Agenda - Council - 05/13/2003 - Laserfiche WebLink

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PC# ~., CONSIDER APPOINTMENT OF CBIZ AS AGENT OF RECORD FOR HEALTH INSURANCE SERVICE AND TERMINATE AGENT OF RECORD RELATIONSHIP WITH TC FIELD FOR HEALTH INSURANCE By: Givonna Reed, Interim Human Resources Manager Background The City has purchased health insurance benefits from PEIP since 1996. In 2001, 2002 and 2003, the City experienced a 10%, 20% and 29% rate increase, respectively. The reasons for these significant increases in health insurance premiums include the following: · low employee participation rates · limited plan design options through PEIP · employees' medical claims have exceeded premiums As many of you are aware, due to service issues and steadily increasing premiums the City has been attempting to explore viable options outside of PEIP for several years. Fortunately, over the last several years the City has put a number of things in place to ensure that beginning in 2004, the City might have a more cost effective and responsive benefits plan. Now is the time to begin actively moving toward that end. Participation Rates In 2002, 48% or 24 of the City's eligible employees participated in the City's health plan. Health Partners, Medica and Blue Cross Blue Shield require a 50% participation rate and declined to offer the City a quote due to low participation rates. In 2003, approximately 60% or 33 of the City's 55 eligible employees are participating in the City's health plan. This significant increase in participation is due to new hires and plan changes by employees. Twenty-two employees receive $290 per month in lieu of electing health coverage through the City. The increase in plan participation makes it more likely that the City will receive competitive quotes from carriers other than PEIP. Plan Design Options In addition to low participation rates, the City has been very limited by plan design options offered through PEIP. The City can exercise significant control over premiums through plan design. For plan year 2003, PEIP offered the City several plan design options, however, they provided only very limited reductions in premiums (2%-6%). Other carriers often offer a wider variety of plan design options that are both less expensive and more responsive to employees' needs. For example, an employee witI5 one dependent may pay a lower premium than an employee with two dependents. G:LAdminis(ration\HumanResources\Benefits~2003 BenefiCs[rnemo to council re benefits 05-13-03.doc -275-