Contract: Sutter Health Plus to Provide Group Health Insurance

Size: px

Start display at page:

Download "Contract: Sutter Health Plus to Provide Group Health Insurance"

Dennis Rodgers
5 years ago
Views:

Office of the City Manager CONSENT CALENDAR January 19, 2016 To: From: Honorable Mayor and Members of the City Council Dee Williams-Ridley, Interim City Manager Submitted by: Sarah Reynoso, Acting

1 Office of the City Manager CONSENT CALENDAR January 19, 2016 To: From: Honorable Mayor and Members of the City Council Dee Williams-Ridley, Interim City Manager Submitted by: Sarah Reynoso, Acting Director of Human Resources Subject: Contract: Sutter Health Plus to Provide Group Health Insurance RECOMMENDATION Adopt two Resolutions: 1. Approving the termination of the service contract with Health Net of California, Inc., (Health Net), a federally qualified Health Maintenance Organization (HMO) and a California Health Care Service Plan, effective March 31, Authorizing the City Manager to execute a contract and any amendments with Sutter Health Plus, to provide group health insurance to City employees and retirees effective April 1, 2016 through December 31, FISCAL IMPACTS OF RECOMMENDATION The total cost is anticipated to be approximately $1,776,000 ($592,000 for April 20 June 2016; and $1,184,000 for the first half of fiscal year July through December 2016). Funding for the health plan premium costs are included in the Fiscal Year 2016 adopted budget. Funding for the health plan premium costs will be included in the Fiscal Year 2017 budget. This contract was entered into the City s contract management database and assigned CMS No. T445J. The Payroll Deduction Trust Fund, budget code , provides for these premiums. CURRENT SITUATION AND ITS EFFECTS The City contracts with both Kaiser and Health Net to provide group health insurance coverage for all benefited employees and employees who qualify for health insurance coverage under the Affordable Care Act. Employees enrolled in a health plan with premiums higher than Kaiser's rates must pay the difference in premium costs, with a few exceptions. Because the Health Net group health plan rate increases have outpaced the Kaiser HMO group health plan rates, over the last several years, the majority of our City employees have enrolled in the Kaiser HMO plan. As of January 2016, there are 1,105 employees in the Kaiser HMO plan, 121 employees in the Health Net HMO plan, and 12 employees in the Health Net POS Plan. Each year, however, 2180 Milvia Street, Berkeley, CA Tel: (510) TDD: (510) Fax: (510) manager@cityofberkeley.info Website:

2 Contract: Sutter Health Plus CONSENT CALENDAR January 19, 2016 our employees and our employee organizations request that the City provide an affordable alternative option to the Kaiser HMO plan. This contract will allow the City to offer the Sutter Health Plus coverage to our employees who would like an alternative to the Kaiser HMO plan. The Sutter Health Plus 2016 rates for Active Employees will be: Kaiser HMO Sutter Plus HMO Difference Single $ $ $21.93 Two-Party $1, $1, $43.95 Family $1, $1, $58.89 The Sutter Health Plus 2016 rates for Pre-Medicare Retirees will be: Kaiser (Early Retirees $5) Sutter Plus HMO (LG Standard $10 ML30) Difference Single $1, $ ($348.08) Two-Party $2, $1, ($696.08) Family $3, $2, ($984.84) BACKGROUND The City has three (3) group health plans for employees: 1) Kaiser HMO, 2) Health Net HMO and 3) Health Net POS plans. The City has a contractual obligation to pay the equivalent of the basic Kaiser rates, including eligible dependents, for all benefited employees. Employees enrolled in a health plan with premiums higher than Kaiser's rates must pay the difference in cost of the premium. For example, the difference between the Kaiser HMO family rate and the Health Net HMO family rate is $1, this is the portion paid by any employee enrolled in the Health Net HMO. However, there are two exceptions for those employees represented by the Service Employees International Union (SEIU) Local 1021, Maintenance and Clerical Chapters (MC) and the International Brotherhood of Electrical Workers (IBEW) Local 1245, who were enrolled in a health plan with premiums higher than Kaiser s rates prior to January 1, For these employees, their Memorandum Agreements require the City to pay the full Health Net premium. For calendar year 2015, the City s cost is estimated to be approximately $2,108,939 for this group of employees. For the past five years, the City has been working with its benefits broker, Keenan & Associates (Keenan), to try to find comparable health care plans at a more reasonable premium. Each year, Keenan issued requests for proposal to prospective group health entities to provide coverage for City employees. However, because most of our employees are enrolled in the Kaiser plan, as well as the fact the City pays up to the Kaiser premiums, no other health plans have been willing to provide coverage to City employees. This year, Keenan was successful in obtaining a quote from Sutter Health Page 2

