City Council Agenda Report
Meeting Date: November 18, 2025
From: Su Tan, Director of Human Resources
Department: Human Resources
Submitted by: Lisa Wirtz, Human Resources Analyst
Subject
2026 Calendar Year Medical, Dental, Vision, Life, Flexible Spending Accounts, Employee Assistance Program, and Pet Insurance/Savings Plan Benefit Proposals for City Employees and Retirees
Recommendation
Ratify the acceptance of the 2026 Calendar Year Medical, Dental, Vision, Life, Flexible Spending Accounts, Employee Assistance Program and Pet Insurance/Savings Plan benefit proposals and authorize the City Administrator to execute 2026 calendar year carrier agreements and related implementation documents with Blue Shield of California, Retiree First/Alignment Health Medicare, MetLife, Ameritas Vision, Lincoln Financial, Igoe Flexible Spending Accounts, Nationwide Pet Insurance, and United Pet Care Savings Plan.
Background
Following a competitive Request for Proposals (RFP) process, on March 18, 2025 the City Council approved a contract Keenan & Associates (Keenan) for health benefits brokerage consulting services. Subsequently, as the City’s health benefits broker, Keenan assisted the City with its annual review of the various lines of coverage for employees and retirees to ensure the City continuously receives competitive health plan coverage and rates. Given the lengthy process necessary to obtain optimal rates and coverage plans for the City, Keenan and staff initiated the annual benefits marketing strategy, review and renewal process for the 2026 calendar year in May 2025. The negotiations process with multiple carriers was extensive with final rates agreed upon shortly before the initiation of the 2026 Benefits Open Enrollment period for City employees.
A summary of the benefits offered to City employees during the 2026 Benefits Open Enrollment period from October 21, 2025 through November 6, 2025 is provided for reference (Attachment 1).
Medical Plans
Blue Shield of California (Blue Shield) currently provides four (4) medical plans for employees and early pre-65 retirees. For calendar year 2026, Blue Shield of California submitted a proposal with the desired benefits and coverage at competitive rates. The Access+ HMO 15, TRIO HMO 15, Traditional PPO Combined Deductible 250, and the Custom Full HDHP PPO Savings plans were negotiated between the carrier and broker with a final renewal rate increase of 3.7% (Attachment 2). Blue Shield has continuously provided the City with competitive rates while maintaining the same level of coverage for employees and early pre-65 retirees. In 2024, the renewal for all Blue Shield plans came in at a 6% increase, and 2025 had an increase of 3%.
The City’s final negotiated renewal premium rate increase continues to remain below or at the market trend for comparable plans in the State of California. In addition, Blue Shield has continuously provided a wellness stipend of $30,000 which the City may use to offset the cost of providing a variety of wellness programs and services. Given the competitive renewal rate and wellness stipend offered by Blue Shield the City opted to continue with Blue Shield for the 2026 calendar year.
Anthem currently provides two (2) Medicare plans for retirees age 65 and over (PPO and HMO).
For calendar year 2026, Keenan conducted an RFP marketing the City’s existing Medicare plan.
Several providers submitted proposals, Retiree First who provide management and administrative services relating to retirement health benefits and Alignment Health Medicare were selected to replace Anthem for the 2026 calendar year based on plan coverages and competitive premium rates offered in their proposal (Attachment 3).
Dental Plans
MetLife currently provides two (2) dental plans for employees and retirees. For the 2026 calendar year, MetLife submitted a proposal with the desired benefits and coverage at competitive rates (Attachment 4). The Dental HMO plan is in a rate guarantee with no increase for the 2026 calendar year. For the Dental PPO plan, Keenan was able to negotiate the PPO increase down to 9% from the initial 20% increase proposed by MetLife. The explanation for the increase is based on a 102% incurred loss ratio, the year prior was 97% and prior to that 88% compared to our standard loss ratio of 83% for the City. Due to the upward trend MetLife’s increase was to account for the loss. MetLife decreased their initial rate increase in order to retain the City as a client. The City opted to continue to contract with MetLife for the 2026 calendar year.
