Item 4ICITY OF
SOUTH LAKE
MEMORANDUM
July 27, 2011
TO: Shana Yelverton, City Manager
FROM: Stacey Black, Director of Human Resources
SUBJECT: Approve a contract renewal with United Healthcare to provide employee
dental benefits for Plan Year October 1, 2011 to September 30, 2012.
Action
Requested: Approve a contract renewal with United Healthcare to provide
employee dental benefits for Plan Year October 1, 2011 to September
30, 2012.
Background
Information: The City's current dental insurance carrier is United Healthcare.
United Healthcare (UHC) has been the City's dental 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.
As part of the renewal
process, UHC provided
the City with basic claims
data. The chart on the
right illustrates the
premiums paid to UHC
compared to the claims
paid by UHC. The red line
on the chart represents
the claims UHC paid each
month while the blue line
represents the monthly
billed premium. From
October 2010 through
April 2011 UHC has paid
fNlnnthly Claims
$101,792 in claims and
has collected $98,354 in premiums from the City. As a result, UHC
has paid more in claims than it has collected in premiums.
In early June, the City received its dental insurance renewal from UHC.
To calculate the renewal, UHC reviewed the premiums paid, the claims
data and the industry trend. To maintain the current plan designs,
Premium Paid vs Claims Paid
Shana Yelverton, City Manager
July 27, 2011
Page 2
UHC 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 the 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.
Financial
Considerations: 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.
The proposed dental insurance plan costs will be included in the
proposed budget for Fiscal Year 2011 -2012.
Citizen Input/
Board Review: N/A
Legal Review: N/A
Alternatives: Deny contract with United Healthcare and seek alternative options.
Supporting
Documents: The following supporting documents are attached:
• United Healthcare Dental Renewal and Rates
Staff
Recommendation: Approve a contract renewal with United Healthcare to provide
employee dental benefits for Plan Year October 1, 2011 to September
30, 2012.
Customer Name: City of Southlake
Dental Renewal & Rates with Alternate
Plan Designs Renewal Date: 10/1/2011
• The numbers below are on an illustrative basis. Rates are subject to Underwriting approval.
Dental Services*
CurreT
Legal Entity
Network
r .
= United Healthcare
Out -of- Network Network
• u
Insurance Company
Out -of- Network
Periodic Oral Evaluation
Radiographs
Lab and Other Diagnostic Tests
Dental Prophylaxis (Cleaning)
Fluoride Treatment
Sealants
Space Maintainers
Basic Services
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Restorations (Amalgams or Composite)
Emergency Treatment / General Services
Simple Extractions
Oral Surgery (incl surgical extractions)
Periodontics
Endodontics
80%
80%
80%
80%
80%
80%
80%
80%
80%
80%
80%
80%
80%
80%
See Below
80%
80%
80%
80%
Oral Surgery (incl surgical extractions)
Periodontics
Endodontics
Inlays /Onlays /Crowns
Dentures and Removable Prosthetics
Fixed Partial Dentures (Bridges)
•
See Above
50%
50%
50%
50%
50%
50%
50%
1 50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
50%
Orthodontia
Orthodontia Eligibility
50%
50%
50%
50%
Adult & Child
Adult & Child
Deductible
Deductible applies to Prev. & Diag.
Annual Max
Lifetime Ortho Max
Waiting Period applies
Out of Network Basis
$501$150
$501$150
$501$150
$501$150
No
No
No
No
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
$1,500
No
No
UCR 90th
UCR 85th
Tier Enrollment Rates Rates
Current Proposed Current Proposed
Employee 94 $34.49 $42.53 $34.49 $37.89
Employee + Spouse 27 $68.98 $85.06 $68.98 $75.78
Employee + Child(ren) 30 $76.75 $94.64 $76.75 $84.31
Employee + Family 43 $116.87 $144.11 $116.87 $128.38
Total 194
Monthly Premium $12,432.43 $15,330.37 $12,432.43 $13,657.36
Annual Premium $149,189.16 1 $183,964.44 $149 1 $163
Renewal Action 23.3% 9.9%
www.uhc.com 7/11/2011 Healing health care. Together.
Dental Renewal & Rates with Alternate
Plan Designs
Network I Out -of- Network
Periodic Oral Evaluation
Rates
Current Proposed
Radiographs
$13.33
Lab and Other Diagnostic Tests
$24.91
Dental Prophylaxis (Cleaning)
See Copay Schedule
Fluoride Treatment
$32.51
$32.51
Sealants
$1,520.41
$18,244.92
Space Maintainers
0.0%
summary for more detailed benefit
Restorations (Amalgams or Composite)
Emergency Treatment / General Services
Simple Extractions
See Copay Schedule
Oral Surgery (incl surgical extractions)
Periodontics
Endodontics
Major Services
Inlays /On lays /Crowns
Dentures and Removable Prosthetics
See Copay Schedule
Fixed Partial Dentures (Bridges)
Irthoclontic Services
Orthodontia
See Copay Schedule
Orthodontia Eligibility
Deductible
Deductible applies to Prev. & Diag.
See Copay Schedule
Annual Max
Annual TMJ Max
Lifetime Ortho Max
Waiting Period applies
Out of Network Basis
Customer Name: City of Southlake
Renewal Date: 10/1/2011
Tier Enrollment
Employee 37
Employee + Spouse 10
Employee + Child(ren) 20
Employee + Family 10
Total 77
Monthly Premium
Annual Premium
Renewal Action
High level benefit summary. Please see your plan
Rates
Current Proposed
description.
$13.33
$13.33
$24.91
$24.91
$22.65
$22.65
$32.51
$32.51
$1,520.41
$1,520.41
$18,244.92
1 $18,244.92
0.0%
summary for more detailed benefit
vwvw.uhc.com 7/11/2011 Healing health care. Together.
Dental Renewal & Rates with Alternate
Plan Designs
Renewal Rate Assumptions
Customer Name: City of Southlake
Renewal Date: 10/1/2011
The rates quoted here are based on the following assumptions. Changes to these assumptions may result in an adjustment to rates or revocation of the quote.
Rates are effective from October 01, 2011 through September 30, 2012.
United Healthcare reserves the right to adjust the above rates should enrollment fluctuate by +/- 10 %.
Employer Contributory plan rates are based at least 50% employer contribution and require an employee participation greater than 50 %.
The In- and Out -of- Network Calendar Deductibles, Maximums and Lifetime Ortho Maximums are combined.
Quote assumes standard Exclusions and Limitations.
Rates include Standard broker commissions.
Assumed contract situs is TX.
Rates listed above assume the plan designs quoted. Rates may change, if plan design changes.
Rates are guaranteed for 12 months.
Rates assume no changes in legislation or regulation that affects the benefits payable, eligibility or contract.
Dependent children are covered to 26.
One or more of these plan design offerings include the MaxMultiplier benefit.
Some of the unused portion of your annual maximum may be available in future periods
vwvw.uhc.com 7/11/2011 Healing health care. Together.