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Council Agenda: 12-17-2024
Item No.: 2.23
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
RESOLUTION NO. ______________
A RES
OLUTION OF THE COUNCIL OF THE CITY OF
SAN JOSE APPROVING THE TERMS OF A SIDE LETTER
AGREEMENT BETWEEN THE CITY OF SAN JOSE AND
BARGAINING UNITS RELATED TO THE CITY’S LUMP
SUM HEALTHCARE PROGRAM AND PROVIDE THE
LUMP SUM H EALTHCARE PROGRAM TO EXECUTIVE
MANAGEMENT AND PROFESSIONAL EMPLOYEES
BE
IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SAN JOSE:
1. That
the terms of a Side Letter Agreement, attached hereto as Attachment B and incorporated in this Resolution, related to the City’s lump sum healthcare program between the City and the following bargaining units are hereby approved and the City Manager is authorized to execute the Agreement:
a. As
sociation of Building, Mechanical and Electrical Inspectors (ABMEI); b. Association of Engineers and Architects, IFPTE Local 21 (AEA); c. Association of Legal Professionals (ALP);
d. Association of Maintenance Supervisory Personnel, IFPTE Local 21 (AMSP);
e. City Association of Management Personnel, IFPTE Local 21 (CAMP); f. San Jose Fire Fighters, IAFF Local 230 (IAFF);
g. International Brotherhood of Electrical Workers, Local No. 332 (IBEW); h. Municipal Employees’ Federation, AFSCME Local No. 101 (MEF); i. International Union of Operating Engineers, Local No. 3 (OE#3); j. San Jose Police Officers’ Association (POA);
k. Park Ranger Peace Officer Association (POPRA); and
l. San Jose Police Dispatchers’ Association (SJPDA).
2. That
the benefit for executive management and professional employees in Unit 99 and other unrepresented employees shall be consistent with the terms of the Side Letter Agreement with the City’s bargaining units r elated to the City’s lump sum healthcare program.
NVF:NXN:JMD
11/29/2024
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Council Agenda: 12-17-2024
Item No.: 2.23
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
3. The general terms of the agreement are set out and described in the Memorandum to the Honorable Mayor and City Council from Kim Jackson, Assistant Director of Human Resources, dated November 25, 2024, and attached hereto as Attachment A and incorporated in this Resolution.
ADOPTED this _____ day of ___________, 2024, by the following vote:
AYES:
NOES:
ABSENT:
DISQUALIFIED:
MATT MAHAN
Mayor
ATTEST:
TONI J. TABER, MMC
City Clerk
COUNCIL AGENDA: 12/17/24
FILE: 24-2332
ITEM: 2.23
TO: HONORABLE MAYOR
AND CITY COUNCIL
FROM: Jennifer Schembri
SUBJECT: Actions Related to the City
Healthcare Incentive
Program
DATE: November 25, 2024
Approved Date:
12/5/24
COUNCIL DI
STRICT: Citywide
RECOM
MENDATION
Adopt a resolution:
(a) Approving the terms of a Side Letter Agreement that is related to the lump sum healthcare incentive program between the City of San José and the bargaining units listed below, and authorizing the City Manager or her designee to execute the Side Letter Agreement.
(1) Asso
ciation of Building, Mechanical and Electrical Inspectors (ABMEI) (2) Association of Engineers and Architects, IFPTE Local 21 (AEA) (3) Association of Legal Professionals (ALP)
(4) Association of Maintenance Supervisory Personnel, IFPTE Local 21 (AMSP)
(5) City Association of Management Personnel, IFPTE Local 21 (CAMP) (6) San José Fire Fighters, IAFF Local 230 (IAFF)
(7) International Brotherhood of Electrical Workers, Local No. 332 (IBEW) (8) Municipal Employees’ Federation, AFSCME Local No. 101 (MEF) (9) International Union of Operating Engineers, Local No. 3 (OE#3) (10) San José Police Officers’ Association (POA)
(11) Park Ranger Peace Officer Association (POPRA)
(12) San José Police Dispatchers’ Association (SJPDA)
(b) Approving the lump sum healthcare incentive program for executive management and professional employees in Unit 99 and other unrepresented employees consistent with the terms of the Side Letter Agreement with the City’s bargaining units.
ATTACHMENT A
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
HONORABLE MAYOR AND CITY COUNCIL
November 25, 2024
Subject: Actions Related to the City Healthcare Program
SUMMARY AND OUTCOME
Adopti
on of the resolution provides for the continuation of the lump sum healthcare incentive program for new full-time employees and current employees who are newly eligible for healthcare on or after January 1, 2025 through December 31, 2026, when choosing the healthcare provider with the second highest employee enrollment, which is currently Anthem Blue Cross Blue Shield (Anthem). It would also allow employees who change to their healthcare provider with the second highest employee enrollment during the City’s open enrollment periods in 2025 for calendar year 2026 and in 2026 for calendar year 2027, to participate in the lump sum healthcare incentive program.
