The Human Resources Department is recommending City Council authorize the City Manager to execute all necessary documentation for Year 2 of the multi-year contract in force with CIGNA Healthcare for self-funded group medical insurance and fixed administrative costs, fully insured group dental, and voluntary vision insurance coverage for the period of January 1, 2018 through December 31, 2018 to provide and offer these benefits to our entire workforce, our retirees, and other members on these plans.

Beginning in 2012 and continuing through the present, the City has self-funded the medical plan with Cigna Healthcare as the plan’s ASO (Administrative Services Only) provider. The City provides two self-funded medical plan options: a HMO and a High Deductible Health Plan with a Health Savings Account (H.S.A.). Two fully-insured dental plans are provided: a DHMO and a DPPO. Employees contribute to the funding of the plan(s) they select by authorizing premium contributions through payroll deductions based on the plan(s) selected and dependent(s) covered. Also, a fully insured vision plan is offered. This plan is voluntary, meaning the monthly premiums are paid for entirely by those employees who elect to participate. Cigna is also provider for the fully-insured dental and vision plans.

For the current 2017 plan year, the City with the assistance of our benefits consultant, IPS Advisors, staff conducted an RFP for the medical plans & components, dental plans, and ancillary and voluntary benefits plans.  As part of the negotiation process, the City was able to obtain multi-year rate guarantees with our vendors including Cigna who provides medical plan administration (TPA) and wellness, fully insured dental plans, and the voluntary vision plan.  

The Human Resources Department, City Management, and IPS reviewed medical plan designs options for 2018. As a result of this work, we feel the following plan changes will improve the efficiency of the medical plans in 2018 and beyond:

• Pharmacy Plan Changes - 1) Implement Cigna’s Value Prescription Drug List which is designed to incentivize use of preferred brand, generic and over the counter alternatives by increasing copays for brand name drugs with clinically proven alternatives and excluding coverage for classes of drugs with over the counter alternatives.  Additionally, certain brand name drugs may also be excluded from coverage unless medically necessary; 2) Limit specialty drug dispensing to a 30 day supply to reduce potential waste generated by dispensing 90-days of therapy for high cost drugs; and 3) Increase specialty drug copay for high cost medications from $125 per script to $150 per script.
• Cost Sharing/Employee Contributions - Over time, the City’s ultimate goal to offer medical plans that are subsidized at the same cost amount thereby allowing employees the option to choose between plans and be responsible for the cost difference as appropriate.  To this end, the employee contributions of the H.S.A. plan will result in a monthly increase to basic rates between $18.26 (employee only) to $44.16 (family). The employee contributions for the HMO plan will see no change to basic rates for 2018.  Employees choosing not to participate in the City's wellness program will, however, also pay a premium adjustment in 2018 in addition to the basic rates - regardless of which medical plan they choose.

The FY17 budget was filed on July 18, 2017, and it included an approximate 4.0% increase to the benefits fund. The recommendations above are in alignment with the proposed budgetary amount and in compliance with the Council’s benefits burden policy.

Staff recommends City Council authorize the City Manager to execute all necessary documents relating to the implementing renewal contracts with CIGNA for the self-funded group medical plans, fully insured group dental plans, and voluntary vision insurance coverage for 2018. Fixed cost totals as stated in the attached exhibits are projected based on employee and dependent assumptions.  The actual cost totals will fluctuate with the types of plans chosen by employees and the number of employees and dependents on the plan at any given time.