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Item 4DITEM 4D CITY OF SOUTHLAK MEMORANDUM July 26, 2016 TO: Shana Yelverton, City Manager FROM: Stacey Black, Director of Human Resources SUBJECT: Approve a contract with Aetna to provide employee health insurance benefits for Plan Year October 1, 2016 through September 30, 2017. Action Requested: Approve a contract with Aetna to provide employee health insurance benefits for Plan Year October 1, 2016 to September 30, 2017. Background Information: In June, the City received its health insurance renewal from United Healthcare (UHC), the current health insurance provider. UHC offers three plan options: a "base" EPO, "buy -down" High Deductible HSA Plan, and a "buy -up" PPO Plan. To maintain the current plan designs, UHC proposed a rate increase of 23.25°/x. As a result, the City issued a Request for Proposals (RFP) for its employee health insurance benefits. The City last issued an RFP for medical insurance in 2013, and will typically issue an RFP every four to five years, depending upon renewal proposals. Five carriers submitted proposals for fully insured health insurance benefits. Each proposal was reviewed and evaluated based on the following criteria: • schedule of benefits and provider network; • rates; • experience, qualifications, reputation and references; • reporting, plan administration and ease of billing; and • wellness. Staff carefully analyzed proposed plans to determine the best option for the City. Following an initial review, Aetna and United Healthcare were selected as finalists and invited to meet with staff. Both finalists offered three different plan options: a HDHP HSA plan, an EPO plan, and a POS plan. The charts below provide a summary comparison of the plans offered and the percentage rate increase over Shana Yelverton, City Manager ITEM 4D July 26, 2016 Page 2 current rates. A more detailed comparison is attached. After meeting with both companies and analyzing plan options, staff recommends selecting Aetna as the provider for employee health insurance benefits. Aetna provides a favorable plan design with the lowest overall rate increase. Financial Considerations: The estimated cost of health insurance premiums is $279,027 per month, or $3,348,329 annually for the combined City and employee premium contributions. If Aetna is selected, the annual estimated increase to the City's portion of health insurance premiums is $93,986 for FY 2017. The proposed health insurance plan costs will be included in the proposed budget for Fiscal Year 2017. Strategic Link: Performance Management and Service Delivery: attract, develop and retain a skilled workforce. Citizen Input/ Board Review: N/A Legal Review: N/A Alternatives: Deny contract with Aetna and seek alternative options. Supporting Documents: The following supporting documents are attached: • RFP Finalist Comparison • Aetna Proposal DHP HSA I(B EPO POS HDHP HSA EPO POS uy-down) (Base) (Buy -up) (Buy -down) (Base) (Buy -up) Ded. + 10% $30 Office $25 Office Ded. + 20% $35 Office $40 Office Office Visit Visit Copay Visit Copay Office Visit Visit Copay Visit Copay 90% 80% 80°% 80% 70% 80°% Coinsurance Coinsurance Coinsurance Coinsurance Coinsurance Coinsurance $3,000 Indv. $1,500 Indv. $1,000 Indv. $3,000 Indv. $1,500lndv. $1,000 Indv. Deductible Deductible Deductible Deductible Deductible Deductible 5% 5% 5% 1.9% 7.7% 1.3% Ratelncrease Ratelncrease Ratelncrease Ratelncrease Ratelncrease Rate Decrease After meeting with both companies and analyzing plan options, staff recommends selecting Aetna as the provider for employee health insurance benefits. Aetna provides a favorable plan design with the lowest overall rate increase. Financial Considerations: The estimated cost of health insurance premiums is $279,027 per month, or $3,348,329 annually for the combined City and employee premium contributions. If Aetna is selected, the annual estimated increase to the City's portion of health insurance premiums is $93,986 for FY 2017. The proposed health insurance plan