Vision Plans
EyeMed currently provides vision insurance benefits for City employees. Keenan conducted an RFP for the City’s vision plan. Ameritas proposed more competitive rates and a two-year rate guarantee (Attachment 5). They also provide both Eyemed and VSP plans offering a smooth continuation of services for employees that wish to stay with EyeMed. Based on Ameritas plan options and competitive rates Ameritas was selected to provide vision insurance benefits for the 2026 calendar year.
Life Insurance
Lincoln Financial is our current provider for the City’s Basic Life Insurance, Accidental Death & Dismemberment (AD&D), Voluntary Life Insurance, and Voluntary Long Term Disability benefits for employees and eligible dependents. Last year the City completed an RFP for these benefits and selected Lincoln Financial. At the time, Lincoln included a benefit enhancement allowing for two (2) incremental increases in voluntary coverage above the Guaranteed Issue amount and without requiring Evidence of Insurability (EOI). This benefit enhancement offering will continue into the 2026 plan year.
In an effort to offer competitive benefits that can aid recruitment and retention, the City opted to increase Basic Life and AD&D coverage for all eligible employees from $20,000 to $50,000 (Attachment 6). This increase in volume will result in an additional annual cost to the City projected at $4,235. The City will continue to contract with Lincoln Financial as there will be no rate increases through December 31, 2027.
Employee Assistance Program
The City currently provides an Employee Assistance Program (EAP) benefit through PRISM/Anthem. Keenan conducted an RFP for EAP services and recommended Lincoln Financial as the new carrier in order for align the Life Insurance with the EAP services to one carrier. The renewal for the EAP provides an enhancement of one additional counseling visit per year along with a decrease in premiums for the 2026 calendar year (Attachment 7). The annual savings to the City is $1,057.80.
Flexible Spending Accounts
Igoe is the provider for the City’s Section 125 plan employee Flexible Spending Accounts (FSA).
There is no increase to the administrative fees for the 2026 calendar year. The City continued to contract with Igoe for the Section 125 plan and FSA accounts with the addition of a Limited Purpose Health FSA for Health Spending Account participants.
Pet Insurance/Discount Plans
New for the 2026 plan year, the City offered two options for pet care including pet insurance and a discount plan. Nationwide Pet Insurance offers ready-made employee plans, plus the ability to customize coverage plans for individual pets and their specific care needs (Attachment 8). United Pet Care provides a pet health savings plan for all pets (Attachment 9). These new plan offerings were made available during Open Enrollment for employees to enroll directly and set up direct payment plans with the respective pet insurance or discount plan carrier.
With the insurance negotiations and Open Enrollment processes now complete, staff is requesting Council approval to execute necessary agreements and related implementation documents with each of the respective carriers as they are received by staff. Agreements and related implementation documents will be reviewed and approved as-to-form by the City Attorney prior to execution.
Fiscal Impact
The total annual estimated premium for all lines of coverage is $5,831,279. 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: $5,053,190
Alignment Health Medicare: $189,420
MetLife Dental: $392,774
Ameritas EyeMed: $40,235
Lincoln Life/AD&D: $150,720
Lincoln EAP: $3,690
IGOE: $1,250.00
Sufficient funds for this expenditure are available in the Insurance Premiums – Medical Account for each City Department’s Fiscal Year 2025-26 budget and will be subsequently budgeted for the remainder of the renewal periods.
Attachments
1. City of Vernon 2026 Renewal Summary
2. Blue Shield Renewal
3. Retiree First Proposal
4. Metlife Dental Renewal
5. Ameritas Vision Proposal
6. Lincoln Life Renewal
7. Lincoln EAP Proposal
8. Nationwide Pet Insurance Summary
9. United Pet Care Summary