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ITEM: RESOLUTION NO. R2016-76 (EMPLOYEE HEALTH INSURANCE)
A RESOLUTION OF WELLINGTON FLORIDA’S COUNCIL AUTHORIZING THE MANAGER TO (1) RENEW A MINIMUM PREMIUM ARRANGEMENT AGREEMENT WITH CIGNA HEALTHCARE TO PROVIDE HEALTH INSURANCE TO ELIGIBLE EMPLOYEES, DEPENDENTS AND RETIREES; (2) CONTINUE WITH SELF FUNDED DENTAL INSURANCE UTILIZING DENTAL DECISIONS ADMINISTERED BY ANCHOR BENEFIT CONSULTING, INC.; (3) RENEW AGREEMENT WITH HUMANA TO PROVIDE VISION INSURANCE; AND (4) APPROVE HRA FUNDING FOR EACH ELIGIBLE EMPLOYEE; AND PROVIDING AN EFFECTIVE DATE.
REQUEST: Authorization to (1) Renew an existing minimum premium arrangement agreement with CIGNA HealthCare to provide health insurance to eligible employees, dependents and retirees, at a cost of approximately $4,859,249.04; (2) Continue with self-funded dental insurance utilizing Dental Decisions administered by Anchor Benefit Consulting, Inc., at an annual cost of $304,593.84; (3) Renew existing agreement with Humana to provide vision insurance to eligible employees and dependents at a cost of approximately $33,300 annually; and (4) Approve HRA funding for each eligible employee at $1,113.00 per employee.
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EXPLANATION:
1. Health Insurance Plan
The Village offers group medical insurance to existing full-time employees, dependents, and retirees through CIGNA HealthCare at a cost of approximately $4.695 million annually, based on the current enrollment of 288 active participants. The minimum premium arrangement agreement with CIGNA HealthCare is set to expire on December 31, 2016.
In order to ensure the best overall value to the Village, The Gehring Group, the Village’s agent/broker of record, solicited quotes and evaluated different options from multiple carriers as summarized below:
|
Carrier |
Coverage Type |
Amount |
% Increase |
Increase Amount |
|
1. Humana NPOS |
Fully Insured |
$4,431,351.84 |
-5.6% |
($263,365.32) |
|
2. United HealthCare |
Fully Insured |
$4,705,059.72 |
0.2% |
$10,342.56 |
|
3. CIGNA Healthcare (Existing Plan) |
Minimum Premium |
$4,859,249.04 |
3.5% |
$164,531.88 |
|
4. Florida Blue |
Fully Insured |
$5,315,498.76 |
13.2% |
$ 620,781.60 |
|
5. Aetna HN Options |
Fully Insured |
$5445,285.24 |
16.0% |
$750,568.08 |
1. The Humana fully insured plan provides a decrease of $263,365.32 or 5.6% less than the Village’s existing premium with CIGNA. In Humana’s proposed plan, Baptist and Tenet hospital systems are not included in the provider network (Tenet Florida is one of the largest healthcare networks in South Florida and includes hospitals such as Delray Medical Center, Good Samaritan Medical Center, Palm Beach Children’s, Palm Beach Gardens Medical Center, St. Mary’s Medical Center and West Boca Medical Center). Therefore, any employee(s) or dependent(s) using any of these facilities will be required to pay high out of network deductibles, as opposed to more affordable co-payments. All of these facilities are included in the Village’s existing plan with CIGNA.
The Humana plan also includes a maximum of thirty (30) chiropractic and short term rehabilitation visits annually, as opposed to the one hundred (100) maximum visits currently provided in CIGNA’s existing plan.
Because this is a fully insured plan, the Village would be responsible for the entire premium of $4,431,351.84, regardless of whether claims for the plan year are less. Under the existing CIGNA plan, the Village only pays for actual claims with a guaranteed maximum premium or cap.
2. The United HealthCare fully insured plan provides an increase of $10,342.56 or 0.2% more than the Village’s existing premium with CIGNA. This plan includes a maximum of twenty (20) chiropractic and short term rehabilitation visits annually, as opposed to the one hundred annual visits in CIGNA’s existing plan. Additionally, the United HealthCare plan tiers the Rx Program, by drug cost, as opposed to drug type, currently offered by CIGNA in our existing plan. By utilizing a drug type tiered plan as opposed to a drug cost tiered plan, employees and dependents utilizing the plan can expect to pay more for prescription drugs. The United HealthCare plan also limits lab visits to one facility (Lab Corp), where the existing CIGNA plan allows employees and dependents to utilize both Lab Corp and Quest Diagnostics for lab work. Additionally, the United HealthCare plan does not provide $25,000 in Wellness dollars, currently included in CIGNA’s existing plan.
The United HealthCare plan does however, include a $400 out of network deductible for both employee and family, as opposed to Cigna’s existing out-of-network plan deductible of $500 for employee and $1,000 for family. While the United HealthCare plan includes a lower deductible for out-of-network services than CIGNA’s existing plan, the financial impact to employees and dependents will be minimal, since most users utilize in-network hospitals and doctors.