costs will be included in the proposed budget for Fiscal Year 2017. Strategic Link: Performance Management and Service Delivery: attract, develop and retain a skilled workforce. Citizen Input/ Board Review: N/A Legal Review: N/A Alternatives: Deny contract with Aetna and seek alternative options. Supporting Documents: The following supporting documents are attached: • RFP Finalist Comparison • Aetna Proposal Shana Yelverton, City Manager ITEM 4D July 26, 2016 Page 3 Staff Recommendation: Approve a contract with Aetna to provide employee health insurance benefits for Plan Year October 1, 2016 to September 30, 2017. City of Southlake Finalist Comparision Rates Effective 10/01/2016 BENEFITS Physician Copay Covered Persons under age 19 Specialist Copay Urgent Care Copay Emergency Room -Facility Diagnostic Laboratory Diagnostic X-ray Diagnostic Major Inpatient Hospital Outpatient Surgery Deductible - Individual Deductible - Family Coinsurance Out of Pocket Max - Ind.* Out of Pocket Max - Fam.* Lifetime Maximum Retail Prescriptions PREMIUMS Employee Employee/Spouse Employee/Child(ren) Employee/Family % Increase Current Plan HDHP (Buy -down Plan) In -Network Out -of -Network Ded + 20% N/A Ded + 20% N/A Ded + 20% N/A Ded + 20% N/A Ded + 20% Ded + 20% Ded + 20% Ded + 20% Ded + 20% Ded + 20% $3,000 $6,000 80% $6,000 $12,000 *Deductible included Unlimited $10/$35/$60 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Covered Current Rates Employees N/A $3,000 24 $ 443.29 1 $ 988.54 3 $ 873.29 4 $ 1,449.56 32 Aetna HDHP (Buy -down Plan) TX OAMC In -Network Out -of -Network Ded + 20% Ded + 40% Ded + 20% Ded + 40% Ded + 20% Ded + 40% Ded + 20% Ded + 40% Ded + 20% Ded + 40% Ded + 20% Ded + 40% Ded + 20% Ded + 40% Ded + 20% Ded + 40% Ded + 20% Ded + 40% Ded + 20% Ded + 40% $3,000 $8,000 $6,000 $16,000 90% 50% $6,000 $9,000 $12,000 $18,000 *Deductible included Unlimited $10/$35/$70 $3 Value Drugs / $150 Speciality Preferred / $300 Speciality Non - Preferred Proposed Rates Current Rates $ 465.45 $ 443.29 $ 1,037.97 $ 988.54 $ 916.95 $ 873.29 $ 1,522.04 $ 1,449.56 5.0%11 United Healthcare HDHP (Buy -down Plan) AG-YB MOD In -Network Out -of -Network Ded + 20% N/A Ded + 20% N/A Ded + 20% N/A Ded + 20% N/A I Ded + 20% N/A Ded + 20% N/A Ded + 20% N/A Ded + 20% N/A Ded + 20% N/A Ded + 20% N/A $3,000 N/A $6,000 N/A 80% N/A $6,000 N/A $12,000 N/A *Deductible included Unlimited $10/$35/$60 Proposed Rates Current Rates $ 451.59 $ 443.29 $ 1,007.05 $ 988.54 $ 889.64 $ 873.29 $ 1,476.70 $ 1,449.56 1.9% RFP Health Insurance Finalists July 2016 City of Southlake Finalist Comparision Rates Effective 10/01/2016 BENEFITS Physician Copay Covered Persons under age 19 Specialist Copay Urgent Care Copay Emergency Room -Facility Diagnostic Laboratory Diagnostic X-ray Diagnostic Major Inpatient Hospital Outpatient Surgery Deductible - Individual Deductible - Family Coinsurance Out of Pocket Max - Ind.* Out of Pocket Max - Fam.* Lifetime Maximum Retail Prescriptions PREMIUMS Employee Employee/Spouse Employee/Child(ren) Employee/Family % Increase Current Plan EPO (Base Plan) In -Network Out - $35 Copay $0 Copay $35 Copay $50 Copay $150 Copay+ 30% Covered 100% Covered 100% Ded + 30% Ded + 30% Ded + 30% $1,500 $3,000 70% $5,000 $10,000 *Deductible included Unlimited $10/$35/$60 of -Network N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Covered EPO (Base Plan) Current Rates Employees TX OA EPO In -Network Out -of -Network 103 $ 529.13 16 $ 1,179.97 79 $ 1,042.38 31 $ 1,730.25 229 Covered 100% N/A Aetna EPO (Base Plan) EPO (Base Plan) AG -2Z MOD2 TX OA EPO In -Network Out -of -Network In -Network Out -of -Network $30 Copay N/A $30 Copay N/A $50 Copay N/A $75 Copay N/A $300 Copay + 30% 20% N/A Covered 100% N/A Covered 100% N/A Ded + 20% N/A Ded + 20% N/A Ded + 20% N/A $1,500 N/A $3,000 N/A 80% N/A $5,000 N/A $10,000 N/A Deductible included Unlimited Unlimited $15/$40/$75 $10/$35/$70 $3 Value Drugs / $150 Speciality Preferred / $300 Speciality Non - Preferred Proposed Rates Current Rates $ 555.59 $ 529.13 $ 1,238.97 $ 1,179.97 $ 1,094.50 $ 1,042.38 $ 1,816.76 $ 1,730.25 5.0% United Healthcare EPO (Base Plan) 529.13 AG -2Z MOD2 $ In -Network Out -of -Network $35 Copay N/A $0 Copay N/A $35/$50 Copay N/A $50 Copay N/A $150 Copay + N/A 30% $35 Copay N/A $35 Copay N/A Ded + 30% N/A Ded + 30% N/A Ded + 30% N/A $1,500 N/A $3,000 N/A 70% N/A $5,000 N/A $10,000 N/A 'Deductible included Unlimited $15/$40/$75 Proposed Rates Current Rates $ 570.11 $ 529.13 $ 1,271.36 $ 1,179.97 $ 1,123.11 $ 1,042.38 $ 1,864.25 $ 1,730.25 7.7% RFP Health Insurance Finalists July 2016 City of Southlake Finalist Comparision Rates Effective 10/01/2016 titNtri i b Physician Copay Covered Persons under age 19 Specialist Copay Urgent Care Copay Emergency Room -Facility Diagnostic Laboratory Diagnostic X-ray Diagnostic Major Inpatient Hospital Outpatient Surgery Deductible - Individual Deductible - Family Coinsurance Out of Pocket Max - Ind.* Out of Pocket Max - Fam.* Lifetime Maximum Retail Prescriptions PREMIUMS Employee Employee/Spouse Employee/Child(ren) Employee/Family % Increase Current Plan PPO (Buy -up Plan) In -Network Out -of -Network $40 Copay Ded + 50% $40 Copay Ded + 50% $40 Copay Ded + 50% $50 Copay Ded + 50% $150 Copay + 2 $ Ded + 50% 30% $ Covered 100% Ded + 50% $40 Copay Ded + 50% Ded + 20% Ded + 50% Ded + 20% Ded + 50% Ded + 20% Ded + 50% $1,000 Ded + 50% $2,000 Ded + 50% 80% Ded + 50% $4,000 Ded + 50% $8,000 Ded + 50% *Deductible included Unlimited $10/$35/$60 Covered Current Rates Employees POS (Buy -up Plan) Renewal 21 $ 591.45 6 $ 1,318.93 2 $ 1,165.16 6 $ 1,934.04 35 $2,000 $6,000 80% 50% POS Comparison (Buy -up Plan) Aetna POS (Buy -up Plan) Renewal In -Network Out -of -Network $25 Copay Ded + 50% $25 Copay Ded + 50% $50 Copay Ded + 50% $75 Copay Ded + 50% $300 Copay + Ded + 50% 20% Covered 100% Ded + 50% Covered 100% Ded + 50% Ded + 20% Ded + 50% Ded + 20% Ded + 50% Ded + 20% Ded + 50% $1,000 $2,000 $2,000 $6,000 80% 50% $3,000 $6,000 $6,000 $18,000 *Deductible included Unlimited $10/$35/$70 $3 Value Drugs / $150 Speciality Preferred / $300 Speciality Non - Preferred Proposed Rates Current Rates $ 621.02 $ 591.45 $ 1,384.88 $ 1,318.93 $ 1,223.42 $ 1,165.16 $ 2,030.74 $ 1,934.04 5.0%1 1 United Healthcare POS (Buy -up Plan) TOZ-P In -Network Out -of -Network $40 Copay N/A $40 Copay N/A $40/$50 Copay N/A $50 Copay N/A $150 Copay + 20% Covered 100% $40 Copay Ded + 20% Ded + 20% Ded + 20% $1,000 $2,000 80% $4,000 $8,000 *Deductible included Unlimited $15/$40/$75 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Proposed Rates Current Rates $ 583.84 $ 591.45 $ 1,301.96 $ 1,318.93 $ 1,150.17 $ 1,165.16 $ 1,909.16 $ 1,934.04 -1.3% RFP Health Insurance Finalists July 2016 aetna@ An Aetna Proposal Presented to CITY OF SOUTHLAKE by Lifetime Benefits Insurance Lip October 1, 2016 E aetna 1W July 6, 2016 Lifetime Benefits Insurance Bob Mundlin 400 N. Main Street, #103 Grapevine, TX 76051 RE: City of Southlake Dear Bob: On behalf of Aetna, I want to thank you for the opportunity to provide a best & final proposal to City of Southlake. Our revised rates for the plans City of Southlake selected: TX OAMC $3000 90/50 HSA RX 3A: EE $465.45 ES $1,037.97 EC $916.95 EF $1,522.04 TX OAEPO $1500 80% RX 3A: EE $555.59 ES $1,238.97 EC $1,094.50 EF $1,816.76 TX OAMC $1000 80/50 RX 3A: EE $621.02 ES $1,384.88 EC $1,223.42 EF $2,030.74 We are also increasing our wellness allowance to $15,000. This allowance is in addition to the Enhanced Wellness program included in our proposal. Thank you again for this opportunity. I look forward to discussing with you how Aetna is the right fit for the city's health care benefit needs. Sincerely, Colleen Neumayer Senior Account Executive aetna, Aetna's OTS Plans Contact Information Group Name: Account Executive: Email: Broker: Producer Service Fee: CITY OF SOUTHLAKE Colleen Neumayer NeumayerC@aetna.com Lifetime Benefits Insurance Up 4.2% Assumptions Lives 304 Participation: Min:75 % Eligible EE, 50% Aetna Large Claims $$ Amounts/Diagnosis Pooling Level: $200,000 Proposed Effective Date: