RESOLUTION NO. NOW THEREFORE BE IT RESOLVED, by the Board of Commissioners of the City of Dothan, Alabama, as follows: Section 1: That the City of Dothan renew the contract with Blue Cross and Blue Shield of Alabama to provide and administer a Health Care Plan for City employees for a one (1) year period beginning October 1, 2019 through September 30, 2020, which said renewal analysis is attached to and made a part of this resolution. Section 2: That the City accepts the proposed administrative fees from Blue Cross and Blue Shield of Alabama for $51.75 per member per month for medical insurance and $4.75 per member per month for dental insurance for a one (1) year period beginning October 1, 2019 through September 30, 2019. PASSED, ADOPTED, AND APPROVED ON Mayor ATTEST: Associate Commissioner District 1 Associate Commissioner District 2 Associate Commissioner District 3 Associate Commissioner District 4 Associate Commissioner District 5 Associate Commissioner District 6 BOARD OF CITY COMMISSIONERSTHE Crry OF DOTHAN, ALABAMA POST OFFICE BOX 2128 + DOTHAN, ALABAMA 36302 + 334.615.3000 KEVIN A. COWPER (CITY MANAGER August 30, 2019 Honorable Mayor and City Commission of the City of Dothan, Alabama | will be presenting to you for your consideration a renewal of the City of Dothan Group Health, Accident and Dental Insurance Policy with Blue Cross/Blue Shield of Alabama for the period October 1, 2019 through September 30, 2020. t to renew the projected contract year of health ‘aceident, and dental coverage with BCBS with No increase to employee and retiree premiums. The City is self-funded and therefore the employees, retirees, and City share in the cost of providing medical coverage, whereas dental insurance is funded totally by active and retired employee premiums. Note: The health insurance reserve fund is now $5.8M and periodic premium increases will be necessary to plan for inflation and increased cost in medical care. However, the plan is performing well and if premium increases are necessary in the future, recommendations from staff will be made. The Personnel Department will continue to monitor the Insurance Fund Reserve throughout FY2020. Sincerely, Kevin A. Cowper, AICP, ICMA-CM City ManagerCity of Dothan Staff Report Mayor and City Commissioners PROJECT TITLE: BCBS Contract Renewal for Health, Accident, and Dental Insurance DEPARTMENT: Personnel Department DEPARTMENT HEAD: _Delvick J. MeKay, Personnel Director Yoke, REPORT DATE: August 23, 2019 1. Discussion and Analysis Health Insurance coverage and benefits provided therein, enhances the strategic advantage of the City in providing an element of the total compensation package that can help to recruit and retain a committed workforce. The discussion of healthcare is a national phenomenon with the passage of the Affordable Care Act and other initiatives that focus on healthcare from a national prospective. The City has been ‘committed to providing a competitive benefit package that is affordable and gives employees, retirees, and dependents access to care within and throughout the Blue Cross and Blue Shield Preferred Network. I. —_ Background ‘The City of Dothan is self-funded and the Personnel Director and General Services Director/Risk ‘Manager manages the health insurance fund along with workers compensation cases and property claims that are mitigated by the City. In FY2018, the Health Insurance Fund received in premium revenues from the following: $9.8M from the City, $2.9M from employees (health and dental premiums), and retirees $1.1M (health and dental premiums); for a total annual premium revenue of approximately $13.8M. Interest eamed and Stop-Loss refunds totaled $440K, for total premium revenue received of $14.2M. The claims and expenses paid was $12.3M with an ending reserve of $3.5M. The projected claims were $13.7M; coming in $1.4M less than projected. For FY2019, claims projected are $12.1M and actual claims to date are $9.2M. Premium revenue received, including interest earned and Stop-Loss refunds total $1 1.6M for a current surplus of $2.3M. ‘The Health Insurance Fund Reserve as of August 2019 is $5.8M. Recommendation: ‘At this time, it is in the best interest for the City of Dothan to remain a self-funded health insurance entity and to manage its own cost sharing methods, which includes premium and fee-based administration to ‘coe, BCBS jected $12.5M i . Providing affordable benefits and competitive compensation to City employees remain as a high priority in developing a sustainable work environment. It is very important to presenta solid benefit package to ‘our workforce that will enable employees to have adequate health insurance for themselves and theirfamilies. ‘The City of Dothan has always taken pride in the benefits offered to its employees and will ‘continue errs an affordable level of coverage going forward. Tar. ih what BCBS baa 1. Recommend renewal of contract with Blue Cross and Blue Shield of Alabama for a period of one year beginning October 1, 2019 through September 30, 2020. Administrative Fees: $51.75 per member per month for medical and $4.75 per member per month for dental. 