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Item 4GITEM 4G CITY OF SOUTHLAKI MEMORANDUM July 30, 2014 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, 2014 to September 30, 2015. Action Requested: Approve a contract renewal with United Healthcare to provide employee dental benefits for Plan Year October 1, 2014 to September 30, 2015. 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 last competitively bid in 2010. Employees are offered two plan options: a traditional PPO plan and a dental HMO plan. The City currently pays the entire premium for employee only dental coverage and the employee pays the entire dependent cost. In early June, the City received its dental insurance Premium Paid vs Claims Paid renewal from UHC. As part of°°°° the renewal process, UHC provided the City with basic claims data. The chart to the 5100° right illustrates the premiums 5==� paid to UHC compared to the claims paid by UHC. The gold line on the chart represents the claims UHC paid each month while the blue line represents the monthly billed 56� premium. In the last twelve months, UHC has collected �aemm �p $222,776 in premiums and has paid $169,123 in claims, resulting in a claims ratio of 76%. To calculate the renewal, UHC reviewed the premiums paid, the claims data and the industry trend. UHC's renewal proposes a 4% increase Shana Yelverton, City Manager July 30, 2014 Page 2 ITEM 4G to the PPO plan, no increase to the DHMO plan and maintains the current benefit plan designs for each plan. The table on the right displays the historical plan increase information. This is the first rate increase to the plan since 2012. Based upon a review of claims data since October 1, 2010, staff believes this renewal is favorable. Plan Year 2011-2012 Renewal Increase 9.9% 2012-2013 0% 2013-2014 0% 2014-2015 Proposed 4% Financial Considerations: The estimated cost of dental insurance premiums is $19,265 per month, or $231,176 annually (combined City and employee premium contributions). The annual estimated increase in the City's portion of dental insurance premiums is $4,986 for FY 2015. The proposed dental insurance plan costs will be included in the proposed budget for Fiscal Year 2015. Strategic Link: Performance Management and Service Delivery: attract, develop and retain a skilled workforce. CBO2: Become an employer of choice by developing a plan to recruit, develop and retain employees committed to excellence. 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 Staff Recommendation: Approve a contract renewal with United Healthcare to provide employee dental benefits for Plan Year October 1, 2014 to September 30, 2015. CITY OF SOUTHLAKE Issued on: June 17, 2014 UnitedHealthearer CITY OF SOUTHLAKE Dental Renewal Effective Date: October 1, 2014 Dental Services Legal Entity Diagnostic Service Passive PPO P6821 CS1 U n ited Healthcare Insurance Company Primary Plan In Network Out of Network Periodic Oral Evaluation 100% 100% Radiographs 100% 100% Lab and Other Diagnostic Tests 100% 100% Preventive Services Dental Prophylaxis (Cleaning) 100% 100% Fluoride Treatment 100% 100% Sealants 100% 100% Space Maintainers Basic Services 100% 100% Restorations (Amalgams or Composite)* 80% 80% Emergency Treatment/General Services 80% 80% Simple Extractions Major Services 80% 80% Oral Surgery (inci. surgical extractions) 50% 50% Periodontics 50% 50% Endodontics 50% 50% I n lays/O n lays/Crowns 50% 50 Dentures and Removable Prosthetics 50% 50% Fixed Partial Dentures (Bridges) Orthodontic 50% 50% Orthodontia 50% 50% Orthodontia Eligibility Adult & Child Deductible $50/$150 $50/$150 Deductible applies to Prev. & Diag. No No Annual Max $1,500 $1,500 Lifetime Ortho Max $1,500 $1,500 Waiting Period applies No No Out of Network Basis UCR 85th PPO Network Options PPO 30 CMM—Annual Roll -Over Yes Assumed Enrollment and Rates Employee Current Renewal 131 $37.89 $39.39 Employee + Spouse 23 $75.78 $78.78 Employee + Child(ren) 41 $84.31 $87.65 Employee + Family 45 $128.38 $133.46 Monthly Premium ,Annual Premium Renewal Action 240 $15,940.34 16J 0: 4.0% Employer Contribution Contributory Participation Requirements 75% of Eligible Employees Dependent Children Coverage To Age 26 Contract Basis Fully Insured Exclusions and Limitations Standard Broker Commissions Standard Graded Rate Guarantee 12 Months CITY DMO D0420 National Pacific DePrimary Plan ntal, Inc. Network Out of Network OF SOUTHLAKE Dental Renewal Effective Date: October 1, 2014 Dental Services Legal Entity Diagnostic I Periodic Oral Evaluation See Copay Schedule Radiographs Lab and Other Diagnostic Tests Preventive Services Dental Prophylaxis (Cleaning) See Copay Schedule Fluoride Treatment Sealants Space Maintainers Basic Services Restorations (Amalgams or Composite)* See Copay Schedule Emergency Treatment/General Services Simple Extractions Oral Surgery (incl. surgical extractions) Periodontics Endodontics Major Services n lays/O n lays/Crowns See Copay Schedule Dentures and