…title
ITEM: (1) RESOLUTION NO. R2013-75 (AUTHORIZATION TO RENEW THE WELLINGTON EMPLOYEE HEALTH PLAN WITH UNITED HEALTHCARE AND THE LIFE, SHORT TERM AND LONG TERM DISABILITY PLANS WITH CIGNA GROUP BENEFITS; AND (2) AUTHORIZATION TO COMMIT $100,000 IN PRIOR YEAR UNSPENT GENERAL FUND BUDGETS FOR HEALTH, LIFE AND DISABILITY PREMIUMS AND HRA ACCOUNTS TO THE INSURANCE RESERVE FUND TO OFFSET FUTURE INCREASES IN INSURANCE PREMIUMS)
A RESOLUTION OF WELLINGTON, FLORIDA’S COUNCIL AUTHORIZING THE MANAGER TO RENEW THE CONTRACT FOR EMPLOYEE HEALTH INSURANCE THROUGH UNITED HEALTHCARE AND THE CONTRACT FOR LIFE, SHORT TERM AND LONG TERM DISABILITY THROUGH CIGNA GROUP BENEFITS; AND PROVIDING AN EFFECTIVE DATE.
REQUEST: (1) Authorization to renew the Wellington Employee Health Plan with United Healthcare and the Life, Short and Long Term Disability Contract with CIGNA Group Benefits for the 2014 plan year and
(2) Authorization to commit $100,000 in prior year unspent General Fund budgets for health, life and disability premiums, and Health Reimbursement Accounts to the Insurance Reserve fund to offset future increases in insurance premiums.
…body
EXPLANATION: (1) Health Insurance Plan:
Wellington offers group medical insurance to existing full-time employees and retirees through United Healthcare, effective through December 31, 2013, at an annual cost of $3.709 million based on current enrollment of 263.
During the months of September - October 2013, The Gehring Group, Wellington’s broker/agent of record issued a solicitation seeking insurance firms to provide a guaranteed cost premium proposal, with plan designs that match Wellington’s current schedule. As a result of the competitive bid process, the following proposers responded for group medical insurance:
|
Proposers |
Premium Increase From 2013 |
|
AETNA |
19.8% |
|
Blue Cross Blue Shield |
29.3% |
|
CIGNA Healthcare |
14.3% Subsequently Revised to 10.5% |
|
Humana |
16.6% |
|
United Healthcare |
24.9% Subsequently Revised to 10.5% |
United Healthcare submitted an initial renewal increase of 24.9% with no change in benefits. After subsequent negotiations with The Gehring Group, United reduced the overall increase to 10.5% or an increase of $389,343 from 2013 premiums. The increases can be attributed to rising healthcare inflation in Florida, Wellington’s medical claims experience, and the Patient Protection and Affordable Care Act (PPACA).
