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