2. Recommend premiums to remain for active employees and retirees to be effective January 1, 2020. (Attachment #1 Proposed Employee and Retiree Medical Premiums; Attachment #2 City/Employee/Retiree Proposed Funding and Premium Structure).Attachment #1 Proposed Employee and Retiree Medical Premiums (No Changes from 2019) Effective January 1, 2020 [rete anny 2000] ‘Type of Coverage _| Monthly | Bi-weekly Employee Only $72.00| $36.00 Employee +1 $266.00 | $133.00 Employee + 2+ $325.00 | $162.50 Type of Coverage _| Monthly Retiree Only ‘$258.00 Retiree Spouse Only | $268.00 Retiree +1 $638.00 Retiree +2 + ‘$782.00 ‘Type of Coverage | Per Rx Preferred $50.00 ‘Specialty $75.00eee Abad #2. Group Heath and Dental Plans FUNDING AND PREMIUM STRUCTURE [ACTIVE AND RETIRED EMPLOYEETRETIREE CITY” Fal TOTALY Propecia Projected emlum —|% off Annual] Premium] —% of] —Annaal|Monthly| Premium] —_Claims|__ Projected! ofcoveragd Ee] Bw| _1P| Yield| Monthly! ___TP|___YieldPremium| Revenue] Expense| RESERVE +/- Employee Only | 380] 72.00] 36.00] 17%| 928,220] 342] 63% 1,550,520] 414.00| 1,887,840} lEmpioyee + 1 4183] 266.00| 133.00] 24%) 584,136] 842] 76%) 1,849,471] 1108.20] 2,433,607 lEmployee +2+ | 379| 325.00] 162.50| 24%] 1,478,100] 1014] 76%! 4,609,398] 1338.50] 6,087,408) [Retive 942) 2,390,556] 8,018,389] 10,408,945] Retiree Only 73] 258.00, | 62%) 226,008] 166] 38%| 196,686) 474.00] 362,664) 62%) 105,264] 156] 38%) 63,648) 414.00) 168,012] 58%| 405,768] 470|42%| © 298,920] 1108.20] 704,815} 58%] 215,832] 557] 42%| 153,732] 1398.50] 369,426 952,872| 652,966 [eri 345] aa za [Health insurance benefit deduction for 68 unfilled vacancies 42 montt [insurance Fund Reservelae of 6/1/2019 Emy +2+ ($1014 x 58) pews fasteners —_—— RECOMMENDED FUNDING AND PREMIUM STRUCTURE TO BE EFFECTIVE JANUARY 1, 2020 Attachment #2 SESeptember October November December January February June uy September Total LHEALTH/DENTAL INSURANCE CITY, EMPLOYEE and RETIREE CONTRIBUTIONS (Deposited into Employee Benefit Plan) 2018 CITY OF DOTHAN Atfahanad F2A 922,788.74 Seve. pike r Gay. Employee Retiree -=—=—sinterest_=—=—Refund © Advances -GGR Total Deposits BC/BS Payments Cash on Hand $ #1834200 $ 23171400 $ 86,747.00 $ 116035 $ aa) $437,963.35 § 929547.83 $ 185880127 #3345000 04605750 8526000 1052.62 : =” 426582032 14930,170.30 2,094451.29 3824400 11553.00 84,668.00 L3BL12 + Xoa9.246.12 107,999.38 2,025,698.03 82773500 246,137.00 9252200 1348.36, : + 4 67702.36 749,937.87 2,443,50252 81372300 © 24491750 94,1280 137396, : + asnenas 69696695 2,897,678.03 #1610900 4574650 94,0000 714.21 : + kaseseart 1,040,427.683,011,82005 1199900 245,598.00 8901800 4.79985, : + Lagarass ‘969432 3,264,04059 s104s.co 365,300.00 9091600 2,015.22 1,268,285.21 eveaaac2 3.855 48178 0387600 © 122,08950 91,216.00 1672.89 = Yoigs14.39 138159757 2,992,698.60 si04e.00 —243,26050 «8531400 1.93953 417,576.03 = 14559.938.06 yoozosas2 — 3.550.572.88 1132600 244,028.00 91,688.00 2,066.63, 44149,100.63 44160,005.353,539,677.12 g0g,68.00 __ 24405050 __96278.00 __ 445615. : = __1s29s265 410222601 3,550,403.76 $iojaos.ass.00 § 289402200 § 4,076785.00 § 7.78088 $ 417,97603 $ — Eiagseess 5 32.313,980.90 2019 ry Employee Retiree ~—Interest’_=«—=—=#Refund— Advances-GGR Total Deposits BC/BSPayments Cason Hand $ 907,051.00 § 24427900 $ 88,786.00 $ 500042 § 2853936 $ = $ 417408576 $ 1102857350 $ 3,694,896.02 7g381.00 24569850 8187000 5,064.53, : + kasama 797,07473 § 4028,92542 7507.0 (24488450 © 93722205 527.37 197,945.48 + 1337;68655 159334957 § 4.507,26240 79636500 4629064 © 97,4200 64166747 223.33 183,215.64 498,33650 $ 5,192,14154 79356800 24196436 © «S7A7782 = 569011 2,613.25 > qasayisse 96767169 $ 5,331,18339 79680000 © 2aZs2100 © 86940S0 6 317.98 - = aan s7e44 4139,39743 $§ 5,32436540 7943700 © 24236800 © 87,2400 7,104.69 43.68 + 43133337 140s2,72004 $ 5,402,778.73 79236700 2267550 86,7240 7014.64 - + Aage7anaa 1106456149 $ 5,466898.38 79189700 241,086.00 96,026.00 §,10627 : + 2407527 3 79962700 242,763.00 87,3000 492823 + 432561923 $7,336,320.00 iamaeoss Teams Gomme {perm § Gs 93285 309.16 ‘includes $2,000,000 Certificate of Deposit that matures 12/30/2019 i Stpetdiote Total perint eles ‘Updated 8/6/39 ath Fou Profual lamas elsAfbab mud #2B Blue Cross and Biue Shield of Alabama ‘Summary of Renewal Contract Year Projected Expenses City of Dothan Group Number(s): 36017, Experience Period: 5/1/2018 - 4/30/2019 “Rating Period: 10/1/2019 - 9/30/2020 ‘Health Dental Combined A. Projected Contract Exposure: 13,572 13,236 N/A B. Projected Unit Claims Cost: $827.39 $44.66 N/A C. Projected Claims Expense [ (A) x (B) ]: $11,229,337.08 $591,119.76 $11,820,456.84 ‘D. Administrative Fees: $705,065.40 $62,871.00 $767,936.40 Health: $51.75 Dental: $4.75 E. Total Projected Contract Year Expense: $11,934,402.48 $653,990.76 \_$12,588,393.24 os gens “Project otal clams eypense fee Fj) (020 * Paid Claims (Cash) Basis egal