City Council Agenda Report
Meeting Date: October 20, 2026
From: Su Tan, Director of Human Resources
Department: Human Resources
Submitted by: Lisa Wirtz, Human Resources Analyst
Subject
2027 Calendar Year City Employee and Retiree Benefits
Recommendation
Ratify the acceptance of the 2027 Calendar Year Medical, Dental, Vision, Life & Long Term Disability, Voluntary Benefits, Employee Assistance Program, Flexible Spending Accounts, and Pet Insurance/Discount Plan benefit proposals and authorize the City Administrator to execute 2027 calendar year carrier agreements and related implementation documents with Blue Shield of California, Anthem Blue Cross Medicare, Ameritas Dental PPO, Ameritas Liberty Dental HMO, Ameritas Vision, Lincoln Financial, Colonial Life Voluntary Group Plans, Lincoln Financial EAP, Igoe Flexible Spending Accounts, Nationwide Pet Insurance, and United Pet Care Discount Plan.
Background
Following a competitive Request for Proposals (RFP) process, on March 18, 2025, the City Council approved a contract with 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 2027 calendar year in May 2026. The negotiation process with multiple carriers was extensive with final rates agreed upon shortly before the initiation of the 2027 Benefits Open Enrollment period for City employees.
A summary of the benefits offered to City employees during the 2027 Benefits Open Enrollment period from October 19, 2026, through November 6, 2026, 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 2027, Blue Shield of California submitted a renewal 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 6.7% (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 increased by 6%, in 2025 the plans increased by 3%, and in 2026 the plans increased by 3.7%. 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 2027 calendar year.
Retiree First who currently provides management and administrative services relating to retirement health benefits and Alignment Health Medicare Advantage PPO, was selected to replace Anthem for the 2026 calendar year based on plan coverages and competitive premium rates offered in their proposal.
Alignment Health Medicare currently provides a Medicare Advantage PPO plan for retirees age 65 and over. For calendar year 2027, Keenan conducted an RFP marketing the City’s existing Medicare plan. Several providers submitted proposals, and it was decided to go back to the City’s previous carrier, Anthem due to complaints received by retirees regarding Alignment’s limited network. (Attachment 3). Anthem’s rates are approximately 8.3% higher than Alignment. For the Medicare population, we believe the Anthem MAPD PPO represents the strongest overall value for the City. In addition to offering competitive pricing, the Anthem plan closely mirrors the Medicare retiree plan design that participants had in 2025, minimizing disruption and providing a familiar member experience. Based on the challenges experienced with the current Alignment arrangement and the City's desire for long-term stability, Anthem MAPD PPO was selected for the 2027 plan year, as we believe it offers the best combination of value, predictability, and member satisfaction for retirees.
Dental Plans
MetLife currently provides two (2) dental plans for employees and retirees. For the 2027 calendar year, Keenan conducted an RFP and Ameritas submitted a proposal with the desired benefits and coverage at competitive rates (Attachment 4). Ameritas/Liberty Dental HMO plan provided an average decrease of 9.41% from current rates. For the Dental PPO plan, Ameritas was able to offer a slight increase of 5.87% from the current MetLife plan and several plan enhancements including: an increase in the annual maximum from $2,000 to $3,000, inclusion of Diagnostic & Preventative (D&P) Waiver, and incentives for utilizing in-network providers. In addition, Ameritas has provided a recruitment performance guarantee as part of their offering for $7,500 (2% of annual premium) as a demonstration of good faith for their efforts to strengthen the network specifically for the City of Vernon employees. The City has opted to change to Ameritas as the dental plan provider for the 2027 calendar year.
Vision Plans
Ameritas currently provides vision insurance benefits in both the EyeMed and VSP network for City employees. Keenan conducted an RFP in 2025 for the City’s vision plan and Ameritas was selected based on competitive rates, a smooth continuation of services for employees, and a two-year rate guarantee through December 31, 2027. (Attachment 5). The City is opting to continue with Ameritas Vision for the 2027 calendar year.
Life & Long Term Disability Insurance
Lincoln Financial is the 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. An RFP for these benefits was completed this year, and the City elected to remain with Lincoln Financial as they continued to remain competitive in order to retain the City’s business. The Life and AD&D plan was renewed with a two-year rate guarantee decrease of 10% for Life and 11% for AD&D. (Attachment 6). The voluntary life and long-term disability rates have also been reduced and are age banded.
Voluntary Benefit Plans
For the voluntary benefits program, the City is currently offering both Aflac and Colonial Life individual plans for employees. Colonial Life’s service model and enrollment support are better aligned with the City’s preference for personalized employee assistance and engagement. In addition, the proposed Colonial Life Group plan enhances the City's current voluntary benefits offering by providing stronger group product options, improved coverage features including no pre-existing condition limitations, and competitive pricing compared to the existing combination of individual voluntary Aflac and Colonial Life plans. The City is opting to no longer offer any new individual plans through Aflac or Colonial and will only be offering Group plans through Colonial going forward and beginning in the calendar year of 2027. Any employees with current individual plans will have the opportunity to keep their current plans and pay the carrier on a direct basis.
Employee Assistance Program
The City currently provides an Employee Assistance Program (EAP) benefit through Lincoln Financial. The rates will remain the same for 2027 with no changes.
Flexible Spending Accounts
Igoe is the provider for the City’s Section 125 Plan and Flexible Spending Accounts (FSA). There is no increase in the administrative fees for the 2027 calendar year. The City continues to contract with Igoe for the Section 125 plan and FSA accounts, including the Limited Purpose Health FSA for Health Spending Account participants added in 2026. Beginning with accounts for the 2027 calendar year, the City will be adding an FSA debit card feature for participants at no additional cost.
Pet Insurance/Discount Plans
Beginning in 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. United Pet Care provides a pet health discount plan for all pets. These plan offerings are 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. There are no rate increases for the 2027 plan year.
Strategic Plan Goals
Goal 5: Strengthen Organizational Efficiency and Financial Planning Fiscal Impact
The total annual estimated premium for all lines of coverage is $6,182,811. 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 estimated annual cost by line of coverage:
Blue Shield of California: $5,263,888
Anthem (Medicare Advantage): $285,197
Ameritas PPO Dental: $401,170
Ameritas/Liberty DHMO: $26,350
Ameritas EyeMed: $41,329
Lincoln Financial Group Life/AD&D: $160,017
Lincoln Financial EAP: $3,610
IGOE: $1,250
Sufficient funds for this expenditure are available in the Insurance Premiums – Medical Account for each City Department’s Fiscal Year 2026-2027 budget and will be subsequently budgeted for the remainder of the renewal periods.
Attachments
1. City of Vernon 2027 Renewal Summary
2. Blue Shield Medical Renewal
3. Anthem Medicare Proposal
4. Ameritas Dental Proposal
5. Ameritas Vision Rate Guarantee
6. Lincoln Financial Life Renewal