Additi
onally, adoption of this resolution would increase the incentive amount from $750 to $850 for an additional two-year period. This increase builds on the program’s demonstrated success and will further incentivize employees to consider Anthem. By doing so, it moves the City closer to achieving a more balanced enrollment between the City’s healthcare providers. This adjustment not only aligns our incentives competitively with neighboring agencies, but also enhances the City’s negotiating position in healthcare provider engagements.
BACKGROU
ND
The City prov
ides the following healthcare medical plans to eligible employees. • Kaiser P
ermanente (Kaiser) $3,000 Deductible Health Maintenance Organization (HMO)
• Kaiser $1,500 Deductible HMO (Not available to members of POA and IAFF.) • Kaiser $25 Co-Pay Plan
• Anthem $20 Co-Pay Select HMO
• Anthem $20 Co-Pay Traditional HMO
• Anthem $1,500 Deductible Select HMO
• Anthem $2,500 Deductible Classic Preferred Provider Organization (PPO) with a Health Savings Account)
• Anthem $100 Deductible Classic PPO
• Anthem $100 Deductible Select PPO
Based on
the enrollment numbers for the 2025 open enrollment period and information obtained during the calendar year, Kaiser remains the medical insurance provider with the highest enrollment population.
To encourag
e a more balanced enrollment between providers and foster competitive options, the City introduced a lump sum healthcare incentive program in 2018. This program offers a non-pensionable, taxable incentive payment to new hires and newly eligible employees who choose the healthcare plan offered by the provider with the DRAFT--Contact the Office of the City Clerk at (408)535-1260 or City [email protected] for final document.
HONORABLE MAYOR AND CITY COUNCIL
November 25, 2024
Subject: Actions Related to the City Healthcare Program
second-highest enrollment, which is currently Anthem. Since its inception, the incentive program has been periodically renewed and adjusted, including an increase in December 2020 from $500 to $750, resulting in a 110% rise in Anthem enrollments from the prior year.
In addit
ion to the incentive, the City has taken further steps to support this balance, such as prioritizing the incentive in benefits communications and defaulting new hires into the healthcare plan offered by the provider with the second-highest enrollment.
These st
rategies, alongside the incentive program, have contributed to a shift in enrollments from 82% to 78% in healthcare plans offered by the provider with the highest enrollment, currently Kaiser.
The positive outcomes are evident in enrollment increases in healthcare plans offered by the provider with the second-highest enrollment. New hire enrollments in healthcare plans offered by the provider with the second-highest enrollment rose from an average of 10 per month in 2022 to 15 per month in 2024, and 74 employees switched from the healthcare plan offered by the provider with the highest enrollment to the healthcare plan offered by the provider with the second-highest enrollment during the 2024 open enrollment. These outcomes will work to enhance the City’s bargaining position with healthcare providers and support more competitive and sustainable healthcare options for the City in the future.
To build on this success, the City agreed with its bargaining units to increase the lump sum incentive from $750 to $850. This proposed increase is intended to further enhance the attractiveness of healthcare plans offered by the provider with the second- highest enrollment, and encourage employees to view the provider as a strong alternative to healthcare plans offered by the provider with the highest enrollment. Aligning with similar incentives offered by nearby local government agencies, such as the County of San Mateo’s $900 incentive, this adjustment supports the City’s goal of achieving a balanced enrollment between providers, ultimately strengthening the City’s position in securing competitive healthcare options.
ANALYSI
S
In reviewing options to achieve a more balanced enrollment in medical plans, the City consulted with its benefits consultant, Alliant. Alliant recommends continuing and expanding the incentive program to encourage employees to consider a broader range of providers, ensuring the City remains competitive with neighboring agencies offering similar incentives. This approach is expected to help balance the distribution of enrollments between providers. By achieving a more balanced enrollment, the City can better manage healthcare costs and stabilize premium rates, since a more evenly distributed enrollment allows for more predictable and competitive pricing during DRAFT--Contact the Office of the City Clerk at (408)535-1260 or City [email protected] for final document.
HONORABLE MAYOR AND CITY COUNCIL
November 25, 2024
Subject: Actions Related to the City Healthcare Program
contract negotiations. This, in turn, strengthens the City’s position when negotiating future medical plan agreements.
