08-13 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
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January 18, 2008 G
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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
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