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HomeMy WebLinkAbout1985-12-17; City Council; 8259-3; City's health insurance carrier selection.. z 0 Ei 8 a i 0 L 3 4B# 8259 fi~~. 12-17-85 IEPT. PER CIT- OF CARLSBAD - AGEND - BILL TITLE: DEPT. HD. SELECTION OF CITY'S HEALTH INSURANCE CITY ATTY'M CITY MGR.&L CARRIER I I RECOMMENDED ACTION: Adopt Resolution No. 8317 awarding bids for the life insurance program, the indemnity health plan (medical, dental, and vision), long term disability and accidental death and dismemberment. ITEM EXPLANATION: Pursuant to Council action of September 10, 1985, the Council reviewed and approved the proposal specifications and authorized the solicitation of proposals for the employee indemnity health insurance package. The Request for Proposal was prepared by the City's insurance consultant, The Wyatt Company and approved by the City's health insurance committee. The Wyatt Company distributed proposal specifications to approximately twenty (20) insurance carriers. Other interested parties were notified of the process by mail and a newspaper ad. released an additional twelve (12) proposals to these individuals. The Personnel Department Proposals were required to adhere to the existing plan design and usage concepts of the San Diego Foundation for Medical Care, Preferred Provider Organization, Coalition Action Program and hospital review. Respondents were asked to outline four (4) funding methods. Twelve (12) carriers receiving RFP's did not submit proposals and three (3) companies submitted incomplete proposals. Three (3) complete proposals for the life, medical, dental, and vision plans were submitted; one (1) company submitted a proposal solely for accidental death and dismemberment; and two (2) companies completed proposals solely for the long term disability insurance. The City's Health Insurance Committee was responsible for bid preparation and evaluation. Members of the committee were: RICK FISHER, Carlsbad Fire Association; GARY SPENCER, Carlsbad Police Officers' Association; GENE KELLOGG, Carlsbad Police Management Association; JOE FEDERICO, Carlsbad Employees' Association; and KELLY IRVING, Representative, Carlsbad Employees' Association. Other members included JEROME PIETI, Personnel Director; JIM ELLIOTT, Finance Director; RAY PATCHETT, Assistant City Manager; and DEBRA NEVILLE, ANN SOMMERCAMP, and JOHN CAHILL, Administrative Assistants. Eight (8) committee meetings were held; two (2) to review the specifications and six (6) to evaluate completed proposals. The three (3) finalists for the life and indemnity health program (medical, dental, and vision) portion were interviewed by the committee on December 2, 1985. The committee spent considerable time studying the following funding concepts: 1) Fully Insured, 2) Minimum Premium, 3) Self Funded, and 4) Fully insured with a 90 day premium delay and 10% retroactive feature. Analysis revealed that two (2) funding mechanisms were more advantageous to the City: minimum premium and fully insured with a 90 day premium delay, 10% retroactive. Lengthy discussions centered around the financial implications of both funding plans. -2- After considerable discussion the Health Insurance Committee unanimously selected the minimum premium funding method. The advantages are that the City holds its own financial reserves and claims are paid as they occur. These advantages result in the additional benefit of an improved cash flow for the City. The committee recommends that the carrier of the life, medical, dental, and vision insurance be Northwestern National Life. The present carriers for long term disability, Standard of Portland, and accidental death and dismemberment, INA/CIGNA, are also recommended. Based upon the solicitation of competitive proposals for the insurance program, the City's maximum exposure will be reduced by approximately $203,130. It is recommended that the employee groups share in the City's reduced liability under this program. Staff has negotiated a slight reduction in the employee's share for the insurance program. The total amount of this reduction for all employee groups is approximately $7,500. A schedule of the new rates is attached. FISCAL IMPACT: $44,880 Long Term Disability - Standard of Portland $39,730 Life Insurance - Northwestern National Life $569,627 Indemnity Health Program (medical, dental, and vision) - Northwestern National Life $3,669 Accidental Death and Dismemberment (City's contribution) - INA/ C IGNA $60,000 Accrued reserves at year end to pay previously incurred claims. $717,906 The City's maximum liability for the indemnity health program is reduced by $203,130. EXHIBITS : 1. Resolution No. 8317 appropriating funds. 