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HomeMy WebLinkAbout01-63 Resolution No. 01-63 RESOLUTION AUTHORIZING EXECUTION OF AN AGREEMENT WITH MUTUAL OF OMAHA COMPANIES BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS, that Joyce A. Parker, City Manager, be and is hereby authorized and directed to execute an agreement on behalf of the City of Elgin with Mutual of Omaha Companies for an employee health insurance program, a copy of which is attached hereto and made a part hereof by reference . s/ Ed Schock Ed Schock, Mayor Presented: March 14 , 2001 Adopted: March 14 , 2001 Omnibus Vote : Yeas : 6 Nays : 0 Attest : s/ Dolonna Mecum Dolonna Mecum, City Clerk CHICAGO GROUP OFFICE m Suite 800 One WestBrook Corporate Center Commies MunkiWOmand est409-0888 60154 FAX-409-3080 February 26, 2001 Mr. Kurt Schmitke Global Benefits Inc. 175 Olde Half Day Road Lincolnshire IL 60069 Re: City of Elgin, GUG-42P9 Dear Mr. Schmitke: We have completed our calculations in preparation for the 3/1/2001 renewal of the Stop Loss contract with City of Elgin. This is the first renewal for this contract after a 2-year rate guarantee. The following Stop Loss rates reflect our adjusted manuals and trend for the last 2 years. These Stop Loss rates will remain in effect through March 1, 2002: Renewal Quotation Attachment Point Individual Stop Loss Level: $100,000 $38.05 $577.90 The Aggregate Stop Loss rate $ 2.69 Please forward this information to City of Elgin. If you have any questions or need other information, do not hesitate to contact Marty (x214) or me (x220). Sincerely, Bonnie J. Garneau Account Assistant t Accepted by, for City of Elgin Da e A of e4o 8 City of Elgin Agenda Item No. -PA EDF ATF.- r' IE jJ rut February 6, 2001 ,ttt t,00 tt►tt 411 ill din TO : Mayor and Members of the City Council FINANCIALLY S \ LE CI V<U.FRNh EFFI:!ENT>ERVICE:. AND QUAL(T V INFRA S ZRUCPJF;E FROM: Joyce A. Parker, City Manager SUBJECT : Group Health Insurance Renewal PURPOSE The purpose of this memorandum is to provide the Mayor and members of the City Council with renewal information and recommendation for the City' s Group Health Insurance plans . BACKGROUND The City has two group health insurance plan options available for full-time, eligible part-time employees and retirees . Currently, life insurance and stop loss insurance for the self-insured indemnity plan are provided by the Mutual of Omaha Insurance Company. The HMO plan is through Unicare Health Plans (formerly Prudential HMO) . The multi-year coverage provided by these two carriers will expire on February 28, 2001 . Request for proposals were prepared by the purchasing department with the assistance of our broker, Global Benefits, Inc. , for distribution to interested carriers . The renewal quote from Mutual of Omaha and proposals received . from other excess (stop loss) carriers for the indemnity plan are laid out in attachment 1 . Eleven carriers listed in attachment 2 declined to quote . None of the carriers that submitted quotes was willing to give a multi-year quote . Although United Health Care' s stop loss quote is lower than the other carriers, their quote is conditioned on our acceptance of their bid for the entire medical program which will result in a higher cost to the City. Our broker recommends that we accept Mutual of Omaha' s renewal quote because Mutual provides the lowest dollar outlay of all bids received, the lowest maximum liability consistent with plan requirements, a look back protection of 36 months, and their rates include the three potentially large existing claims . 