Trustmark Insurance Company Group for an Employee-Paid Life Insurance with Long-Term Care (LTC) plan. (Citywide)
DISCUSSION
City Council authorization is requested for approval of the calendar year 2027 Benefits Package rates, employee contribution amounts and plan updates for active employees and retirees, effective January 1, 2027 through December 31, 2027.
Background
The Human Resources Department administers the City’s employee benefits healthcare program, including group health plans for HMO, PPO, dental, vision, life insurance, long- and short-term disability, long-term care, and flexible spending plans (health and dependent care).
The program covers approximately 4,300 active employees, 2,000 retirees, and 7,000 dependents. In accordance with the Memoranda of Understanding (MOU) between the City and its employee organizations, the Health Insurance Advisory Committee (HIAC), which is comprised of representatives from each of the employee associations, annually reviews the Human Resources
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Honorable Mayor and City Council
October 6, 2026
status of the plan costs and makes recommendations to the City Manager on plan changes, benefit levels, and addition and deletion of plans.
Human Resources Department staff, members of the HIAC, and Alliant Insurance Services (Alliant), the City’s benefits consultant, have had a series of meetings from January 2026 through July 2026 to review plan utilization data presented by plan providers, trends, legislative impact, and plan design to finalize recommendations for the calendar year 2027 Employee Benefits Program.
Alliant, in conjunction with an independent Actuary, Turner Consulting Actuarial LLC., conducts an actuarial analysis of the proposed benefit plan costs and negotiates with each provider on behalf of the City to obtain the most competitive rates. Alliant presented the results of their actuarial analysis and negotiation efforts to the HIAC at the July meeting.
It is noted that while the claims experience on the Anthem HMO plan has been increasing since 2019, with 2024 being the highest reported year since the contract’s inception, the decrease in claims experience that started in 2025 continued in 2026. The City’s PPO plans continues to see increases on the claims experience, with high-cost claimants over $50,000 driving the upward trend. The City’s HMO and pharmacy plans annual rate are in line with industry trends, and show a continued increase to premiums based on impacted plan performance. Analysis of the City’s healthcare spend showed that the main cost drivers affecting plan performance are the sustained increases to the cost of care, inflation, and high-cost claimants over $50,000.
The health, vision, and dental (DPPO) plans have received a modest increase to employee contributions, while the dental (DHMO) and Life and Disability plans remain unchanged for the calendar year 2027. The City remains dedicated to providing added value and innovative resources that are designed to contribute towards the City’s efforts to mitigate future claims costs, promote healthier outcomes, and improve overall employee satisfaction through its comprehensive benefits package.
The following chart summarizes the City’s benefit contracts, applicable industry trends, and final renewal impact for Plan Year 2027. City Council approval is requested for the calendar year 2027 Benefits Package rates, employee contribution amounts and plan updates for active employees and retirees for the 2027 plan year employee benefits package, as reflected in the recommendations from the HIAC.
2027 Plan Renewals
Plan Industry
Trend
Final COLB Renewal
Anthem Blue Cross PPO
Self-funded medical & Rx
9.3% 12.6% increase
Inclusive of
Pharmacy Benefit Contract
Anthem Blue Cross HMO
Fully insured medical &
Self-funded Rx
8.8% 18.5% increase
Inclusive of
Pharmacy Benefit Contract
United HealthCare – Medicare Advantage 6.2% 15.3% increase Honorable Mayor and City Council
October 6, 2026
Fully insured
SCAN Health – HMO Medicare Advantage
Fully insured
6.2% 5.5% increase
Delta Dental DPPO – Self-funded 4.5% 3.7%
DeltaCare USA DHMO – Fully insured 3.5% 0.00%
Vision Service Plan (VSP) Vision –
Self-funded
3.0% 4.1%
The Standard – Fully insured
Basic Life/AD&D Insurance
Voluntary Life Insurance
Short and Long-term Disability
Varies by
Claim
Experience
0.00%
Service Provider Contract Renewal and Rates
Anthem Blue Cross
The overall impact of the calendar year 2027 renewals for the Anthem PPO and HMO (including CVS Caremark carve-out for prescription drugs) plans resulted in 12.6 percent and 18.5 percent increase, respectively. As stated previously, the claims experience on the Anthem HMO and PPO plans have been increasing year after year since 2019, which impacted the City’s final renewal rates. Final and favorable renewal results are attributed by further negotiation efforts led by Alliant Insurance Services.
