City Council Meeting


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  F.2.g.       
Meeting Date: 09/21/2021  
Contact: Kathleen Shields, Managing Director of Human Resources

COUNCIL ACTION
Motion by Councilmember Marks with a second by Councilmember Brown-Patrick to approve as presented. Motion passes 7-0.
AGENDA ITEM:
Consider authorizing the City Manager to negotiate and execute renewal contracts for employee medical, dental, life, and vision insurance products at the quoted rates for Plan Year 2022
BACKGROUND:
As part of its compensation and benefits package, the City has historically offered employees and retirees a comprehensive and competitive fully insured benefits package. This package has traditionally included health, dental, life, AD&D, long-term disability, and vision as its main components. The City subsidizes the cost of employee premiums (except for vision coverage) and does not subsidize retiree benefit contributions.
FINDINGS:
To ensure competitiveness, the City regularly reviews all plans and options. The current insurance-contracted carriers are continuing; however, the current rates will expire at the end of December 2021. This is the third year of a three-year contract for the medical insurance, the final renewal for the dental contract, the final renewal of the life insurance contract, and the final renewal year for the vision contract. As a result, the City received rate quotes from all providers.

McGriff, the City's insurance consultant, negotiated the initial insurance rate quotes and received a 21% initial rate increase for health. That rate increase was negotiated down to 12% by the consultant for the Plan Year which translates to 9% for the 2022 fiscal year, and staff is recommending acceptance of those rates. For dental coverage with Cigna, the City received a 5% renewal increase, and this is the last available renewal. Life insurance rates are guaranteed through December 2022, so there are no increases from Dearborn Life.  Plan Year 2022 is the last renewal year for vision coverage through The Standard. The original increase for employees (as this is an ancillary voluntary benefit) was 17%; however, the increase was negotiated to 7%. All of these increases have some basis in high utilization, large claims, and/or medical inflation. The actual total cost incurred will be determined by the final enrollment in each product. 
FINANCIAL IMPACT:
Below are the final costs for each type of coverage. 
 
Types of Coverage and Carrier 2021 Cost 2022 Cost Difference
BCBS Medical 4,170,884.04 4,671,386.28 500,502.24
Cigna Dental 11,159.88 326,713.92 15,554.04
The Standard Vision 32,720.64 34,971.36 2,250.72
Dearborn Life 53,022.44 53,022.44 0
Total 4,567,787.00 5,086,094.00 518,307.00
 
Funds are budgeted for all of these amounts in the FY 2022 Budget. 
RECOMMENDATION:
Staff recommends that the City Council authorize the City Manager to negotiate and execute renewal contracts for employee medical, dental, life, and vision insurance products at the quoted rates for Plan Year 2022.
MANAGEMENT REVIEW

    

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