4 Group Health Insurance Renewal February 6, 2001 Page 2 Besides the renewal quote from Unicare for the HM0, we received quotes from three other carriers with two carriers refusing to quote (see attachment 3) . United Health Care' s quote is conditioned on their getting the entire healthcare package (Life, Excess, 900, HMO & TPA) . Our broker recommends that we accept Unicare' s renewal quote because their rate is competitive, their plan benefits are better than what is quoted by other carriers and continuing with them will prevent the typical disruption that occurs when carriers are changed. Five providers submitted proposals for "Third Party Administration" of the indemnity plan including our current third party administrator, Health Plan Management (see attachment 4 ) . OBA Midwest and Professional Benefit Administrators are competitively priced and offer other services that we may be interested in. Because of the disruption and additional charges associated with making a change, our broker is recommending that we stay with Health Plan Management until June 1, 2001, if necessary, to give us the time that may be needed for site visits and investigation of OBA Midwest and Professional Benefit Administrators before effecting a change if we so elect . COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED None. FINANCIAL IMPACT The cost changes for the Mutual of Omaha self-insured PPO plan and the third party administrator (TPO) based on a 503 employee census and a $100, 000 specific insurance deductible (stop loss rate reflects the effect of coming off of a multi-year fixed rate contract with three outstanding potentially large claims) will be as follows : 2000/2001 2001/2002 Difference TPA/PP0 Cost $ 68 , 206 $ 78, 467 $ 10, 261 Stop Loss Premium 166, 050 245, 906 79, 856 Total Fixed Cost $ 234 , 256 $ 324 , 373 $ 90, 117 Annual Attachment 3, 303, 141 3, 488 , 204 185, 063 Maximum Cost $3, 537, 397 $3, 812, 577 $ 275, 180 Monthly premium for the self-insured plan will be as follows : Single $ 205 . 41 $ 223 . 28 $ 17 . 87 Employee +1 437 . 93 477 . 34 39 . 41 Family 477 . 44 520 . 40 42 . 96 Group Health Insurance Renewal February 6, 2001 Page 3 Additionally, the PPO claims savings for the 12-month period September 1999 - September 2000 were $566, 235 ( see attachment 5) . The cost changes for the Unicare HMO plan will be as follows : 2000/2001 2001/2002 Difference $ 957 , 379 $1, 048 , 326 $ 90, 947 Monthly HMO premiums : Single $ 158 . 06 $ 173 . 08 $ 15 . 02 Family 434 . 67 475 . 96 41 . 29 Sufficient funds have been budgeted in the Medical Insurance fund (account numbers 635-0000-796 . 50-04 and 635-0000-796 . 