HomeMy WebLinkAboutReso 91-235 - Approve entering into & authorize the mayor to execute contracts with Anthem Co for Insuring Emp Life & Dependent Life Ins Benefits, as well as Excess Health & Dental Policy & Amend agreement to administer Health Care Plan with Concept Admin RESOLUTION NO. 91- oZ
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDDING
` APPROVING ENTERING INTO AND AUTHORIZING THE MAYOR TO
EXECUTE CONTRACTS WITH ANTHEM COMPANIES FOR INSURING
EMPLOYEE LIFE AND DEPENDENT LIFE INSURANCE BENEFITS, AS
WELL AS THE CITY'S EXCESS HEALTH AND DENTAL POLICY, AND
AN AMENDMENT TO THE AGREEMENT TO ADMINISTER HEALTH CARE
{ PLAN WITH CONCEPT ADMINISTRATORS INC.
WHEREAS, pursuant to the terms of the attached Report to
City Council ( forming part of this Resolution) dated June 13,
1991 , the Director of Personnel Services has recommended the
following:
1. Renewing the City' s contracts with The Anthem Companies
I for insuring employee life and dependent life insurance benefits,
as well as the City' s excess health and dental policy, for the
period July 1 , 1991, through June 30, 1992; and
2. Entering into an amendment to the Agreement to
Administer Health Care Plan with Concept Administrators Inc. for
the period July 1, 1991, through June 30, 1992; and
WHEREAS, based on said recommendations, the City Council
deems it to be in the best interests of the City to enter into
said contracts/amendment; and
WHEREAS, it has been determined that this matter is
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categorically exempt from the provisions of the California
Environmental Quality Act;
NOW, THEREFORE, IT IS HEREBY RESOLVED by the City Council of
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the City of Redding that the City enter into the following
contracts/amendment in the amounts of and/or rates set forth in
the attached Report to City Council:
1. A renewal contract with The Anthem Companies for
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insuring employee life and dependent life insurance
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benefits, as well as the City' s excess health and
dental policy, for the period July 1, 1991, through
June 30, 1992 .
2 . An amendment to the Agreement to Administer Health Care
Plan with Concept Administrators Inc. for the period
July 1, 1991, through June 30, 1992.
BE IT FURTHER RESOLVED that the Mayor of the City of Redding
is hereby authorized and directed to sign the necessary
contracts/amendment when available, on behalf of the City of
Redding; and the City Clerk is hereby authorized and directed to
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attest the signature of the Mayor and to impress the official
Iseal of the City of Redding on the aforesaid documents, when
appropriate.
• I HEREBY CERTIFY that the foregoing Resolution was
introduced and read at a regular meeting of the City Council of
the City of Redding on the 18th day of June , 1991, and was duly
adopted at said meeting by the following vote:
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AYES: COUNCIL MEMBERS: Fulton, Moss & Dahl
NOES: COUNCIL MEMBERS: None
ABSENT: COUNCIL MEMBERS: Arness & Buffun
ABSTAIN: COUNCIL MEMBERS: None
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MIKE DAHL, Mayor
City of Redding
ATTEST:
ETHEL A. NICHOLS, City Clerk
FORM A ROVE&Z,
` for RANDALL A HAYS, City Attorney
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CITY OFING
ITEM N0. 4-9-7 (b) REPORT TO CI Y COUNCIL
MEETING DATE June 18 , 1991
APPROVED BY
DEPARTMENT DIRECTOR
DATE : June 13 , 1991
James G. Bristow
ClMANAGER CODE : P-100-150-000
FROM: Director of Personnel
SUBJECT: Employee Benefits Program
l Background
Each year staff researches the employee benefit insurance market in order to
obtain the most competitive prices for our employee benefit program to be
effective July 1 , 1991 .
As you know the City is self insured for employee group medical/dental
benefits and we purchase excess medical coverage; commonly referred to in the
industry as stop loss protection. In addition, we buy insurance for our life
and long term disability benefits .
Based upon research of the insurance market conducted by the City' s employee
benefit broker consultant, it is staff ' s recommendation the following actions
be taken effective July 1 , 1991 and run through June 30 , 1992 .
Medical Reinsurance
Currently the City purchases specific stop loss insurance to cover exposure
for specific medical claims above $75 , 000 and in the aggregate for claims
exceeding $3 , 461 , 000 . We currently pay insurance premiums for this
protection in the amount of $147 , 376 and $11 , 500 respectively. Our broker
consultant has shopped the market (please see attached report) and delivered
a renewal with the Anthem Company of $194 , 709 and $13 , 000 . While the premium
increase may seem on the high side the market survey conducted showed that
Anthem offered the most competitive quote available in the market .
Life Insurance
Currently the City provides life insurance for City employees in the amount
of two times the annual salary plus dependent coverage . The current premium
rate for this insurance is . 24 per $1 , 000 of life coverage . The Anthem
' Company is proposing no increase in this rate.
Lona Term Disability Coverage
Currently, the City of Redding provides Long term disability coverage to
employees in the amount of 60% of salary after a 90 day waiting period. We
are in the second year in our contract with Union Mutual Life Insurance
Company with a two year rate guarantee and therefore no action is required.
