HomeMy WebLinkAbout2006 07 10 Regular 305 Health Insurance Plan
City of Winter Springs
071006_ COMM_Regulac3 05 _Health_Insurance_Renewal
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COMMISSION AGENDA
ITEM 305
Regular
MGR.I /DEPT.
Authorization
July 10, 2006
Regular Meeting
REQUEST: City Manager requesting the City Commission to approve the Health Insurance Plan
and Provider for FY 07.
PURPOSE: This agenda item is needed for the City Commission to choose a health insurance plan
design and provider it deems appropriate for FY 07.
PREVIOUS ACTION: On June 26,2006 the Commission tabled Agenda Item 302 delaying action on
this item, and requesting staff to provide additional information.
CONSIDERATIONS:
A combination of aggressive bidding and negotiations, benefit control and personalized services has
allowed Winter Springs to offer its employees an exceptional health insurance plan, including city paid
insurance for employees and a 28% contribution to the incremental cost of adding dependent coverage,
or 58% contribution to the combined employee dependent coverage.
Over the past nine years, Winter Springs health insurance cost has increased an average 5.91 % annually,
while health insurance cost has increased in double digit numbers across the nation. Winter Springs also
has the lowest rates of cities in Seminole County who purchased insurance from private carriers.
According to a study performed by Work Place Economics (a Washington, D.C. economic consulting
firm), the average total premium paid by state governments and their active employees reached $445 per
month for single coverage, and $1,017 per month for family coverage as of July 1, 2006. The average
premium cost among Seminole County cities insured by private carriers for HMO was $385.09 per
month for single coverage and $1,026.89 per month for family coverage. Comparably Winter Springs is
$312.71 per month for single coverage and $810.74 per month for family coverage.
City of Winter Springs
071006_ COMM_Regular 305 _Health_Insurance_Renewal
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Seminole County Cities
State Governments Cities
Single Coverage
Family Coverage
As shown below health insurance premiums for the city, including employee cost and the city's 28%
subsidy of dependent coverage cost the city approximately $1.1 million. The city has budgeted a 23.5%
increase in cost into the budget.
FY06
FY07
$ CHANGE
% CHANGE
According to representatives for CIGNA, the city's current carrier, higher than anticipated costs due to
actual usage of the plan would force a 36% increase in their premium rate for FY 07. Consequently, the
city instructed the city's insurance agent to bid the city's health insurance in the marketplace, and to
offer a reduced benefit plan option for consideration.
The agent reduced 46 agent submissions to a short list of plans which were further reduced to three
options as follows:
1. Continuation of the current plan design with the low bidder United Health Care.
The option represents a 17% increase in premiums.
2. Change to an 80-20 co-insurance plan with the low bidder United Health Care.
This option would represent a 9% increase in premiums.
3. Adopt a hi/low plan in which the city would provide the 80-20 co-insurance plan and the
employee would have the option to buy up to the original plan design.
This option represents a 9% increase to the city and a 27% increase to employees that would
choose to buy up to the original plan design.
Another alternative for reducing the cost of health insurance would be to eliminate all or a portion of the
subsidy the city provides for dependent coverage. Currently 90 employees elect some type of dependent
coverage. The city pays 28% of the incremental increase in the cost of dependent coverage over
employee only coverage or 58% of the total employee dependent rate. The cost of this subsidy to the
city is approximately $150,000.
City of Winter Springs
071006_ COMM_Regular 305 _Health_Insurance_Renewal
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As shown below the amount of subsidy for dependent premiums varies among Seminole County
governments.
Altamonte Springs
Lake Mary
Oviedo
Casselberry
Sanford (TPA)
Seminole County
Longwood
Winter Springs
0%
0%
0%
18%
36%
50%
55%
58%
Nationally, employee's share of family dependent premiums cost has increased 143% over the past five
years, as among other factors, employers have reduced their contribution to dependent coverage.
The cost of new plan options over the existing plan retaining the city's subsidy is shown in Table "A".
The cost of the new plan options over the existing plan eliminating subsidies is shown in Table "B".
Analysis of FY 07 Plan Options & Monthly Premiums
with Increase over Current Cigna Plan
INCLUDING CITY SUBSIDY FOR DEPENDENT COVERAGE
Coninue Current Plan Design Adopt 80/20 Plan Design
United
Analysis of FY 07 Plan Options & Monthly Premiums
with increase over Current Cigna Plan
ELIMINATING CITY SUBSIDY FOR DEPENDENT COVERAGE
Continue Current Plan Design Adopt 80/20 Design
United
City of Winter Springs
071006_COMM_Regulac305_Health_Insurance_Renewal
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FUNDING:
Funding for the city's share of the health insurance plan chosen by the City Commission is included in
the City's FY 07 Budget.
RECOMl\fENDATION:
The City Manager recommends the City Commission take the following actions:
4. Select the low bidder United Health Care as the City's Health Insurance provider for FY 07.
5. Select the United 44C plan option which provides coverage similar to our current plan design.
ATT ACHMENTS:
1. Attachment A:
2. Attachment B:
Health Insurance Bid Responders "Short List."
United Health Insurance Plans Summary
COMMISSION ACTION:
City of Winter Springs
Attachment A
Short List
City of Winter Springs
Attachment B
Recommended Plan