53-08 ) to cover anticipated insurance expenses . v 4V j LEGAL IMPACT None . ALTERNATIVES The City Council could approve the staff recommendation to renew with our current carriers or direct that coverage be changed to any of the other carriers who submitted proposals . RECOMMENDATION Staff recommends that the proposed one-year renewals be accepted from our existing carriers, Mutual of Omaha Insurance Company and Unicare Health Plan, for the employee group insurance plans and Health Plan Management as the third party administrator . Re ectfully submitteed, Jo ce A. Parker City Manager Attachments IC • SIM II III ill ill .111 111111 .1111111111811 ,111M111111111111 , CITY OF ELGIN - STOP LOSS RENEWAL ANALYSIS i't Ac t4 ME-`t 1. • For Contract Year 3-1-01 to 3-1-02 Census 503 Employees Mutual Mutual ' United Carrier of Omaha of Omaha The Kemper American Monumental Health Care Current Renewal Hartford Ins. Co. Fidelity Life Ins Co Ins Co n Specific Deductible $100,000 1 Monthly Specific Rate Composite $25.54 $38.05 $46.50 $41 20 $41 75 $40.64 $29 65 2 Monthly Aggregate Rate Composite $2.11 $2.69 $3.80 $5 05 $2.30 $2 27 $3 22 3 Combined Annual Premium $166,050 $245,906 $303,610 $279,165 $265,885 $259,004 $198,403 4 Annual Attachment $3,303,141 $3,488,204 $3,497,750 $3,740,013 $3,817,526 $3,624,445 $3,192,561 Maximum Cost (3+4) $3,469,191 $3,734,110 $3,801,360 $4,019,078 $4,083,411 $3,883,449 $3,390,964 $125,000 1 Monthly Specific Rate Composite $31 59 $38.39 $33.23 $28.08 $27.61 Did Not Quote 2 Monthly Aggregate Rate Composite $2.69 $4.15 $5.10 $2 30 $2 43 3 Combined Annual Premium $206,914 $256,771 $231,360 $183,373 $181,321 4 Annual Attachment $3,550,314 $3,532,721 $3,784,915 $3,951,140 $3,639,272 Maximum Cost (3+4) $3,757,228 $3,789,492 $4,016,275 $4,134,513 $3,829,616 $150,000 1 Monthly Specific Rate Composite $24.87 $31.14 Did Not Quote $20.76 $22.98 Did Not Quote 2 Monthly Aggregate Rate Composite $2.69 $4.49 $2 30 $2 60 3 Combined Annual Premium $166,352 $215,031 $139,980 $154,400 4 Annual Attachment $3,594,679 $3,242,407 $4,089,430 $3,154,035 Maximum Cost (3+4) $3,761,211 $3,457,438 $4,229,420 $3,808,435 AM Best Rating A A A+ A+ A+ A A+ Contract Basis 24/12 36/12 15/12 15/12 15/12 15/12 12/12 Advanced Funding Yes Yes No No Yes Yes No ` Excludes precription drugs from specific coverage. Quote contingent upon accepance of bid for entire medical program ..The negotiated renewal rates anticipate retaining the Group Life coverage. I STOP LOSS REQUESTS Declined to Quote: 1 . Canada Life 2. Sun Life 3. AUL 4. American National 5. Lloyds of London 6. Standard Life of New York 7. AIG 8. Titan Underwriting 9. Stop Loss International (SLI — NBR) 10. National Risk Transfer 1 1 . New York Underwriters U F U U a I IC I ma ' AU AM dpi Ai id Ja2 JMNI MI illaS AU ZS MB MS . ais City of Elgin - — -- - - - HMO =� Ac.N E3_3 Competitive Bidding for Contract Year 3-1-01 to 3-1-02 -------- ---- Census: Single 51 FamilL165 r -_.._- _- __,_- Carrier Unicare Unicare (3) United Current Renewal Blue Cross (1) Humana CIGNA (2) Aetna Health Care Benefits General Services Checkups 100% 100% 100% No Quote $10 No Quote 100% Office Visits 100% 100% 100% $10 100% --- — — ---- ---- ---------- Immunization 100% 100% 100% Well Visits 100% 100% 100% $10 100% Vision EyeExam&Disc EyeExam&Disc EyeExam&Disc Exam $10 Not Included Hospital Services - Inpatient 100% 100% 100% 100% 100% Outpatient 100% 100% 100% 100% 100% Surgery _ Surgeon 100% 100% 100% 100% 100% -— ------- -- ----- ,Anesthesiologist 100% 100% 100% 100% 100% - — — Emergency — — —E.R. co-payment — -- $25 $25 $50 $50 $25 Mental Health Out-pt M/H 20 visit $20 visit $20 visit $20 visit $30,25visits $20 visit Out-pt S/A 20 visit $20 visit $20 visit $20 visit $30,25visits $20 visit In-pt M/H 20 Day Max 100% 100% 100% $100,8visits 100° 1 In-pt S/A 20 30 Day Max 100% 100% 100% $100,8visits I00'',�, Prescription Drug --__ $5/$10 $5/$10 $5/$10/$25 $5/$15 � $5/$10/$25 Contraceptive $8/90DaySupply $8/90DaySupply MailOrderOnly ----- -- -------- --- Rates ; --- - - -- —(Single _ — $158.06 $173.08 $179.64 $182.71 $493.03 Family — $434.67 $475.96 $471.29 $598.72 $493.03 Totd Month $79,781.61 $87,360.48 $86,924.49 $108,107.00 $106,494.48 Total Annual $957,379 $1,048,326 $1,043,094 $1,297,284 i $1,277,934 1 No Quote due to St. Joes not being a part of the e network. 