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Item 4FCITY OF SOUTHLAKE MEMORANDUM July 14, 2010 TO: Shana Yelverton, City Manager FROM: Stacey Black, Director of Human Resources SUBJECT: Approve a contract with United Healthcare to provide employee dental benefits for Plan Year October 1, 2010 to September 30, 2011. Action Requested: Approve a contract with United Healthcare to provide employee dental benefits for Plan Year October 1, 2010 to September 30, 2011. Background Information: In early June, the City issued a Request for Proposals (RFP) for its employee medical and dental insurance benefits. The City last issued an RFP for medical and dental insurance in 2006, and will typically issue an RFP every four to five years depending upon renewal proposals. This year, the current dental provider, Aetna, proposed a rate increase of 5 %. Ten carriers submitted proposals for dental benefits, including the current provider, Aetna. Each proposal was reviewed and evaluated based on the following criteria: • Experience and reputation; • Proposed schedule of benefits; • Rates; • Provider network access; and • Reporting and cost management. Staff carefully reviewed each proposal and analyzed proposed plans to determine the best option for the City. Following an initial review, United Healthcare and Aetna were selected as finalists and invited to meet with staff. Aetna proposed a 3% rate increase to maintain the same benefit plan. The current plan offers employees one dental plan, with DHMO and PPO options built into the one plan. This plan allows employees the flexibility to switch between DHMO and PPO on a monthly basis. United Healthcare proposed dual option PPO and DHMO plans. Both plans are very similar to the current plan design; however, employees are required to select one option during open enrollment and must remain within that plan throughout the plan year. Switching to United Healthcare will still provide employees the option of either a DHMO or PPO plan, but with a reduction in premium on the DHMO plan. Moving to United Healthcare reduces the City's annual cost by an estimated 8 %. After meeting with both companies, staff selected to recommend United Healthcare for providing the best plans combined with the best rates. The City currently pays the entire premium for employee only dental coverage and the employee pays the entire dependent cost. Financial Considerations: The estimated cost of dental insurance premiums is $14,375 per month, or $172,500 annually (combined City and employee premium contributions). The estimated decrease in the City's portion of dental insurance premiums is $8,337 for FY 2011. The proposed dental insurance plan costs will be included in the proposed budget for Fiscal Year 2010 -2011. Citizen Input/ Board Review: N/A Legal Review: The City Attorney reviewed the Request for Proposals (RFP) and applicable documents. Alternatives: Deny contract with United Healthcare and seek alternative options. Supporting Documents: The following supporting documents are attached: • Summary of Medical & Dental RFP Submissions • United Healthcare Benefit Levels and Rates • Proposed Dental Insurance Plan Design Options Staff Recommendation: Approve a contract with Aetna to provide employee medical benefits for Plan Year October 1 , 2010 to September 30, 2011. CITY OF SOUT'111 ILAKEr 2010 Medical &Dental RFP Submissions Product Vendor Name Broker 1 Medical Aetna 2 Medical Blue Cross Blue Shield 3 Medical Cigna 4 Medical TML 5 Medical United Healthcare 6 Medical United Healthcare Product Vendor Name Lifetime Benefits, Inc Lifetime Benefits, Inc Lifetime Benefits, Inc Lifetime Benefits, I Lifetime Benefit Inc Virtual Benefits Broker 1 Den 2 Dental 3 Dental 4 Dental 5 Dental 6 _Dental 7 Dental 8 Dental 9 De ntal 10 Dental 11 Dental Aetna Ameritas Guardian Cigna Blue Cross Blue Shield Delta SunLife TML MetLife United Healthcare United Healthcare Lifetime Benefits, Inc Lifetime Benefits, Inc L ifetime Benefits, Inc Lifetime Benefits, Inc Lifeti Benefits, I Lifetime Benefits, I Lifetime Benefits, Inc Lifetime Benefit Inc Lifetime Benefits, Inc Lifetime Benefits, Inc Virtual Benefits raventivn R. Dinannstic Periodic Oral Evaluation Radio Lab and Other Dia Tests Dental Proph ( Cleanin g) Fluoride Treatment Sealants Space Maintainers See Co Schedule Restorations (Amal or Composite)__ General Svcs ( incl Emer Treatment) Simple Extractions Oral Sur ( includes sur extra ctiop Periodontics Endoclonfics See Co-Pa Schedule Ma Services In sJC n la y s/Crowns and Brid Dentures and Removable Prosthetics See Co-Pa Schedule Fixed Partial Dentures ( Brid g es ) Orthodontic Services Orthodontia See Co-Pa Schedule Orthodontia Eliaibilitv I Deductible Deductible applies to Prev. & Dia AnnuallMax See Co-Pa Schedule Annual TMJ Max Lifetime Ortho Max Waitin Period applies Out of Network Basis Emplo 49 $13.52 Emplo + Spouse 8 $25.26 Emplo + Child(ren) 26 $22.97 Emplo + Famil 9 $32-97 92 Monthl Premium $1 Annual Premium $21,102.12 �e M Un Specialt Benefits' Benefit Levels and Rates for Cit of Southlake TX Effective October 01, 2010 Benefit Levels and Rates for Cit of Southlake TX Effective October 01, 2010 In Out of Network Network Dia q Service Periodic Oral Evaluation Radio Lab and Other Dia Tests Preventive Services Dental Proph (Cleanin Fluoride Treatment Sealants Space Maintainers Basic Services Restorations (Amal or Composite General Svcs (incl Emer Treatment) Simple Extractions Oral Sur (incl,._ sur extrac Periodontics Endodonfics Majo Services Inla Dentures and Removable Prosthetics Fixed Partial Dentures (Brid I Orthodontic Services I Prthodontia Orthodontia Eliablitv 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 50% 50% 50% 50% T 50% 50% 50% 50% Adult & Child Deductible Deductible applies to Prev. & Annual Max Lifetime Ortho Max Waitin Period applies Out of Network 'Basis Emplo Emplo + Spouse Emplo + Child(ren) Emplo + Famil Monthl Premium Annual Premium $50/$150 $501$150 No No $1500 $1500 $1500:1 Na UCR 90th 89 $34.98 20 $69.95 27 $77.82 41 $118.51 177 $11 $137,667.24 3 UnitedHealthcare Specialt Benefits ` .. ` .. .. Dental Quote Assumpt for City of ����UUt�`'�� TX �For Plans: Custom -OQ420 CAPITATION -8E45O-N. Texas/Gulf Coast - w Rates are valid for 90 days from June 17, 2010 or October 0 1, 2010, whichever is sooner. w Rates are effective from October O1 . 2010 through September 30. 2011. � Quote assumes e complete dental replacement. w Employer Contributory plan rates are based on an employer contribution level and employee participation of 75-99%. • The In- and Out-of-Nebwork Calendar Deductibles, Maximums and Lifetime Ortho Maximums are combined. • Quote assumes standard Exclusions and Limitations. • Rates include Standard broker commissions. • Assumed contract a[iumimTX. • Rates listed above assume the plan designs quoted. Rates may change, if plan design changes. • Rates are guaranteed for 12months • Rates assume no changes in legislation or regulation that affects the benefits payable, eligibility or contract. � Dependent children are covered to 25. 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