October 01, 2016 Telephone Number: 214-200-8913 Fax: 214-200-8916 Contract State: TX SIC Code: 9111 Contributions: Min:75 % EE, 50% EE & DEP Mem/EE Ratio: 2.05 Aetna Whole Health Networks Additional Average Discount Aetna Whole Health networks are available for any of Aetna's standard EPO plans In Texas. The estimated AWH •Houston (Memorial Hermann) 5.50% ..dditional tliscount can be estimated by applying the appropriate reduction percentage. Final rates will be dependent on the demographics for the population in the ACO network geography. Rates for non-AWH AWH - San Antonio (OPIC) 5.60% subject to change based on enrollment assumptions. I AWH- Austin(Seton) 6.00% 191.1; nc i G-nmrsunanGn:rv�a OAMC$100080/50 RX 3A 801/o/50% $25 $50 $10002000 $3000/$6000 $300+20%DW/$75 OAMC $3000 90/50 HSA RX 3A 90%/50% Coins. AD Coins. AD $3000/$6000 $6000/$12500 Coins. AD TX OAEPO 150080%RX 3A 80% $30 $50 $1,500 $5.000 $300+20%DW/$75 Affordable Care Act The Affordable Care Act imposes two new fees/assessments, the transitional reinsurance contribution and the health insurance provider fee. The fees were effective as of January 1, 2014. This rate quote includes, where permitted, an estimated proportionate allocation of expenses associated with these fees. Customers participating in a third parry Exchange should reference the vendor's documentation for any additional tees/charges. This material is for informational purposes only and is neither an offer of coverage nor medical advice. It contains only a partial, general description of plan benefits or programs and does not constitute a contract. Benefits may vary due to state specific mandates and/or filing limitations. Consult the plan documents: Schedule of Benefits, Certificate of Coverage, Evidence of Coverage, Group Agreement, and Group Insurance Certificate, to determine governing contractual provisions, Including procedures, exclusions and limitations relating to Benefits described In this document are specific to your plan and otherwise our standards will apply. While this material Is believed to be accurate as ofthe print date, It Is subjectto change. The presented rates are only valid If all offered plan options are from this portfolio. If combined with any other plan offerings than a re -rate will be required. For Traditional Products, Out of Network Reimbursement will be communicated In the detailed benefit summaries. The plans provided are for Aetna's OTS plans. These plans streamline installation shortening the amount of time to get the plans set up. Any customization of the above will require a re -rate as wall as lengthening of the installation process. Please note that groups with less than 301 employees can select a maximum of 4 plans. "Aetna Premier Formulary Offers moderate savings and control. All generics are preferred plus more brands per class. Includes proven pharmacy management techniques like precertification and step therapy. Customers can choose between Transition of Coverage or Transition Fill. Specialty drugs must be filled at our Specialty Pharmacy Network. Coverage includes select over-the-counter drugs and certain formulary exclusions apply. Some programs may not be available based on state regulations. Covered drug lists can be found at: wancaelna.com/formulary HSA- Embedded Deductible Al covered expenses, including prescription drugs accumulate toward both the preferred and non -preferred deductible and out-of-pocket limit. The family deductible and out-of-pocket limit are cumulative for all fam lly members. The family deductible and out-of-pocket limit can be met by a combination of family members; however no single Individual within the family will be subject to more than the individual deductible or out-of-pocket amount. Unless otherwise Indicated, the Deductible most be met prior to benefits being payable. 7/25/2016 OTS Plans $3/$10/$35/$70/$150/$300 $621.02 $1,384.88 $1,22342 $2,03074 $3/$10/$35/$70/$150/$300 $46545 $1.037.97 $916.95 $1.522.04 $3/$10/$35/$70/$150/$300 $555.59 $1,238.97 $1,094.50 $1,81676