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Home My WebLink About07-35 Resolution No. 07-35 RESOLUTION ACCEPTING THE PROPOSAL OF BLUE CROSS BLUE SHIELD OF ILLINOIS FOR THE CITY OF ELGIN'S HMO AND PPO MEDICAL INSURANCE PROGRAM AND AUTHORIZING THE EXECUTION OF DOCUMENTS RELATED THERETO BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN,ILLINOIS,that the City of Elgin hereby accepts the proposal of Blue Cross Blue Shield of Illinois for the City of Elgin's HMO and PPO medical insurance program for the period of March 1, 2007 through February 29, 2008. BE IT FURTHER RESOLVED that Olufemi Folarin, City Manager, be and is hereby authorized and directed to execute all documents necessary and incident to such proposal of Blue Cross Blue Shield of Illinois for the City of Elgin's HMO and PPO medical insurance program. s/Ed Schock Ed Schock, Mayor Presented: February 14, 2007 Adopted: February 14, 2007 Vote: Yeas: 7 Nays: 0 Attest: s/Dolonna Mecum Dolonna Mecum, City Clerk s/Jennifer Quinton Jennifer Quinton, Deputy City Clerk y City of Elgin Agenda Item No. Pr E it! IfID1�t' �i L ■ G i°00 r011 February 9, 2007 i. t « ; 1 Ndu? r a;o-j t TO: Mayor and Members of the City Council Pal FINANCIALLY STABLE CITYGOVERNMENT ff UK*NT SERVICE:S, AND OUAUTY INFRASTRUCTURE FROM: Olufemi Folarin, City Manager Gail Cohen, Purchasing and H an Resources Director SUBJECT: Group Health Insurance Program PURPOSE The purpose of this memorandum is to provide the Mayor and members of City Council with renewal information and recommendations for the City's Group Health Insurance. RECOMMENDATION It is recommended that the City Council approve the proposed one-year, fully paid HMO and rok PPO'plans from Blue Cross Blue Shield. BACKGROUND In 2005, the City changed from a self-insured PPO (Preferred Provider Organization) plan administered by Group Administrators and an HMO (Health Maintenance Organization) provided by Unicare Health Plan to a fully insured PPO and HMO. Last year, as a result of competitive bidding, the City selected Blue Cross Blue Shield (BCBS) as its provider for both the HMO and PPO plans saving 3% or $194,000 compared to the previous year. Additionally, BCBS has been extremely popular with our employees. This year Global Benefits, the City's broker, again requested competitive quotes from BCBS, Unicare, United Health Care and Aetna. BCBS was the most competitively priced option, even with an initial premium increase of 19.9%. Global Benefits indicated that the 19.9% increase was due to a higher claims history for the first six months of the 2006-2007 plan year as well as general medical inflation. Global Benefits recommended that the premium increase should be at or below the 2007 —2008 medical trend (the average annual increase in healthcare cost) which is eleven percent (11%). Various options and changes to the current HMO and PPO programs were reviewed and discussed by an employee group including Human Resources, Fiscal Services, Police union representatives, Fire union representatives and SEIU/Clerical Technical representatives. ribl* Health Insurance Plans February 9, 2007 Page 2 The agreed upon changes that lower the premium increase to 11% include: • Encouraging all HMO Illinois members to switch to the lower cost HMO Blue Advantage. HMO Blue Advantage has the same network as HMO Illinois with the exception of Advocate Hospital network. Only 4 our of 133 enrolled employees use physicians in the HMO Blue Advantage network; they will be permitted to continue in the network but pay 100% of the premium difference between HMO Blue Advantage and HMO Illinois. There should be no disruption to the other 128 employees if they switch to HMO Blue Advantage. • Provide an option for a higher deductible. Currently, by contract and practice, the PPO deductible is $200/person and $600/family. The largest premium savings are realized by increasing the deductible. Therefore, we are offering two options; a $200 deductible and a $400 deductible. Only 19% of PPO members are expected to reach their $200 deductible this plan year, so an increase should not affect about 80% of the PPO members. • Increase the maximum out of pocket amount. The current out of pocket maximum is $750 and has been so for many years. Only about 12% of PPO members are expected to reach the maximum out of pocket this plan year. The out of pocket amount has been increased to $1,500 for the $200 deductible