CITY COUNCIL AGENDA ITEM
Memo Date: May 20, 2024
Agenda Date: June 4, 2024
Prepared By: Tammy Gemmati, Administrative Services Director
Through: Stockton Whitten, City Manager
Requested Action:
title
Approve, as recommended, the proposed Fiscal Year 2025 benefit renewal medical, dental, life, and disability insurance; and to authorize the City Manager to sign related agreements.
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BACKGROUND:
The City of Cocoa offers group medical, dental, vision, and life insurance to its employees and retirees and their dependents (subject to eligibility guidelines). For the Fiscal Year 2022 benefit renewal, the City’s benefit broker Gehring Group (Gehring) released a Request for Proposal (RFP) for medical, dental, pharmacy, and Employee Assistance Program (EAP) benefit plans. Cigna was the lowest bid in all categories based on the City’s network utilization. Since then, Gehring has been successful of negotiating the medical renewals to a lower rate increase versus the projected increases.
The City has an Insurance Task Force (ITF) committee comprised of different departmental and union representatives with the purpose to bring forth any concerns related to the City’s benefit plans and to make recommendations on the insurance plans offered by the City. The City held an ITF meeting on May 16, 2024 to review the recommended renewal.
Medical Plan -For the Fiscal Year 2025 renewal, the initial projections based on the City’s claims experience was anticipated to be a 10-12% increase due to the recent large claims experience. The Gehring Group worked directly with Cigna to negotiate the renewal down to a 5% increase.
With this renewal, the City will continue its practice of paying 100% of Employee contributions and the current funding ratio of dependent contributions (Employee +1: 56% Family: 58%). Here is a summary of the employee and City impact (based on current enrollment):
|
Fiscal Year |
Total |
City |
Employee |
Retiree |
|
FY24 |
$5,645,093 |
$4,870,834 |
$630,557 |
$143,702 |
|
FY25 |
$5,925,770 |
$5,113,016 |
$661,906 |
$150,848 |
|
Annual Total Increase: |
$280,677 |
$242,182 |
$31,349 |
$7,146 |
|
Per Pay Change: |
|
EE+1: $9.17 Family: $18.00 (Bi-weekly) |
EE+1: $41.52 Family: $85.34 (Monthly) |
The data above includes retiree enrollment and/or budgetary impact. The City has a Medicare Advantage Plan for retirees over 65 which will be brought to Council separately for renewal. Depending on retiree status eligibility, the City either pays 100%, 50%, or 0% of medical, dental, and vision contributions for eligible retirees under age 65.
Dental Plan - Effective October 1, 2023, the City secured a rate guarantee with Cigna through September 30, 2025. Therefore, there is no rate change for the upcoming Fiscal Year. The estimated annual premium based on current enrollment is $331,444, of which $249,685 is the estimated City’s contributions for active employees and retirees.
Vision Plan - Effective October 1, 2022, the City secured a rate guarantee with EyeMed through September 30, 2026. The estimated annual premium based on current enrollment is $58,894, of which $45,554 is the estimated City’s contributions for active and retirees.
The City has had Life and Disability coverage with New York Life (NYL), previously under Cigna, since 2012. Gehring released an RFP to check the market and received multiple quotes with NYL being one of the lowest and Prudential very close in price. Staff recommends continuing coverage with New York Life (NYL), which will be a three-year rate guarantee on all coverage through September 30, 2027. NYL will also allow our employees to purchase new coverages during Open Enrollment up to the Guarantee Issue coverage limits.
Basic Life/Accidental Death and Dismemberment (AD&D) and Supplemental Life Coverages) -The rate premiums are based on employee salaries. The City’s estimated annual cost is $65,025 for Basic Life and employee’s supplemental policy premiums total to $64,564, which is based on the current annual employee salaries and selections. The benefit amounts will be increased with the salaries that are in effect on October 1, 2024.
|
Category |
Previous Rate |
New Rate |
Annual Change (based on current salaries) |
|
Basic Life/AD&D (City Paid) |
$.253/.04 per $1000 |
$.190/.025 per $1000 |
-$23,590 |
|
Supplemental Employee/AD&D |
$.254/.04 per $1000 |
Same |
No Change |
|
Retiree Life |
$.250 per $1000 |
$.240 per $1000 |
-$44 |
|
Dependent Life |
$1.38 per month |
Same |
No Change |
|
Spouse Life/AD&D |
$.294/.04 per $1000 |
Same |
No Change |
|
Child Life |
$.184 |
Same |
No Change |
Short-Term Disability (STD) (Employee paid benefit) -The rates vary by age bracket and is shown the attached renewal summary. The estimated annual cost to enrolled employees is $43,089, which is based on the current annual employee salaries. The benefit amounts will be increased with the salaries that are in effect on October 1, 2024.
Long-Term Disability (LTD) (City paid benefit) -NYL reduced the rate from $.359 to $.295 per $100 of salary. The annual estimate, based on current salaries is $42,904. The benefit amounts will be increased with the salaries that are in effect on October 1, 2024. This reflects a $9,308 annual savings.
In summary, City Staff is requesting approval as recommended the proposed Fiscal Year 2025 benefit renewal for medical, with an increase of 5%, and renewal for the dental, vision, life insurance, and disability plans; and authorize the City Manager to sign related agreements, if necessary.
STRATEGIC PLAN CONNECTION:
Organizational Effectiveness
BUDGETARY IMPACT:
Budgeted: Included in Proposed FY25 Budget in related department budgets.
|
Provider |
Plan (# Members) |
FY2024 Annual City Cost |
FY2025 Annual City Cost |
Difference |
|
Cigna |
Medical (439) |
$5,645,093 |
$5,925,770 |
$280,677 |
|
Cigna |
Dental (590) |
$249,685 |
$249,685 |
$0 |
|
EyeMed |
Vision (587) |
$45,554 |
$45,554 |
$0 |
|
Cigna |
Basic Life/AD&D |
$88,615 |
$65,025 |
-$23,590 |
|
Cigna |
Long Term Disability |
$52,211 |
$42,904 |
-$9,308 |
|
Total City Plan Cost: |
$6,081,158 |
$6,328,938 |
$247,779 |
The amounts above are estimates based on current enrollment of current employees and retirees. Benefits for vacant positions are also budgeted. This medical plan renewal includes current employees and retirees under age 65 and the Budget includes unfilled positions at the same rate. Also, the numbers above do not include the amount paid directly by employees and retirees.
The City’s Medicare Advantage Plan (retirees over 65) with United Healthcare and the budget approval for the Medicare Part B reimbursements which is on a calendar year renewal, which will be presented on a separate City Council agenda item.
PREVIOUS ACTION:
At a regular Council meeting on June 6, 2023, Council approved the proposed Fiscal Year 2024 benefit renewal for medical, dental, vision, life, and disability insurance.
RECOMMENDED MOTION:
Recommendation
Approve, as recommended, the proposed Fiscal Year 2025 benefit renewal medical, dental, life, and disability insurance; and to authorize the City Manager to sign related agreements.