Since this is a fully insured plan, the Village pays and is responsible for the entire premium of $4,705,059.72, regardless of whether claims for the plan year are less. Under the existing CIGNA plan, the Village only pays for actual claims with a guaranteed maximum premium or cap.
3. The CIGNA HealthCare minimum premium arrangement plan (existing plan) includes an increase of $164,531.88.16 or 3.5% more than the existing premium with CIGNA, and has no change in coverage. This increase falls within the budgeted amount for FY 2017. Under the minimum premium arrangement, CIGNA charges an administrative fee which is billed to the Village on a monthly basis. The Village then pays CIGNA for medical and prescription drug claims only as they are incurred on a monthly basis. It is important to note that this type of plan also provides protection to the Village; the guaranteed maximum cost for the 2017 plan year is $4,859,249.04 (calculation based on current enrollment). If incurred claims are lower than the maximum cost, the Village retains all surplus funds in its own bank account. In the event the claims exceed the guaranteed cost maximum of $4,859,249.04 projected for the plan year, CIGNA bears one hundred percent of the liability of this deficit.
4. The Florida Blue fully insured plan provides for an increase of $620,781.60 or 13.2%, and includes higher deductibles for out-of-network, non-hospital services and prescription drugs.
5. The AETNA fully insured plan provides an increase of $750,568.08 or 16%, and out- of-network prescriptions are not covered under this plan.
Staff recommends renewing the existing minimum premium arrangement agreement with CIGNA HealthCare (#3 above) at an estimated maximum annual cost of $4,859,249.04. Employee contributions will remain the same for the 2017 plan year. The plan retains the same provisions from the existing healthcare plan as summarized below:
• Out of pocket maximum in the amount of $1,500/$3,000 in network and $2,500/$5,000 out of network for individuals and families respectively.
• Prescription benefits at $10/$30/$50 (generic, preferred, non-preferred)
• Urgent Care co-payments of $35
• Inpatient hospitalization co-payment of $250
• Emergency room visit co-payment of $100
Under this plan, the maximum amount of premiums paid by the Village will increase by approximately $164,531.88 from the 2016 plan year, while the employee’s contribution will remain the same. The Village’s guaranteed maximum cost under this plan is $4,859,249.04.
2. Dental Insurance
The Village is currently self-funded for dental insurance and utilizes Dental Decisions administered by Anchor Benefit Consulting, Inc. to manage the plan. The Village expects annual premiums of $304,593.84 for the 2017 plan year. Employee contributions will remain the same for the 2017 plan year.
3. Vision Insurance
The Village’s existing vision insurance policy with Humana is set to expire December 31, 2016. Humana has agreed to renew the existing agreement, under a two-year rate guarantee, with enhanced benefits (increase in reimbursement for lenses, frames, and contacts), and no change in cost. Employee contributions will remain the same under this renewal. The Village currently pays approximately $33,300 annually, based on current enrollment. The contract will be effective from January 1, 2017 through December 31, 2018.
4. Health Reimbursement Account:
The Village’s health reimbursement account (HRA) program is set by resolution which funds an annual amount to each HRA account offered to existing full time employees, and is adjusted automatically based upon the United States Department of Labor Consumer Price Index (CPI) medical inflation rate. Due to the Patient Protection and Affordable Care Act (PPACA) regulations, employees that do not participate in the group medical plan can no longer utilize the HRA to receive reimbursement for their out of pocket medical expenses; however, they will be able to utilize the HRA for non-medical expenses such as dental and/or vision out of pocket costs. The funding for the 2017 year is proposed at $1,113.00 per eligible employee, an increase of $48.00 over the prior year funding of $1,065.00 The annual cost of the program is $337,824.00 which includes a per employee administrative fee of $5.00.
Staff recommends (1) Renewing the existing minimum premium arrangement agreement with CIGNA HealthCare to provide health insurance to eligible employees, dependents and retirees, at a guaranteed maximum cost of approximately $4,859,249.04; (2) Continuing with self-funded dental insurance utilizing Dental Decisions administered by Anchor Benefit Consulting, Inc., at an estimated cost of $304,593.84 annually; (3) Renewing existing vision insurance plan with Humana at a cost of approximately $33,300 annually for two years; and (4) Approving HRA funding for each eligible employee at $1,113.00 per eligible employee for plan year 2017.
BUDGET AMENDMENT REQUIRED: NO
PUBLIC HEARING: NO QUASI-JUDICIAL:
FIRST READING: SECOND READING:
LEGAL SUFFICIENCY: YES
FISCAL IMPACT: Funds are available in the FY 2017 personnel expense budget.
WELLINGTON FUNDAMENTAL: Responsive Government
RECOMMENDATION: Authorization to (1) Renew an existing minimum premium arrangement agreement with CIGNA HealthCare to provide health insurance to eligible employees, dependents and retirees, at a cost of approximately $4,859,249.04; (2) Continue with self-funded dental insurance utilizing Dental Decisions administered by Anchor Benefit Consulting, Inc., at an annual cost of $304,593.84; (3) Renew existing agreement with Humana to provide vision insurance to eligible employees and dependents at a cost of approximately $33,300 annually; and (4) Approve HRA funding for each eligible employee at $1,113.00 per employee.