HomeMy WebLinkAbout1985-12-17; City Council; 8259-3; City's health insurance carrier selection.. z 0 Ei
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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
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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.
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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
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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
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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
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6.74
15.03
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3.11
6.94