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HomeMy WebLinkAbout08-13 Resolution No. 08-13 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 February 29, 2008 through March 1, 2009. 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: January 23, 2008 Adopted: January 23, 2008 Vote: Yeas: 7 Nays: 0 Attest: s/Diane Robertson Diane Robertson, City Clerk E �� January 18, 2008 G ( r�r N Lath , pJ it TO: Mayor and Members of the City Council I , • FINANCIALLY STABLE CITY GOVERNMENT EFFICIENT SERVICES, AND QUALITY INFRASTRUCTURE FROM: Olufemi Folarin, City Manager Gail Cohen, Purchasing and Human 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 PPO plans from Blue Cross Blue Shield. BACKGROUND 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 health insurance plans. BCBS has been extremely popular with our employees since they began as our health insurance provider in 2005. This year Gallagher Benefits, the City's broker, requested a renewal quotation from BCBS as well as competitive quotes from United Health Care, Humana and Aetna. BCBS's initial renewal quotation included an increase of 27.9%. Gallagher was able to reduce the increase to 17.7% with no change to the plan. As last year, the City is absorbing the rate of medical inflation, which is twelve percent (12%). 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. The City has two PPO plans and two HMO plans. Health Insurance Plans January 18, 2008 Page 2 The agreed upon changes that lower the premium increase to 12%include: • Increasing the Out of Pocket Maximum per individual from $1,500 to $3,000 and the Out of Pocket Maximum per family from $4,500 to$6,000 for PPO Plan#1. • Increasing office visits from $35 to $45 for specialists for PPO Plan#1. • Increasing prescription costs from $20/$30/$60 (generic/formulary/non-formulary) to $20/$40/$70 for PPO Plan#1. • Increasing the Out of Pocket Maximum per individual from $2,000 to $5,500 and the Out of Pocket Maximum per family from $6,000 to$11,000 for PPO Plan#2 • Increasing the annual deductible per individual from$400 to $500 for PPO Plan#2. • Applying a$300 inpatient hospitalization fee for both PPOs. No changes were made to the HMO plans. Per labor contract negotiations, all employees shall contribute a portion of the cost of the premium, which will be eight and a half percent for all employees effective March 1, 2008. 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 A meeting was held with the Police, Fire, Clerical Tech and Public Works unions to review and adjust the proposed plans. FINANCIAL IMPACT The policy year costs for March 2008 through February 2009 are 12%higher than 2007 —2008. 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 2008/2009 2007/2008 Difference Single $ 418.43 Employee + 1 $ 890.05 Family $1,277.05 The monthly premium for the HMO Blue Advantage plan is as follows: Health Insurance Plans January 18, 2008 Page 3 Type of Coverage 2008/2009 2007/2008 Difference Single $ 241.53 Employee + 1 $ 515.74 Family $ 740.73 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 $. The annual HMO Plan cost is anticipated to be $. There are sufficient funds budgeted in account numbers 635-0000-796.50-04 (HMO- $1,650,000); 635-0000-796.50-15 (PPO-$6,514,700) to cover the projected insurance expenses. LEGAL IMPACT None. 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 D --3 Resolution No. 08-13 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 February 29, 2008 through March 1, 2009. 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. Ed Schock, Mayor Presented: January 23, 2008 Adopted: Vote: Yeas Nays: Recorded: Attest: Diane Robertson, City Clerk j )(\r\ (k,rM, / , f( ( .