Additionally, increases to employee contributions are limited by maximum(s) that have been previously negotiated in MOU agreements for single, two-party, and family coverage for active employees. Per the MOU, any increase to employee contribution(s) that exceeds the employees’ maximum cost share as outlined in the MOU agreement(s), will be carried over into the following plan year (2027). Carryover amounts for plan year 2027 are as follows:
Anthem PPO – Single $9.00 carryover
Anthem PPO – Two Party $73.00 carryover
Anthem PPO – Family $110.00 carryover
Anthem HMO – Single $14.00 carryover
Anthem HMO – Two Party $100.00 carryover
Anthem HMO – Family $144.00 carryover
Honorable Mayor and City Council
October 6, 2026
Delta Dental of California and Vision Service Plan (VSP) Rates and employee contributions for the Dental PPO (Delta Dental DPO) increased by one dollar each, with no increase to the Dental HMO (DeltaCare USA) for the calendar year 2027. 2026 2027
Delta PPO – Single $10.00 $11.00
Delta PPO – Two Party $13.00 $14.00
Delta PPO – Family $18.00 $19.00
Miscellaneous Enhancements
UNUM, the City’s Group Long-Term Care carrier, closed the plan to new enrollments effective February 1, 2026. While existing policyholders were not impacted, the ability to participate in the plan by new or existing employees was eliminated. At HIAC’s request, Alliant collected information on employee-paid options to replace the plan.
After review of options, HIAC recommends that the City Council approve implementing the following employee-paid plan with Trustmark;
• Implement a Group Employee-Paid Life Insurance with Long-Term Care (LTC) plan with Trustmark
The above-recommended change will be implemented in early 2027 and will be rolled out with a comprehensive education and communication plan.
Retiree Health Plans
It is also recommended that the City Council approve the proposed calendar year 2027 rates (Exhibit 2) for the retiree Medicare health plans, which include:
• A 15.3 percent increase for the UHC Medicare PPO Advantage Plan rates; • A 5.5 percent reduction for the SCAN Medicare Advantage Plan; and, • A 12.6 percent increase for the Anthem Medicare Supplement Plan rates.
At its July 28, 2026 monthly meeting, the HIAC voted to adopt the employee benefit plan changes outlined in Attachment B, which is submitted to the City Council for approval.
This matter was reviewed by Assistant City Attorney Gary J. Anderson on September 8, 2026, and by Budget Analysis Officer Greg Soresnen on September 11, 2026.
Honorable Mayor and City Council
October 6, 2026
TIMING CONSIDERATIONS
Human Resources is planning to utilize the month of October to communicate open enrollment changes via various mediums to employees, who will update their health plan options online.
Therefore, City Council action is requested on October 6, 2026, for adequate open enrollment planning. Communication pieces explaining benefits options will be distributed prior to and during the Open Enrollment period.
FISCAL IMPACT
The estimated employee healthcare program costs for both the Active and Retirees are estimated at $132.6 million, for the period of January 1, 2027, through December 31, 2027, compared to $117.0 million last year. The costs for the health benefit plans are paid from the Employee Benefits Fund Group in the Citywide Activities Department. Funding to support these costs are recouped through employee contributions and charges to departments and funds as a personnel-related overhead rate. It is expected that there will be sufficient appropriation to support these costs based on these renewal rates which have been included in the FY 27 budget.
Staff will monitor actual costs throughout the year, and any adjustments needed to the interdepartmental charges will be evaluated based on actual experience and incorporated into future budget development processes. This recommendation has no staffing impact beyond the budgeted scope of duties and is consistent with existing City Council priorities. There is no fiscal or local job impact associated with this recommendation.
SUGGESTED ACTION:
Approve recommendation.
Respectfully submitted,
Bryce M. Tyler
Director
Human Resources
ATTACHMENT – 2027 ACTIVE CONTRIBUTIONS