2. Memo to City Manager from Health Insurance Committee. I Yxhibit 2 December 9, 1985 TO : CITY MANAGER FROM: City Insurance Committee RECOMMENDATION The City Insurance Committee unanimously recommends the City accept the minimum premium funding proposal submitted by Northwestern National Life Insurance Company to provide employee indemnity health insurance. Since September 10, 1985, the ten member City Insurance Committee, in conjunction with The Wyatt Company, the City's insurance consultant, prepared and issued a Request for Proposal to 32 interested parties. Three (3) finalists were selected and evaluated, with representatives of Crown Life, Northwestern National Life and the John Hancock companies interviewed on December 2, 1985. The interviews and subsequent deliberations resulted in this recommendation. Concurrently, the Committee recommends retention of Standard Insurance Company for Long Term Disability Insurance and INA/CIGNA for Accidental Death and Dismemberment. All employee associations were represented on the Insurance Committee and concur in this recommendation. Administrative Assistant I1 President, CFA Awinis t ra t ive Assist ant I1 ,, 1 2 3 4 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. 8317 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING INSURANCE CARRIERS AND AUTHORIZING THE EXECUTION OF CONTRACTS FOR THE EMPLOYEE BENEFITS INSURANCE PROGRAM WHEREAS, the City of Carlsbad solicited proposals for the ,employee benefits insurance program; and, WHEREAS, all prospective bidders were required to submit detailed proposals addressing program funding concepts; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California: 1. That the above recitations are true and correct. 2. That the proposal submitted by Northwestern National Life Insurance Company for indemnity medical, dental, vision and life insurance is hereby accepted and the City Manager is authori- zed to enter into an agreement with said carrier for provision of these services. 3. That the funding concept referred to in the approved proposal as minimum premium will be utilized to finance the insurance program. 4. That the proposal submitted by Standard of Portland for : a long-term disability insurance is hereby accepted and the City Manager is authorized to enter into an agreement with said carrier for provision of these services. 5. That the proposal submitted by INA/CIGNA for Accidental Death and Dismemberment insurance is hereby accepted and the City Manager is authorized to enter into an agreement with said carrier for provision of these services. 6. That the City Manager is authorized to establish the 1 2 3 4 5 6 7 a 9 10 11 12 13 14 15 16 17 18 19 2c 21 22 22 24 2e 26 27 2E required administrative, financial and banking arrangements necessary to fund the program and establish a reserve. 7. That the City Council authorizes the City Manager to implement the Rate Schedule as decribed in Attachment A, Attached hereto and made a part thereof. PASSED, APPROVED, AND ADOPTED by the City Council of the City of Carlsbad, at a regular meeting held on the 17th day Of December , 1985, by the following vote, to wit: AYES: Council Members Casler, Lewis, Kulchin, Chick and Pettine NOES: None ABSENT: None ATTEST: q-y qzqz UTHA Li RAUTENKmZ, City Clerk KAREN R. KUNDTZ, Deputy (SEAL) 2. ATTACHMENT A Resolution No. 811 7 RATE SCHEDULE NORTHWESTERN NATIONAL LIFE MONTHLY RATES EFFECTIVE 1/1/86 Total City Employee Biweekly Management Premium Pays Pays Employee Pays Employee $ 68.10 $ 62.95 $ 5.15 $ 2.38 Employee + 1 155.94 128.03 27.91 12.88 Employee + 2 240.75 188. a3 51.92 23.96 Police Employee 68.10 60.33 7.77 3.59 Employee + 1 155.94 134.43 21.51 9.93 Employee + 2 240.75 197.63 43.12 19.90 Fire - Employee 68.10 58.59 Employee + 1 155.94 126.83 Employee + 2 240.75 187.90 Miscellaneous 9.51 29.11 52.85 4.39 13.44 24.39 Employee 68.10 68.10 Employee + 1 155.94 149.20 Employee + 2 240.75 225.72 -0- 6.74 15.03 .j - 0- 3.11 6.94