Submitted By
Jason Bajor, Interim Assistant Village Manager
Reviewed By
LKS
Agenda Item Title
Title
A Resolution Approving the 2016 Employee Health Benefit Plan Documents, Design and Premiums
End
Overview
Overview
On November 2, 2015, the Village Board will be asked to approve the 2016 Employee Health Benefit Plan by approving Resolution 15-474, authorizing the Village Manager to execute insurance provider plan documents and establish the design of the health benefit plan and corresponding premiums.
Body
Staff Recommendation
Staff recommends the Village Board approve Resolution 15-474 and authorize the Village Manager to execute the plan documents and establish the employee health benefit plan design and premiums for 2016.
Fiscal Impact
The proposed 2016 Annual Budget includes a projected 5% increase to overall Medical/Rx premiums over those contained within the adopted 2015 Annual Budget. The Medical/Rx premiums presented within Exhibit A of this packet reflect increases ranging from 3.4% to 7.2% depending upon enrollment classification (e.g. single, single +1, or family) and plan option (e.g. PPO or HMO). The financial impact of these varying premium increases do not, however, exceed the projected estimates presented in the proposed 2016 Annual Budget. In addition, the Employee Health Fund reflects the costs associated with the health benefit plan and will be reviewed by the Village Board as part of their consideration and subsequent approval of the proposed 2016 Annual Budget.
Background
Some notable items of the 2016 health benefit plan design and corresponding premiums are as follows:
Medical/Rx - Blue Cross/Blue Shield:
Effective for 2016, the Village’s Medical and Rx plan will be administered within a unified PPO/HMO Cost Plus contract. This change affords BC/BS to place more credibility on the Village’s claims experience and results in lower claim projections and lower total stop-loss liability. The effect of lower claim projections also serves to reduce the Village’s fixed-costs associated with administrative and stop-loss fees.
As noted above, the Village’s Rx plan will also be part of the unified Cost Plus contract effective for 2016. While this change does serve to reduce administrative fees and offset resulting premium increases for 2016, an even larger strategic concern is addressed in that this now provides the Village with stop-loss coverage on its Rx claims. The presence of stop loss coverage on the Rx portion of claims is a significant protection of the Village’s financial liability as the costs and utilization of specialty prescription drugs continue to increase.
Life/AD&D - Mutual of Omaha:
Effective 2016, the life benefit of the plan will increase for employees currently at the $25,000 benefit amount to $50,000. This serves to equalize the affected employees with those employees currently at the $50,000 benefit amount. The premium costs associated with this increase are projected at $20,400 annually, but are more than offset by the cost reductions with the Medical/Rx plan described above.
Dental - Delta Dental:
Delta Dental presented their renewal to the Village with no changes in the dental plan design or increase to the premiums for 2016.
Vision - VSP Vision Care:
There are no changes in the vision plan design or increase to the premiums for 2016. A previously executed contract with VSP Vision Care is in effect for the 2016 plan year, therefore, there is no need to execute a new agreement for this renewal period.
Affordable Care Act:
The fees associated with the Village’s compliance with the provisions of the Affordable Care Act are estimated at $20,600 and are reflected in the premiums for 2016.
Alternatives
Although the Village is legally required to provide health insurance to its employees and retirees in some form based upon statute and collective bargaining agreements, the Village Board may direct staff to make changes to the plan documents and corresponding plan design and premiums. However, the latitude or extent of any desired changes by the Board is also subject to statute and collective bargaining agreements.
Previous Board Action
N/A
Citizen Advisory Commission Action
N/A
Anticipated Future Actions/Commitments
Should the Village Board approve the execution of the plan documents and resulting plan design and premiums, staff will then proceed to conduct open enrollments meetings later in November. The open enrollement meetings afford participating employees and retirees the opportunity to make their annual health benefit plan elections effective for 2016.
Intergovernmental Cooperation Opportunities
The Intergovernmental Personnel Benefit Cooperative (IPBC) is a potential option for the Village to cooperate with other member municipalities in the pooling of health benefit claim costs and cost-sharing of other related services. The suitability of the IPBC for the Village’s health benefit plan is under consideration, along with a search for other potential intergovernmental opportunities that may be available.
Performance Management (MAP) Alignment
The Village Manager’s Office will continue with its participation in the MAP during the course of 2016.