City Council Agenda Report
Meeting Date: September 17, 2024
From: Michael Earl, Director of Human Resources
Department: Human Resources
Submitted by: Lisa Wirtz, Human Resources Analyst
Subject
2025 Calendar Year Medical, Dental, Vision, Life, and Employee Assistance Program Benefit Proposals for City Employees and Retirees
Recommendation
Approve the acceptance of the 2025 Calendar Year Medical, Dental, Vision, Life, and Employee Assistance program proposals and authorize the City Administrator to execute 2025 calendar year carrier agreements with Blue Shield of California, Anthem, MetLife, EyeMed, Lincoln Financial, and Anthem PRISM EAP.
Background
Each year, with the assistance of the City’s insurance benefits brokerage and consulting firm, currently Alliant Insurance Services, Inc., the City reviews its various lines of coverage for employees and retirees to ensure the City is continuously receiving competitive rates. Blue Shield of California currently provides four (4) medical plans for employees and early retirees. For calendar year 2025, Blue Shield of California submitted a proposal with the desired benefits and coverage at competitive rates. The Access+ HMO 15, TRIO ACO HMO 15, PPO Combined Deductible and the HDHP PPO Savings Embedded plans were negotiated between the carrier and broker with a final renewal rate increase of 3%.
Blue Shield of California has continuously provided the City with competitive rates while maintaining the same level of coverage for employees and retirees. In 2024, the renewal for all Blue Shield plans came in at a 6% increase. The City’s final negotiated renewal premium rate increases continue to remain below the market trend for comparable plans in the state of California. In addition, Blue Shield of California has continuously provided a wellness stipend of between $25,000 an $30,000 for which the City may use to offset the cost of providing a variety of programs and services. For 2025, Blue Shield of California has increased the wellness stipend to $40,000. Furthermore, Blue Shield of California is offering a Special Premium Arrangement equal to 25% of the first month’s gross premium, not to exceed $101,918, which will be applied as a credit towards the City’s invoice. It is recommended that the City continue to contract with Blue Shield of California for the 2025 calendar year.
Anthem currently provides two (2) Medicare plans for retirees. For calendar year 2025, Anthem submitted a proposal with the desired benefits coverage at competitive rates consistent with the Medicare plan market. Regulatory changes for both medical and prescription drug coverage in this market has resulted in larger premium increases for 2025 than historically seen with Medicare plans. The Anthem Medicare HMO was negotiated with a final rate increase of 26.9% and the Anthem Medicare PPO was negotiated at a final rate increase of 21.3%. Anthem has continuously provided the City with competitive rates while maintaining the same level of coverage for Medicare-eligible retirees. It is recommended that the City continue to contract with Anthem for the 2025 calendar year.
MetLife currently provides two (2) dental plans for employees and retirees. For 2025, MetLife submitted a proposal with the desired benefits and coverage at competitive rates. The Dental HMO plan is in a rate guarantee with no increase for the 2025 calendar year. For the Dental PPO plan, MetLife has proposed an increase of 6%. It is recommended that the City continue to contract with MetLife for the 2025 calendar year.
EyeMed currently provides vision insurance benefits for City employees. There is no change in premiums for the 2025 plan year. It is recommended that the City continue to contract with EyeMed to provide vision insurance benefits for 2025.
Mutual of Omaha is our current provider for the City’s Basic Life Insurance, Voluntary Life Insurance, and Voluntary Long Term Disability benefits for employees and eligible dependents.
Alliant Insurance Services presented two (2) additional carriers that provided competitive quotes.
Lincoln Financial offered to match our existing plan design as Mutual of Omaha provides at a cost savings of 16.9% in Basic Life Insurance premiums with a three (3) year rate guarantee. In addition, Lincoln includes a benefit enhancement allowing for two (2) incremental increases in voluntary coverage above the Guaranteed Issue amount and without requiring Evidence of Insurability (EOI). It is recommended that the City change life insurance carriers and contract with Lincoln Financial for the 2025 calendar year.
The City also provides an Employee Assistance Program (EAP) benefit provided through Anthem PRISM EAP. The renewal for the EAP provides the same coverage with no increase in premiums for 2025. It is recommended that the City continue to contract with Anthem PRISM EAP for the 2025 calendar year.
Fiscal Impact
The total annual estimated premium for all lines of coverage is $5,449,457. The amount will vary based on enrollment of employees and retirees and their plan selections. Furthermore, the total annual premium is offset by employee and retiree contributions. Below is a breakdown of the approximate cost per line of coverage:
Blue Shield of California: $4,892,052
Anthem: $249,647
MetLife: $253,526
EyeMed: $46,267
Lincoln: $3,666
Anthem PRISM EAP: $4,299
Sufficient funds for this expenditure are available in the Insurance Premiums – Medical Account for each City Department’s Fiscal Year 2024-25 budget and will be subsequently budgeted for the remainder of the renewal period.
Attachments
1. Benefit Renewal Confirmation Documents