2 No Quote due to inforce renewal rates. 3 Quoted a self funded plan rates shown represent maximum liability. � :,!. ?'1. '�.� •.y+ t:i•K:+?�,i','k,.�n ...may, sow CITY OF ELGIN 4,6( 44 1 t)`{ I 14'" ADMINISTRATIVE COST ANALYSIS Ass urnpttons. 503 Employees Effective Date 3-1-01 Professional Health Plan Mgnit I tealth Plan Mgmt OBA Group Benefit United ervrces Current Renewal Midwest Administrators Administrators Health Cure ledical Claim Proc. Offered: Yes Offered: Yes Offered: Yes Offered: Yes Offered: Yes Offered: Yes Per EE per Month Cost: $0.00 Cost: $10 45 Cost: $10.00 Cost: $12 25 Cost: $11-25 Cost: $35 09 Annual Fee $54,324 $63,076 $60,360 $/3,947 $67,905 $211,803 One Time Set Up Fee N/A N/A $5,000 $2,500 $4,000 Inc Annual Maurlainence Fee $750 $750 None None $1,000 None 'PO Network Offered:Preferred Plan Offered:Preferred Plan Offered:Preferred Plan Offered:Preferred Plan Offered:Preferred Plan Offered: Yes, Own PPO Access per EE per Mo Cost: $2.30 Cost: $2 55 Cost: $2 55 Cost: $2 55 Cost: $2 25 Cost Inc Annual $13,882 $15,391 $15,391 $15,391 $13,581 ,nnual Claim Processing and 'PO fee combined $68,206 $78,467 $80,751 $91,832 $85,486 $211,803 :obraAdnunistration Offered: No Offered: No Offered: Yes Offered: Yes Offered: Yes Uttered: Yes Per Occurance Cost: Cost: Cost: Inc Cost: $15.00 Waal Cost: $1 25 PE=PM Cost: Inc $6 00 Accepted Plus 2% of COBRA Premium IIPPA Administration Offered: Yes Offered: Yes Offered: Yes Offered: Yes Offered: Yes Offerert: Yes Cost per certnficatlon Cost: Inc Cost: Inc Cost: $1000 Cost: Inc Cost: Inc Cost Inc I U cards Offered: Yes Offered: Yes Offered: Yes Offered: Yes Offered: Yes Offered: Yes Per Participant Cost: Inc Cost: Inc Cost: $1.00 Cost: Inc Cost: Inc Cost: Inc None lurnmary Plan Description Offered: Yes Offered: Yes Offered: Yes Offered: Yes Offered: Yes Offered: Yes Per SPD(includes printing) Cost: $4.00 Cost: $4 00 Cost: $4.00 Cost: $4 50 Cost: Inc Cost: Inc Ian Document Preparation Offered: Yes Offered: Yes Offered: Yes Offered: Yes Offered: Yes Offered: Yes Cost: Inc Cost: Inc Cost: $1,250 Cost: $2,500 Cost: $1,200 Cost: Inc lairn Run-out Administration Offered: Yes Offered: Yes Offered: Yes Offered: Yes Offered: Yes Offered: Yes Approximate Cost: $12,000 Cost: $12,000 Cost: $15,000 Cost: $18,500 Cost: $15,000 Cost: Inc lairn Run-in Administration Offered: N/A Offered: N/A Offered: Yes Offered: Yes Offered: Yes Offered: Yes Approximate Cost: Cost: Cost: $4,401 Cost: $5,533 Cost: $5,030 Cost: Inc ate Guarantee Offered: Yes Offered: Yes Offered: Yes Offered: Yes Offered: Yes Offered: Yes Duration: One Year Duration: One Year Duration:Three Years Duration: One Year Duration: One Year Duration: One Ye[1r I City of Elgin Preferred Plan Inc. Preferred Provider Organization Savings Year Amount 9/99 - 9/00 S566,235 9/98 - 9/99 S579.909 9/97 9/98 S370,935 TOTAL S1,516,589 1 4 I 14 11.!