3 Contract: Sutter Health Plus CONSENT CALENDAR January 19, 2016 Plus to provide group health insurance option that provides comparable health care coverage provided as Health Net but at a significantly reduced cost. Following is a comparison between the Sutter Plus HMO premiums and the City s 2016 Health Net HMO and Health Net POS premiums: Health Net HMO Sutter Plus HMO Difference Single $1, $ $ Two-Party $2, $1, $ Family $3, $1, $1, Health Net POS Sutter Plus HMO Difference Single $1, $ $ Two-Party $3, $1, $2, Family $4, $1, $3, Since the Sutter Health Plus provides comparable health care coverage to Health Net and its rates are fairly close to the Kaiser rates, we are requesting that the Council authorize the termination of the Health Net contract. Prior to terminating the Health Net contract, the City will hold an open enrollment period in February 2016, to allow employees enrolled in Health Net to move to Sutter Health Plus. ENVIRONMENTAL SUSTAINABILITY There are no identifiable environmental effects or opportunities associated with the subject of this report. RATIONALE FOR RECOMMENDATION The Sutter Health Plus group health insurance coverage provides a meaningful and affordable option for City employees. ALTERNATIVE ACTIONS CONSIDERED Staff and Keenan & Associates (Keenan), considered staying with Health Net as the City group health insurance carrier. CONTACT PERSON Sarah Reynoso, Acting Director of Human Resources, Human Resources, (510) Attachments: 1. Resolution: Termination of the Health Net Contract 2. Resolution: Contract with Sutter Health Plus to Provide Health Insurance Coverage Page 3

4 RESOLUTION NO. -N.S. APPROVING THE TERMINATION OF THE HEALTH NET SERVICE CONTRACT EFFECTIVE MARCH 31, 2016 WHEREAS, the City has a contract with Health Net of California, Inc., (Health Net), a federally qualified Health Maintenance Organization (HMO) and a California Health Care Service Plan, to provide the HMO and Health Net Select Point of Service (POS) group health insurance plans, authorized by Resolution No. 67,307-N.S. to provide group health insurance for City employees and retirees; and WHEREAS, the City desires to terminate the HMO and POS health insurance coverage provided by Health Net, authorized by Resolution No. 67,307-N.S., due to high premium rates; and WHEREAS, the City s existing contract with Health Net contains a provision allowing termination of the contract after giving a 30 day written notice of cancellation. NOW THEREFORE, BE IT RESOLVED that the Council of the City of Berkeley authorizes the City Manager to issue Health Net a 30 day written notice of termination and approves termination of the contract with Health Net effective March 31, 2016.

5 RESOLUTION NO. -N.S. CONTRACT: SUTTER HEALTH PLUS TO PROVIDE HEALTH INSURANCE COVERAGE WHEREAS, the City pays for the health insurance premiums up to the equivalent of the Kaiser Health Maintenance Organization (HMO) plan rate for all benefitted employees except for certain employees represented by the Service Employees International Union (SEIU) Local 1021 Maintenance and Clerical Chapters (MC) and the International Brotherhood of Electrical Workers (IBEW) Local 1245 who were enrolled prior to January 1, 2003 in Health Net HMO or Health Net Select Point of Service plan; and WHEREAS, the City pays the full health insurance premiums for employees represented by SEIU Local 1021MC who were enrolled in a non-kaiser plan prior to January 1, 2003; and WHEREAS, the City also pays the full health insurance premium for IBEW Local 1245 employees who were enrolled in a non-kaiser plan prior to January 1, 2003; and WHEREAS, Sutter Health Plus can provide an HMO plan as an alternative to the City s Kaiser HMO plan that provides lower rates and similar or improved benefit choices as compared to those provided by the City s former alternative health insurance carrier, Health Net HMO and Health Net Select Point of Service; and WHEREAS, funding for the health plan premium costs are included in the Fiscal Year 2016 adopted budget; funding for the health plan premium costs will be included in the Fiscal Year 2017 budget; this contract was entered into the City s contract management database and assigned CMS No. T445J; the Payroll Deduction Trust Fund, budget code , provides for these premiums. NOW THEREFORE, BE IT RESOLVED by the Council of the City of Berkeley that the City Manager is authorized to execute a contract and any amendments for the period April 1, 2016 to December 31, 2016 for the not to exceed amount of $1,776,000 with Sutter Health Plus to provide Sutter Plus HMO Plan with rates as follows: Active Employees (Group Plan Name) Sutter Plus HMO LG Standard $10 ML30 Coverage Level Calendar Year 2016 Monthly Premium Rate Single $ Two Party $1, Family $1, The Sutter Health Plus 2016 rates for Pre-Medicare Retirees will be: Coverage Calendar Year 2016 Pre-Medicare Retirees (Group Plan Name) Level Monthly Premium Rate Sutter Plus HMO-LG Standard $10 ML30 Single $ Page 2

6 Pre-Medicare Retirees (Group Plan Name) Coverage Level Calendar Year 2016 Monthly Premium Rate Two Party $1, Family $2, BE IT FURTHER RESOLVED that a record signature copy of said contract and any amendments reflecting these rate increases to be on file in the Office of the City Clerk. Page 3

Honorable Mayor and Members of the City Council. Submitted by: David W. Hodgkins, Director of Human Resources

Office of the City Manager To: From: Honorable Mayor and Members of the City Council Christine Daniel, City Manager Submitted by: David W. Hodgkins, Director of Human Resources Subject: Health Plan Rate