The lum
p sum incentive payment will be issued in the paycheck following two pay periods after an employee’s enrollment in the eligible healthcare plan and in pay period three for open enrollment participants. The City can end this lump sum healthcare program at any time and at its own discretion. This offering is intended to incentivize employees to enroll in a healthcare plan provided by the medical insurance provider with the second highest overall employee enrollment.
A compl
ete copy of the Side Letter Agreement is attached to this memorandum.
EVALUAT
ION AND FOLLOW-UP
The Cit
y will continue to offer the $850 lump sum to new full-time employees, and current employees not previously eligible to receive benefits who are hired into a full- time position eligible for benefits on or after January 1, 2025 through December 31, 2026, who enroll in a healthcare plan provided by the medical insurance provider with the second highest overall employee enrollment.
The Cit
y will also extend the lump sum incentive payment to current employees who move from a healthcare plan provided by the medical insurance provider with the highest overall employee enrollment to a healthcare plan provided by the medical insurance provider with the second highest enrollment through the City’s open enrollment events in 2025 for calendar year 2026 and in 2026 for calendar year for 2027.
COST SUMM
ARY/IMPLICATIONS
A lump s
um non-pensionable, taxable payment of $850 would be made to each new employee hired or newly eligible for benefits employee between January 1, 2025 and December 31, 2026, who selects a healthcare plan offered by the medical insurance provider with the second highest overall employee enrollment and to those employees who switch from a healthcare plan offered by the medical insurance provider with the highest overall employee enrollment to a healthcare plan offered by the medical insurance provider with the second highest overall employee enrollment during the City’s open enrollment periods in calendar years 2025 and 2026. There is $564,000 set aside in the Health Care Bonus appropriation in the Benefit Fund, which reflects monies received from employee benefit provider performance guarantees and Flexible Spending Account forfeitures, to fund this program; no additional City funds will be required at this time. If additional funding is necessary, staff will bring forward budget actions for City Council approval as part of a future budget process, as DRAFT--Contact the Office of the City Clerk at (408)535-1260 or City [email protected] for final document.
HONORABLE MAYOR AND CITY COUNCIL
November 25, 2024
Subject: Actions Related to the City Healthcare Program
appropriate. As noted above, this program can end at any time at the City’s discretion.
BUDGET REF
ERENCE
The tabl
e below identifies the fund and appropriation to fund the incentive program recommended as part of this memorandum.
Fund # Appn. # Appropri
ation
Name
Total
Appr
opriation
2024-2025
Adopted Operating
Budget Page
Last Budget Ac
tion
(Date, Ord. No.)
160 226K Healthcare
Incentive Program
$564,000 954 10/22/24
Ord. No. 31130
COORDIN
ATION
This mem
orandum has been coordinated with the City Attorney’s Office and the City Manager’s Budget Office.
PUBLIC
OUTREACH
This mem
orandum will be posted on the City’s Council Agenda website for the December 17, 2024 City Council meeting.
COMMIS
SION RECOMMENDATION AND INPUT
No commi
ssion recommendation or input is associated with this action.
CEQA
Not a P
roject, File No. PP17-010, City Organizational and Administrative Activities resulting in no changes to the physical environment.
PUBLIC
SUBSIDY REPORTING
This it
em does not include a public subsidy as defined in section 53083 or 53083.1 of the California Government Code or the City’s Open Government Resolution.
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
HONORABLE MAYOR AND CITY COUNCIL
November 25, 2024
Subject: Actions Related to the City Healthcare Program
Jennifer
Schembri
Deputy City Manager
For questi
ons, please contact Damiana Garcia, Benefits Division Manager, Human Resources at [email protected].
ATTACHME
NT
Side Letter Agreement – City Healthcare Program
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
SIDE LETTER AGREEMENT
BETWEEN
THE CITY OF SAN JOSE
AND
THE ASSOCIATION OF BUILDING, MECHANICAL AND ELECTRICAL INSPECTORS (ABMEI) THE ASSOCIATION OF ENGINEERS AND ARCHITECTS, IFPTE LOCAL 21 (AEA)
THE ASSOCIATION OF LEGAL PROFESSIONALS (ALP)
THE ASSOCIATION OF MAINTENANCE SUPERVISORY PERSONNEL, IFPTE LOCAL 21 (AMSP) THE CITY ASSOCIATION OF MANAGEMENT PERSONNEL, IFPTE LOCAL 21 (CAMP) THE SAN JOSE FIRE FIGHTERS, IAFF LOCAL 230 (IAFF)
THE INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL NO. 332 (IBEW) THE MUNICIPAL EMPLOYEES’ FEDERATION, AFSCME LOCAL NO. 101 (MEF) THE INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL NO. 3 (OE#3) THE SAN JOSE POLICE DISPATCHERS’ ASSOCIATION (SJPDA)
THE SAN JOSE POLICE OFFICERS’ ASSOCIATION (POA)
PEACE OFFICER PARK RANGER ASSOCIATION (POPRA)
City Healthcare Program
1. New Full-Time Employees and Current Employees Not Previously Eligible for Benefits a. The parties agree that effective to January 1, 202 5, n ew full-time employees and current employees not previously eligible to receive benefits who are hired into a full- time position eligible for benefits , and hired on or after January 1, 202 5 through December 31, 202 6, and who enroll in a he althcare plan provided by the medical insurance provider with the second highest ove rall employee enrollment on or after the date of this Agreement , shall receive a one -time non -pensionable lump sum payment of eight hundred fifty dollars ($850).