Third Party Administration
Currently, the City contracts with Concept Administrators to process medical
and dental claims . Concept is currently paid at a rate of $9 . 02 per employee
per month representing an annual cost of $89 , 082 . Concept is proposing a
rate increase to $9 . 92 per employee per month for a total annual cost of
approximately $97 , 970 . This constitutes approximately a loo increase over
current rates and given Concept' s performance , which has been very good, this
increase is justified.
Employee Benefits Program
June 13 , 1991
Page 2 of 2
Conclusion
Overall , the above described renewals are reasonable as they represent
approximately a 3`a increase in the City' s overall plan costs . Typical plan
costs have been averaging anywhere from 10-20o and given the difficult
employee benefits market for municipalities , we recommend these renewals be
accepted.
Issues
i Should the City make these recommendations in its employee benefits program?
Alternatives
1 . Make the changes as outlined above .
2 . Do not renew and direct staff to do more research on municipal insurance
markets .
Recommendations
It is recommended that the attached resolution be approved.
Attachments
Letter from Charles E . Bertolina and resolution.
BUSINESS INSURANCE SERVICES
We Make A Difference Benefit Specialists
June 7 , 1991
Mr. James Bristow
Personnel Manager
CITY OF REDDING
760 Parkview Avenue
Redding, CA 96001
RE: JULY 1, 1991 EXCESS LOSS RENEWAL
Dear Jim:
We are pleased to present our report and conclusions
concerning the upcoming excess loss renewal contract. We are
s presently in the final stage of aligning our renewal with the
City's fiscal year, July 1st and must say that Anthem/Acordia
has been most helpful in this regard.
This year two other Brokers/Agents were interested in bidding
the coverage; therefore, we supplied them with the background
information required to assist them in their efforts. To
date, we have received written notification from one agent
that he has been unable to be competitive. We have heard
nothing from the other, as yet.
In preparation for the renewal, CEB conducted a full market
analysis, as we do each year. After considering the full
array of markets available to us, we narrowed the requests
for quote to twenty-seven. Sixteen carriers declined to
quote, most due to their inability to be competitive. Of the
eleven quotes received, none offered a compelling reason to
make a change at this time either by cost or by contract
improvement.
With this in mind, let's now take a look at Anthem's renewal
offering. The fixed costs represent a 30% increase over
last year. While that may appear to be high, you can easily
see by the market survey conducted, Anthem was the most
competitive. Pleasantly transitioning into the overall plan
47 Quail Court, Suite 313, Walnut Creek, California 94596, (415)947-0277 FAX(415)947-1364
AFFILIATE OFFICES: Denver, CO • Houston, TX 9 Los Angeles, CA 9 Phoenix, AZ • Salt Lake City, LIT 9 Seattle,WA
Mr. James Bristow
June 7, 1991
Page 2
costs, it translates to a low 3% increase which is well below
the normal renewal increase (averaging from 10% to 20%)
carriers are delivering in today's market. We believe this
to be a very fair renewal quote; therefore, we recommend we
accept the Anthem renewal as quoted.
Since Union Mutual Life Insurance Company (UNUM) , our Long
Term Disability carrier, had quoted a two-year rate
guarantee, no renewal will be needed.
Next, Concept Administrators has presented their renewal rate
effective July 1, 1991, which constitutes a 10% increase over
the current rates.
90/91 91/92
9.02 9.92
Incl. COBRA Incl. COBRA
One change in Concept's COBRA administration procedures was
effective May 1, 1991. They began administering the COBRA
eligibility notifications at that time. This is good news
and should help free up some of your administrative workload.
Also, just as a footnote, we looked at the rate Gallagher
Bassett was charging in 1986 and confirmed the rate to be
$12.92 per employee per month plus 12% of the Stop Loss.
Under the circumstances, I think you will agree our decision
to make the change has been financially rewarding. A Concept
Renewal Amendment is enclosed for your signature. Please
return it to my office after it has been executed, should the
City agree to accept it.
Also included in our renewal presentation is a section on
Historical Plan Performance. I am most pleased to report,
though our claims costs are rising, the rate of increase
seems to be slowing somewhat as reflected in the Three Year
Recap graph. We are sure some of the cost containment
measures CEB has recommended have had a positive financial
impact on our plan even within the constraints of the
collective bargaining agreement constraints. As further
verification, our Average Length of Stay per hospital
confinement has reduced from 5. 22 days in the 1989/90 plan
year to 2.15 days in 1990/91. We will watch this trend to
see if we simply "had a good year" or if our cost containment
measures are producing favorable results.
Mr. James Bristow
June 7, 1991
Page 3
Finally, I ran across an excellent article in my reading
concerning National Health Care and have decided it is worthy
of sharing with my clients. I am in hopes you will have an
opportunity to read through it and will find it interesting.
Jim, as always, it is a pleasure working with you and the
City and we look forward to being of assistance to you in the
coming year.
Please feel free to give me a call with any questions or
iconcerns.
Sincerely,
Charles E. Bertolina,
Principal
CEB/j m
Enclosures