01-63 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.
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February 6, 2001 ,ttt t,00
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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
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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
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