Removable Prosthetics Fixed Partial Dentures (Bridges) Orthodontic Orthodontia See Copay Schedule Orthodontia Eligibility Deductible See Copay Schedule Deductible applies to Prev. & Diag. Annual Max Waiting Period applies Out of Network Basis CMM—Annual Roll -Over No Assumed Enrollment and Rates Employee Current Renewal 19 $13.33 $13.33 Employee + Spouse 7 $24.91 $24.91 Employee + Child(ren) 10 $22.65 $22.65 Employee + Family 10 $32.51 $32.51 Monthly Premium Annual Premium Renewal Action 46 $979.24 $979.24 $11,750.88 $11,750.88 0.0 Employer Contribution Contributory Participation Requirements 75% of Eligible Employees Dependent Children Coverage To Age 26 Contract Basis Fully Insured Exclusions and Limitations Standard Broker Commissions Standard Graded Rate Guarantee 12 Months CITY OF SOUTH LAKElAssumptions - We reserve the right to change rates and/or plan provisions if the number of lives or volume of insurance change by more than 10% before, on, or after the effective date listed above or if factors used to generate this quote such as group demographics or effective date are changed, found to be incomplete or incorrect. - Rates assume no changes in legislation or regulation that affects the benefits payable, eligibility or contract. - Rates assume standard administrative services including Claims & Data processing, Enrollment & Billing, Customer Service, Case Management, Provider Relations, and Reporting. - Assumed contract situs is Texas. - Employees must be U.S. citizens or residents regularly working and living in the U.S. Coverage for U.S. citizens working outside of the U.S. must be approved in writing by us. Approval depends on locale and length of assignment. - Employer's assumed primary business is classified as 9111. - Rates may increase on renewal in accordance with the terms of the policy. The Dental and/or Vision premium includes expenses related to state & federal taxes, fees, and assessments. It may also include additional new taxes, fees and assessments from the Affordable Care Act. Rates listed above assume the plan designs quoted. Rates may change, if plan design changes. Our contract covers only those procedures performed in the United States. 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. Please contact your sales representative for more details on the network quoted in your proposal. The In- and Out -of -Network Plan Deductibles, Maximums and Lifetime Ortho Maximums are combined. Participation in qualifying dental and vision plans must be 75 percent or greater of eligible medical employees for Packaged Savings to be activated. * Please contact your sales representative to confirm specific plan Restorations (Amalgams or Composite) coverage. Please note that the summary of benefits in this document provides a brief description of coverage. State mandates may preclude certain benefit plan design features. This is not a policy, certificate of insurance or coverage document. For complete details on coverage, exclusions, limitations and the terms under which coverage may continue, please contact your sales representative. CITY OF SOUTH LAKEIDisclaimers This proposal is valid for 90 days from the issued date, unless otherwise noted within this document. Brokers and agents may receive commissions, bonuses and other compensation for selling the products presented in this proposal. The cost of this compensation may be directly or indirectly reflected in the premium or fees for those products. Contact your broker and/or agent if you have questions regarding their compensation relating to products in this proposal. This proposal is subject to negotiation and execution of a written agreement, which will supersede the proposal contents. This proposal does not constitute an agreement, and is based on assumptions made from the written information in our possession and provided by you. We retain the right to modify our proposal if the information upon which this proposal is based is changed or is supplemented. We consider much of the information contained in the proposal to be proprietary or otherwise confidential, and are releasing this proposal to you on the understanding that you and your representatives will only use it, and any data included in the proposal, for the specific purpose of evaluating its content. If this is not consistent with your understanding, please notify us before reviewing the proposal. In addition, by accepting and reviewing the contents of this proposal, you and your agents or other designees agree, to the extent permitted by law, that certain information contained herein, or other information provided to you in connection with this proposal response or associated request for proposal (RFP), is proprietary and/or confidential to UnitedHealthcare and its related entities, and may not be copied, used, distributed or disclosed without prior written consent from an authorized representative of UnitedHealthcare, other than is necessary to evaluate this proposal.