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Department of General Services
Reference: 2019 Benefits
To: Mayor Kenneth J. Kreutzer and Members of City Council
Through: Philip A. Rodriguez, City Manager
Prepared By: Karen Borkowski Surine, General Services Director
Date Prepared: October 9, 2018
PURPOSE
To establish fringe benefits for regular full-time and regular part-time employees and City Council for Fiscal Year 2019. We are recommending changes to the administration of the medical benefits, carving out pharmacy to a managed plan and self-funding the City’s dental benefits. A more detailed explanation of our requests were provided by our brokers and staff at the most recent City Council Study Session.
STRATEGIC FOCUS AREA(S)
Financial Responsibility
Innovative, Data-Driven, Results-Focused City Government
BACKGROUND
The City of Brighton contracts with HUB International Southwest, Inc. for the purpose of helping us manage our self-funded benefits program, which is entering the sixth year. HUB representatives meet regularly with Finance and HR staff members to review claims performance, funding options and data projections. The goal of these meetings is to review claim activity, monitor the budget and identify trends in order to continue to provide employees with coverage comparable to that which they have become accustomed to, as well as, come up with a financially viable benefit options and strategic planning for future plan years.
The cost to the City to provide health benefits for 2019 is $4,253,721. The fund has current reserves of $1,800,000 to cover expenses that may be incurred above the expected claims. The current reserve gives sufficient security for 2019 and will not be increased. Medical inflation increases benefits costs annually at approximately 6-7%.
In order to contain costs and provide greater flexibility in managing the plan, staff is recommending switching to UMR, which is United Health Care’s wholly owned Third Party Administrator. United Healthcare providers and system will remain the same.
Staff is also recommending carving out the pharmacy portion of the plan and contracting it through CVS/Caremark.
In order to assure that the City’s health plan remains fiscally strong to address projected claims and to promote wise consumption of health care, it is recommended that individual full-time and part-time benefitted employees and spouses selecting coverage through the City plan be required to go to their own provider annually for biometric screening by October 31, 2019. Employees and spouses on the medical plan who opt to participate in confidential biometric screening will each be eligible to receive a monthly $50.00 for each incentive reduction for 2020. Children on the City’s healthcare plan will not be required to complete biometric testing.
Employees will have a choice of two United Healthcare options: In-Network PPO only or a PPO allowing for higher In-Network and Out-of-Network options.
The City will continue to contract with HUB for the Telehealth benefits package. Telehealth consists of Teledoc, Health Advocate and eDocAmerica at the same cost as 2018. Teledoc gives employees 24/7 access to U.S. board-certified doctors and pediatricians for no cost per consultation. If appropriate, the physician will prescribe medication and call in the prescription to the member’s pharmacy of choice. It is ideal for routine, nonemergency issues (colds, flu, bronchitis, sinus problems, allergies and more).
The Health Advocates are available to employees and covered dependents at no cost and are also available 24/7. The Health Advocates help employees and covered dependents coordinate care among doctors and medical institutions in various ways, including negotiating a reduction on the amount due to a provider if the balance is more than $400.
eDocAmerica provides 24/7 e-mail access to this medical team. Employees can ask any medical or health questions and get a personal, direct answer. Members also have access to a video library and health tips sent out weekly via e-mail from doctors. The City has budgeted money for the Telehealth program in the FY 2019 budget. Employees that utilize this program receive timely responses and usually save a trip for medical care. It also saves the City money because the phone consultations are not charged to the City health plan.
The Dental Insurance provider this year is Delta Dental Plan. The City is recommending us to become self-funded and retain Delta Dental as the Third Party Administrator. The cost for the renewal this year increased 10.7%. With self-funding we believe the cost will remain the same. There is no need for stop loss for dental costs. The current medical fund reserve balance is more than enough to mitigate the risk as dental benefits have a low cap. The City of Brighton covers the entire cost for dental insurance for the employees. The cost for employees electing coverage for their family is $23.10 per month. The total cost to the City for dental coverage in 2019 is $207,755.
The Vision Provider is VSP. The budgeted cost in 2019 is $77,068. This is the seventh year in a row we will be able to maintain the same cost to employees with family members on the plan. Because the renewal came in slightly below the current rate, the annual frame allowance will increase from $130 - $150. Staff recommends continuing with VSP.
The City currently has coverage for Life/AD&D, Long Term Disability and Short Term Disability with Lincoln through the end of this year. The budgeted amount for 2019 is $198,531.
The maximum contribution into the Flexible Spending Account in 2019 is $2,600 for healthcare. Eligible dependent care contributions and reimbursements may not exceed $5,000 each calendar year. These contributions follow IRS guidelines and allow employees to reduce their taxable income.
The Anthem Pro Employee Assistance Program provides up to five free consultations with professionals in counseling, legal, geriatric and financial services per incident per year for regular employees. This benefit is well used by our employees. The cost to the City for this program is $15,000.
Regular full-time and part-time benefitted employees and their families can obtain a Family Pass to the Brighton Recreation Center through the Employee Wellness Program at no cost. The cost for a Family Pass for a resident is $500 and for a non-resident is $640. This represents quite a savings for health conscious families.
An Employee Retiree Health Care Savings program is in its second year for sworn officers. The goal is to assist this defined group of employees with healthcare premium costs in retirement. Staff is recommending the following retiree health savings account benefit for sworn police officers in order to continue to address employees in different stages of their career:
1. For sworn police officers who have reached at least 60 years of age with 20 years of consecutive service in Brighton who were hired before 2008, and retire from the City, the City will contribute $500.00 (tax free) monthly into a Retiree Health Savings Account until the officer is Medicare eligible. The City contribution will be allocated in the budget annually, depending on resources.
2. For sworn police officers with PTO in excess of 200 hours at year end, the City will deposit the cash equivalent of up to 16 hours maximum into a Retiree Health Savings Account, after which time the PTO account will be reduced by the amount contributed from PTO to the RHS Account.
3. For each pay period, beginning in the first pay period of 2019, sworn police officers
will be required to put 1% of their gross salary into a Retiree Health Savings Account and the City will contribute .5% of each officer’s salary into their Retiree Health Savings Account. It is important to note that the monies in the Retiree Health Savings Account can only be used to pay premiums.
Long Term Care Insurance will be offered to City employees in 2019 as a voluntary benefit and at no cost to the City.
FINANCIAL IMPACT
The total benefits package for 2019 is $7,822,330. The City’s cost for fringe benefits is included in the FY 2019 Proposed Budget.
STAFF RECOMMENDATION
Staff recommends approval of the proposed Ordinance. Self-funding our benefits, to include dental in 2019, allows us an alternative to buying traditional health insurance with fewer state mandatory benefits, freedom to tailor the plan design to meet the City’s loss history and future goals, eliminates insurance company overhead and fees, improves cash flow by allowing us to hold claims dollars until they are actually needed and gives the City better access to claims data to examine areas of utilization. Medical inflation increases on average 6-7% per year. Having employees and spouses on the City health care plan contribute to their premium at $12.50 per bi-monthly paycheck each if they elect to participate in biometric testing will assist the City in some absorption of the increase and incentivize them to be pro-active in their overall health. This is the same cost as last year for employees who participated in biometric testing. Giving employees until 10/31/2019 to meet with their medical provider will allow for face to face time with a provider to address any areas of medical concern.