The proposed United Healthcare renewal retains the provisions in the current policy as noted 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 at $35
• Inpatient hospitalization co-payment of $250
• Emergency room visit co-payment of $100
Under this renewal, the premiums paid by Wellington will increase by $389,343 while the employee’s contribution will remain the same as indicated below:
|
|
|
Total |
Wellington |
Employee |
|
Employee (EE) |
111 |
$705.52 |
$680.52 |
$25.00 |
|
EE + Spouse |
31 |
$1,508.55 |
$1,276.55 |
$232.00 |
|
EE + Children |
48 |
$1,304.73 |
$1,128.73 |
$176.00 |
|
EE + Family |
73 |
$2,107.50 |
$1,707.50 |
$400.00 |
|
Monthly Premium |
263 |
$341,552.31 |
$293,937.31 |
$47,615.00 |
|
Annual Premium |
|
$4,098,627.72 |
$3,527,247.72 |
$571,380.00 |
|
$ Increase |
|
$389,342.88 |
$389,342.88 |
$0 |
Life, Short Term and Long Term Disability Plan
Current life, long term and short term disability insurance is provided to existing full- time employees through CIGNA Group Benefits, effective through December 31, 2013, at an annual cost of $194,000 based on current payroll (premiums calculated based on payroll exposure). CIGNA Group Benefits proposed to renew effective January 1, 2014, with no changes to premiums or covered benefits until December 31, 2014. This plan is offered at no cost to the employee as shown below:
|
LIFE |
|
|
|
|
|
Total |
Wellington |
Employee |
|
Life Rate |
$0.185 |
$0.185 |
$0 |
|
AD&D Rate |
$0.025 |
$0.025 |
$0 |
|
Total Life and AD&D |
$0.210 |
$0.210 |
$0 |
|
Life Volume |
$23,157,750.00 |
$23,157,750.00 |
$0 |
|
Monthly Premium |
$4,863.13 |
$4,863.13 |
$0 |
|
Annual Premium |
$58,357.53 |
$58,357.53 |
$0 |
|
LONG TERM DISABILITY |
|
|
|
|
|
Total |
Wellington |
Employee |
|
LTD Rate |
$0.35 |
$0.35 |
$0 |
|
LTD Volume |
$1,171,839.00 |
$1,171,839.00 |
$0 |
|
Monthly Premium |
$4,101.44 |
$4,101.44 |
$0 |
|
Annual Premium |
$49,217.24 |
$49,217.24 |
$0 |
|
SHORT TERM DISABILITY |
|
|
|
|
|
Total |
Wellington |
Employee |
|
STD Rate |
$0.40 |
$0.40 |
$0 |
|
STD Volume |
$180,225.00 |
$180,225.00 |
$0 |
|
Monthly Premium |
$7,209.00 |
$7,209.00 |
$0 |
|
Annual Premium |
$86,508.00 |
$86,508.00 |
$0 |
|
TOTAL LIFE AND DISABILITY |
|
|
|
|
|
Total |
Wellington |
Employee |
|
Monthly Premium |
$16,173.57 |
$16,173.57 |
- |
|
Annual Premium |
$194,082.84 |
$194,082.84 |
- |
Health Reimbursement Account
Wellington’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 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 2014 year is proposed at $995 per eligible employee an increase of $27.00 over the prior year funding of $968. The annual cost of this program is $289,890, which includes $995 per employee plus a monthly $6.00 administrative fee.
(2) Wellington maintains an Insurance Reserve in the General Fund to offset future premium increases, with a current balance of $540,000. Of the total funds budgeted in FY 2013 for health, life, disability and HRA, over $100,000 remain unspent. Staff recommends utilizing these excess funds to increase the committed amount in the insurance reserve for FY 2014 and beyond.
BUDGET AMENDMENT REQUIRED: NO
PUBLIC HEARING: NO QUASI-JUDICIAL:
FIRST READING: SECOND READING:
LEGAL SUFFICIENCY: YES
FISCAL IMPACT: Based on projected enrollment of 263 employees, the premium for health, life and disability and HRA funding totals $4,582,600. After employee health premium contributions of $571,000, the net cost to Wellington is approximately $4.01 million. These funds are budgeted for 292 covered employees (assuming full enrollment) across departments in the applicable health, life, disability and HRA expense accounts.
The commitment of an additional $100,000 in excess FY 2013 funds to the Wellington Insurance Reserve will increase the total reserved amount to $640,000. Any use of the Reserve for future insurance premium increases requires prior Council approval.
WELLINGTON FUNDAMENTAL: Responsive Government
RECOMMENDATION: (1) Authorization to renew the Wellington Employee Health Plan with United Healthcare and the Life, Short and Long Term Disability Contract with CIGNA Group Benefits for the 2014 plan year and
(2) Authorization to commit $100,000 in prior year unspent General Fund budgets for health, life and disability premiums, and Health Reimbursement Accounts to the Insurance Reserve fund to offset future increases in insurance premiums.