plan and $2,000 for the $400 deductible plan. • Increase office visit co-pay in HMO from $15 to $20 (regular office visit) and $30 (specialist). • Increase office visit co-pay in PPO from $20 to $35 ($200 deductible plan) and $25 ($400 deductible plan). • Increase formulary and non-formulary prescription co-pays in HMO and PPO to encourage use of generics. Roughly 85% of prescription claims dollars were spent on brand name drugs. Adjustment to the tier pricing provides the single largest source of renewal rate relief. • Increase Emergency Room co-pay from $75 to $150 to encourage alternatives, where appropriate,to the overuse of emergency room visits. Per labor contract negotiations, all employees shall contribute a portion of the cost of the premium, ranging from 7.5%to 8.5%. Employees will be able to use pre-tax income to pay for their premium contributions as well as other non-covered medical expenses and childcare under the City's flexible spending plan which was implemented last year and is also on the agenda with a recommended increase in contributions. COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED Multiple meetings were held with the Police, Fire, Clerical Tech and Public Works unions to review and adjust the proposed plans. • ,., Health Insurance Plans February 9, 2007 Page 3 90(_____ FINANCIAL IMPACT The policy year costs for March 2007 through February 2008 are about 11% higher than 2006 — 2007. The monthly premium for the PPO plan with a $200 deductible including medical and prescription claims, and administration fees are shown below. Type of Coverage 2007/2008 2006/2007 Difference Single $ 418.43 $371.84 $46.59 Employee + 1 $ 890.05 $790.94 $99.11 Family $1,277.05 $1,134.86 $142.19 The monthly premium for the HMO Blue Advantage plan is as follows: Type of Coverage 2007/2008 2006/2007 Difference Single $ 241.53 $ 213.36 $28.17 Employee + 1 $ 515.74 $455.58 $60.16 Family $740.73 $654.33 $86.40 The proposed premiums charged to the participating departments (based on the number of employees and the type of coverage chosen) as well as the employee contribution will pay for the HMO and PPO premiums. The annual PPO Plan cost is anticipated to be $5,646,000. The annual HMO Plan cost is anticipated to be $1,504,272. There are sufficient funds budgeted in account numbers 635-0000- 796.50-04 (HMO-$2,035,206); 635-0000-796.50-15 (PPO-$5,903,416) to cover the projected insurance expenses. LEGAL IMPACT None. Health Insurance Plans February 9, 2007 Page 4 ALTERNATIVES 1. The Council may choose to accept the proposals as recommended for coverage of all eligible, participating employees. 2. The Council may direct staff to investigate other health insurance alternatives. Respectfully submitted for Council consideration. GAC Attachment r ,..) '''', '-') , GL BAL FMtr9(WPElu-\F.171"S,l1tl4FAC Pd.I\SL7NVlt '"�, ' '" `4_d"''' Employee Benefits Renewal -" 1 2007—2008 MARKETING SUMMARY PPO PPO I HMO PPO PPO 116101 HMOI 1110BA fafOBA Combined C�IIZ f $ > xh ,e t . #I 1 , L ,�t , � TOTAL TOTAL PERCENTAGE In Out of In Out of R, Dr.Office Rx Dr.Office EE EE•Med EE+I Family Fain-Med Enrollment EE E+I Family Enrollment EE EE-Med E+I Famih Enrollment OIONTHL). ANNUAL &DOLLAR �4/ Welt Network Network Netork Copay Copat Copat Copay 175 5 167 187 16 549 36 32 65 133 28 I 15 50 94 MEDICAL MEDIAL DEFERENCE BCBSL 0.0% C>mrtt $200 $1000 80'%1750 60'%11500 50/520440 520 5/5/5251550 $15 $37184 $25552 $790.94 $10486 $51104 $45,321 $139.73 $51188 $73520 512.798 $2036 $205.91 $45558 $65433 $45.730 $536,850 56.442,06 50 BCBSL 0.9% Rerun! $200 $4000 80'41750 60%-$1500 $4215201540 520 515125/550 $15 $445.19 $30634 $94824 $1360.55 $60.67 $50150 $287.41 5613.68 $88141 $81,216 $255.79 $24686 $546.5 5114.46 $54.825 5643.66 $7,123;377 $628152 EE EE-Med E+I Famih BCBSI, 65 I 41 Ili I10% 4Maematrve01a6 5200 51500 80%11500 60%t13,000 520530/560 SOS 561530/550 $201530 54543 $28135 $890.05 5127705 $57511 $410,131 $27131 $51945 583215 SO $24153 $23317 $5014 1740.73 105,356 $596,093 5716140 $70,942 EE EE-Med E+I Family BCBSL 65 I 47 115 I1O% ,42etratve0,104 5400 $1500 80'%12,000 60'5 14.000 $421530;550 $25 5/51530550 5201530 $4504 $28726 $88911 $121586 $57452 $410,295 $27137 $57945 $83215 SO $241.53 S2331 $5014 $740.13 $55,356 $595.651 51.01,809 5705,60 $150 ER Copay Alternative 1(a)&1(b) $75 ER Copay Current&Renewal 1580 S Milwaukee Ave I Libertyville,IL 60048 I 847.837.3037 I 847.837.3038(0