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Item 4D Approve a contract with Aetna to provide employee health insurance benefits for Plan Year October 1, 2016 through September 30, 2017. 4D Madame Mayor and members of the City Council, this presentation will cover Item 4e on the August 2, 2016 City Council Agenda. 1 Item 4D Approve a contract with Aetna to provide employee health insurance benefits for Plan Year October 1, 2016 through September 30, 2017. The purpose of this item to is to request City Council approval of a contract with Aetna to provide employee health insurance benefits for the Plan Year October 1, 2016 through September 30, 2017. 2 City of Southlake Strategy Map The City of Southlake provides municipal services that support the highest quality of life for our residents, businesses, and visitors. We do this by being an exemplary model of balancing efficiency, fiscal responsibility, transparency, and sustainability. C1 Achieve the highest standards of safety & security C2 Provide travel convenience within City & region C3 Provide attractive & unique spaces for enjoyment of personal interests C4 Attract & keep top-tier businesses to drive a dynamic & sustainable economic environment C5 Promote opportunities for partnerships & volunteer involvement Serve our Customers Manage the Business B1 Achieve best-in-class status in all City disciplines B2 Collaborate with select partners to implement service solutions B3 Enhance resident quality of life & business vitality through tourism B4 Provide high quality services through sustainable business practices B5 Enhance service delivery through continual process improvement B6 Optimize use of technology Provide Financial Stewardship Promote Learning and Growth F1 Adhere to financial management principles & budget F2 Invest to provide & maintain high quality public assets F3 Achieve fiscal wellness standards F4 Establish & maintain effective internal controls L1 Ensure our people understand the strategy & how they contribute to it L2 Enhance leadership capabilities to deliver results L3 Attract, develop & retain a skilled workforce L4 Recognize & reward high performers L5 Empower informed decision-making at all levels in the organization C6 Enhance the sense of community by providing excellent customer service and citizen engagement opportunities L6 Foster positive employee engagement Deliver on Our Focus Areas Approving the contract with United Healthcare links to the City’s strategy map relative to the focus area of Performance Management and Service Delivery and specifically to the corporate business objective of Attract, develop, and retain a skilled workforce. 3 Background The City’s current healthcare plan is a fully insured plan provided by United Healthcare. [CLICK] Employees are offered three different plan options: [CLICK] a “base” EPO plan, a “buy-down” High Deductible Health HSA (HDHP) plan, and a “buy-up” PPO plan. The City contributes the same amount to all three plans and employees are able to choose a plan that best meets their own unique healthcare needs. United Healthcare became the City’s medical carrier [CLICK] October 1, 2013 following a competitive bidding process. The City has previously issued an RFP for medical insurance in 2010, and will typically issue an RFP every four to five years depending upon renewal proposals. 4 Renewal 23.25% Rate Increase Each year in June the City receives a renewal proposal from the current health insurance provider. This year, United Healthcare proposed a rate increase of 23.25% to maintain the existing plan designs. As a result, the City issued a request for proposals for employee health insurance. 5 RFP The RFP was issued in early June and the City received responses from 5 carriers: Aetna, BlueCross Blue Shield, Cigna, Texas Municipal League and United Healthcare. Each proposal was reviewed and evaluated based upon criteria including the schedule of benefits and the provider network, rate, carrier experience and qualifications, reporting and plan administration and wellness. Following the initial review Aetna and United Healthcare were selected as finalists and invited to provide the City with best and final pricing. 6 Finalist Comparison Staff recommendation: Aetna On the screen you will see a comparison of the plans offered by the finalists. You will see that each carrier offered three plan alternatives: a HDHP HSA, a EPO, and a POS. A more detailed comparison is included in your packet. 77% of employees have selected the EPO plan, making it the most popular. Aetna’s EPO plan is more competitive than United’s with a 5% rate increase and a more favorable plan design. After meeting with both companies and analyzing each plan, staff recommends selecting Aetna as the provider for employee health insurance. Aetna provides a favorable plan design with the overall lowest rate increase. 7 Financial Considerations Estimated cost of health insurance premiums: Funding for employee health insurance will be included in the proposed FY 2017 budget. The total estimated cost of annual medical insurance premiums $3,348,329. This includes both the City and employee premium contributions. The annual estimated increase in the City’s portion of medical insurance premiums is $93,986 for Fiscal Year 2017. <<City Annual Cost: $2,759,875>> Funding for the proposed medical insurance plan costs will be included in the proposed budget for Fiscal Year 2017. 8 Staff Recommendation Approve a contract with Aetna to provide employee health insurance benefits for Plan Year October 1, 2016 through September 30, 2017. Staff recommends City Council Approve a contract Aetna to provide employee health insurance benefits. 9 Questions: Stacey Black 817-748-8063 10 If you have any questions regarding this item, please contact me at 817-748-8063. Thank you for your attention.