(i) To be e ligible for the one-time non -pensionable lump sum payment of eight hundred fifty dollars ($850), the employee mus t be enrolled for medical plan year 2025 or 2026 in a healthcare plan provi ded by the medical insurance provider with the second highest overall employee enrol lment, and the employee must be an active City employee on the date the lump sum payment is made.
(ii) This one-time non-pensionable lump sum payment of eight hundred fifty dollars ($850) shall be made in the paycheck issued two pay perio ds after the employee enrolls in the eligible healthcare plan.
(iii) New full-time employees who do not sign up for a healthcare plan within thirty (30) calendar days from their hire date are not eligible for this one -time non- pensionable lump sum payment.
(iv) The parties agree that the City retains the abi lity to end the one-time non - pensionable lump sum payment program at a ny time upon the City’s sole
ATTACHMENT B
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
Side Letter Agreement – City Healthcare Program
November 19, 2024
discretion. The City will meet and discuss with the bargaining units before ending the program.
2. Current Employees
a. The parties also agree tha t the City may choose to offer all current employees who, through the City’s Open Enrollment events in 2025 for medical plan year 2026 or 2026 for medical plan year 2027 , move from the healthcare plan provided by the medical insurance provider with the highest overall employee enrollment to the healthcare plan provi ded by the medical insura nce provid er with the second highest over all enrollment, shall also receive a one-time non-pensionable lump sum payment of eight hundred fif ty dollars ($ 850). The City will determine at least two month s before the Open Enrollment e vents if the City will exercise thi s option based on the overall enrollment in the healthcare plans.
i. To be eligible for the one-time non -pensionable lump sum payme nt o f eight hundred fifty dollars ($850), the employee must make a change to be enrolled for medical plan year 2026 or 2027 in a healt hcare plan provided by the medical insurance provider with the second highest overall employee enrollment, and the employee must be an active City employee on the date the lump sum payment is made.
ii. This one-time non-pensionable lump sum payment of eight hundred fifty dollars ($850) shall be made in the paycheck issued two pay periods after the beginning of the new medical plan year.
iii. Employees are not eligible for this l ump sum payment i f the y are already enrolled in the healthcare plan with the second highest overall enrollment. iv. The parties agree that the City retains the abi lity to end the one-time non - pensionable lump s um payment program at a ny time upon the City’s sole discretion. The City will meet and discu ss with the bargaining units before ending the program.
This agreement shall become effective when signed by all parties below and approved by the City Council in open session.
FOR THE CITY:
Jennifer Schembri Date Elsa Cordova Date
Deputy City Manager Deputy Director of Employee Relations 12/4/2024
12/4/2024
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.
Side Letter Agreement — City Healthcare Program
November 19, 2024
FOR THE UNIONS:
ZAP L-_vof ff
Mary Reed Date Nate Morris Date
President, ABMEI Business Representative, IBEW
Florin Lapustea Date Jerry May Date
President, AEA President, IAFF
John Tucker Date Krista De La Torre Date
Business Representative Business Representative, IFPTE Local 21 AFSCME, Local 101
Terra Chaffee Date Nick Rovetto Date
President, ALP President, MEF
Jesse Perez Date Jeremy Cabaccang Date
President, AMSP Business Representative, OE#3/POPRA
Julie Jennings Date Steve Slack Date
President, CAMP President, POA
Frank Crus¢o Mary Sunzeri Date
Chief Steward, IBEW President, SJPDA
11/21/2024
11/20/2024
11/21/2024
11/20/2024
11/20/2024
12/3/2024
11/21/2024
12/3/2024
12/3/2024
11/20/2024
12/3/2024
11/20/2024
11/20/202411/20/2024
DRAFT--Contact the Office of the City Clerk at (408)535-1260 or [email protected] for final document.