Item 4I AudioU I T Y 0 F
SOUTHLAKE �
Honorable Mayor and City Council. This presentation will cover Item 41 on the
August 2, 2011 City Council Agenda.
Item 41
Approve a contract renewal with
United Healthcare to provide
employee dental benefits for Plan
Year October 1, 2011 to September
30, 2012.
The purpose of this item to is to request City Council approval of a contract renewal
with United Healthcare to provide employee dental benefits for Plan Year October 1,
2011 through September 30, 2012.
2
Approving the contract renewal 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
•
The City of Southlake provides municipal services that support
the highest quality of
life for our residents and businesses. We do this by delivering outstanding
unrivaled quality in everything that we do.
value and
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Achieve the C2 Provide travel C3 Provide attractive C4 Attract and keep
highest standards convenience and unique spaces tier businesses to drive
top- C5 Promote
a opportunities for
of safety and within City and for enjoyment of dynamic and sustainable
security region personal interests economic environment
partnerships and
volunteer involvement
B1 Achieve B2 Collaborate with B3 Enhance resident B4 Provide
best select to life high
B5 Improve
performance B6 Optimize"
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-in -class partners quality of and quality
status in all City implement service business sustainability customer
disciplines solutions through tourism service
of delivery and use of
operational technology
processes
F1 Adhere to financial
F2 Invest to provide and F3 Achieve fiscal
management maintain high quality wellness
F4 Establish and'
maintain effect
principles and budget public assets standards
internal co "
L1 Ensure our people L2 Enhance L3 Attract, L4 Recognize
understand the leadership develop and and
informed decisio
t retain a skilled reward high
workforce performers
making at all 1
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Approving the contract renewal 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
• Current carrier
— 10/01/2010 - present
• Bid insurance in 2010
• 2 plans: PPO and DHMO
UnitedHealthcare
The City's current dental insurance carrier is United Healthcare. United Healthcare
has been the City's medical carrier since October 1, 2010 and dental insurance was
competitively bid in 2010. Currently, employees are offered two plan options: a
traditional PPO plan and a dental HMO (DHMO) plan. The City currently pays the
entire premium for employee only dental coverage and the employee pays the
entire dependent cost.
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Dental Claims Ratio
• Total Premium Paid:
$98,354
• Total Claims Paid:
$101,792
• Claims Ratio:
103.9%
$25,000
$20,000
$15,000
$10,000
$5,000
$0
ti ti ti ti ti " ti " ti
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-4--Monthly Billed Premium --E-Monthly Claims
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As part of the renewal process, United Healthcare provided the City with basic
claims data. The chart illustrates the premiums paid to United Healthcare compared
to the claims paid by United Healthcare. The red line on the chart represents the
claims United Healthcare paid each month while the blue line represents the
monthly billed premium. From October 2010 through April 2011 United Healthcare
has paid $101,792 in claims and has collected $98,354 in premiums from the City.
As a result, United Healthcare has paid more in claims than it has collected in
premiums and is currently losing money on the City's dental account.
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Premium Paid vs Claims Paid
UHC Proposed Renewal
...
• No plan changes: 23.3%
• With plan changes: 9.9%
DHMO:
• No plan changes: 0%
Estimated Increase: $8,000
Renewal Rate
In early June, the City received its dental insurance renewal from United Healthcare.
To calculate the renewal, United Healthcare reviewed the premiums paid, the claims
data and the industry trend. To maintain the current plan designs, United
Healthcare proposed a rate increase of 23.3% to the PPO plan and a 0% rate
increase to the DHMO plan.
In response to the high PPO rate renewal, staff worked with UHC to incorporate
plan changes to decrease the proposed renewal increase. With plan modifications,
the renewal increase changed from 23.3% to 9.9 %, resulting in an estimated cost
increase of $8,000 to the City. Plan changes to the PPO plan include: changing
usual and customary charge reimbursement rate for out of network benefits from
the 90th to 85th percentile and moving oral surgery, periodontics and endodontics
from a 20% coinsurance level to a 50% coinsurance level.
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Financial Considerations
• Funding for dental insurance will be included
in the proposed FY 2012 budget.
The estimated cost of dental insurance premiums is $15,178 per month, or
$182,133 annually (combined City and employee premium contributions). The
estimated increase in the City's portion of dental insurance premiums is $8,000 for
FY 2012.
Funding for the proposed dental insurance plan costs will be included in the
proposed budget for Fiscal Year 2012.
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• Estimated cost of dental insurance
Staff Recommendation
Approve a contract renewal with United
Healthcare to provide employee dental
benefits for Plan Year October 1, 2011 to
September 30, 2012.
Staff recommends City Council Approve a contract renewal with United Healthcare
to provide employee dental benefits for Plan Year October 1, 2011 to September 30,
2012.
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SOUTHLAKE
If you have any questions regarding this item, please contact me at 817- 748 -8063.
Thank you.