HomeMy WebLinkAboutResolution No. 2020-28;e Sponsored by : Administration
Kt;NAI
CITY OF KENAI
RESOLUTION NO. 2020-28
A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI , ALASKA, AUTHORIZING
CONTRACTS FOR EMPLOYEE HEAL TH CARE AND OTHER BENEFITS EFFECTIVE JULY 1,
2020.
WHEREAS, as part of a comprehensive employee benefit package and pursuant to KMC
23.40.120 the City provides group medical, dental, vision , life, and supplemental life insurance to
its employees; and,
WHEREAS , the City's current provider for group medical, dental and v ision is PREMERA Blue
Cross Blue Shield of Alaska , and UNUM for both life and supplemental life insurance; and,
WHEREAS, PREMERA Blue Cross Blue Shield of Alaska has provided a renewal quote plus a
one-month premium holiday for continuing group medical, dental and vision coverage at a
average premium increase of 9.65%; and,
WHEREAS , VS P 's network of vision providers in the greater Kenai/Soldotna area have not been
satisfactory to our employee users ; and,
WHERAS , the City can instead provide our employees with a Health Care Reimbursement
Arrangement (HRA) benefit for vision, which, when paired with our existing Premera vision
benefit, offers our employees greater provider choice at equal or less cost to the City; and,
WHEREAS , Unum has provided a no change quote with $0.18 in rate per $1,000 of insurance;
and,
WHEREAS, providing quality major medical, dental, vision , life, and supplemental life insurance
is a co mponent of a comprehensive compensation package which allows the City to recruit and
retain quality employees to provide the services of the City for its residents.
NOW , THEREFORE , BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA:
Section 1. That the City Council authorizes the City Manager to execute a contract with
PREMERA Blue Cross Blue Shield of Alaska to provide group medical insurance, group dental
insurance and group vision insurance to the employees of the City of Kenai effective July 1, 2020
for an estimated annual premium of $2,656,731 .
Section 2. That the City Coun ci l authorizes the City Manager to execute a contract with Unum
to provide life and supplemental life insurance to the employees of the City of Kenai effective July
1, 2020 for an estimated annual premium of $20,516 .
Resolut ion No . 2020-28
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Section 3. That the City Council authorizes funding of an employee only HRA at $1,800
including $1 ,650 for group medical deductible and prescription copay and $150 for vision re lated
e xpenses .
Section 4 . That the City Council authorizes funding of an employee with dependent(s) HRA
at $3,600 including $3,300 for group medical deductible and prescription copay and $300 for
vision related expenses.
Section 5. That this resolution takes effect July 1, 2020 .
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 2ot11 day of May, 2020 .
BRIAN GABRIEL SR., MAYOR
ATIEST:
City o f Ke na i I 21 0 f=idalgo Ave, Kenai, AK 99611 -77941907.283.7535 I www.k enai.ci!y
MEMORANDUM
TO:
THROUGH:
Mayor Brian Gabriel and Kenai City Council
Paul Ostrander, City Manager
FROM: Stormy Brown, Human Resources
Terry Eubank, Finance Director
DATE: May 12, 2020
SUBJECT: Resolution 2020-28 -Employee Health Insurance Renewal
Resolution 2020-28 will authorize renewal of the City's employee health care plan and additional
coverage types with PREMERA Blue Cross Blue Shield of Alaska and other providers as
summarized here. KMC 23.40.120 requires the City to provide medical , dental and vision
coverage for its employees.
As negotiations with these health care providers are now complete, the following summaries and
updates are provided in support of the negotiated FY2021 City of Kenai employee benefits
offerings .
The Administration is recommending the following :
1. Renewal with PREMERA Blue Cross Blue Shield of Alaska for employee group medical
insurance. Renewal premiums are an average of 9 .65% higher than FY2020 rates . The
FY2021 rates again consider a one-month premium holiday . Absent the FY2021 rate
holiday the year-over-year rate increase would have been 19.61 %. It is unlikely that future
premium holidays will be offered, making a year-over-year increase similar to 19.61 %
probable in future year renewals. There are no changes being made to the plan design ;
updates implemented in FY2020 will continue in FY2021.
2. Renewal with PREMERA Blue Cross Blue Shield of Alaska for employee group dental
insurance . Renewal premiums, net of a one-month premium holiday being provided for
the first time on group dental, are the same as FY2020 rates , and, following a period of
reviewing current coverage against the market, have resulted in an improved benefit
offering for covered employees:
a. Preventive services, previously covered at 80%, will be covered at 100% in FY2021.
b. The maximum benefit for covered employees and covered family members will be
increased from $1,500 to $2,000 annually.
c . Endodontic and periodontic services will be covered at the Basic level (80 %) in
FY2021, an improvement from coverage at the Major level (50 %) in FY2020 .
3. Renewal with PREMERA Blue Cross Blue Shield of Alaska to again provide group vision
insurance in FY2021. Although VSP , as our current primary vision provider had provided
a no increase bid for renewal , VSP's network of vision providers in the greater
Kenai/Soldotna area has not been satisfactory to our employee users , having one local
provider and no provider solution regarding this issue over several years .
a. To provide an equal or better benefit to our employees, the administration
recommends the establishment of a $150 individual/$300 family vision-specific
HRA to provide replacement value to employees with the elimination of the vision
benefit through VSP previously carried by the City. This HRA would be paired with
our current PRE MERA coverage for vision .
4. Renewal with UNUM for employer-provided and employee supplemental life i nsurance.
UNUM provided a renewal quote with modest increases.
The result of this renewal, including the PREMERA premium holiday for medical and dental,
changes to the employee census, as well as the provider updates and related changes, will result
in a total FY2021 budget increase of $365,766 or 14 .07% with a projected increase in Employee
Health Care Fund reserves of $21, 714 in FY21 . Total billings to City departments will be
$2,636 , 734, an 8.23% increase ; the employee cost share increase by 1 % to 11 % will generate
employee contributions of $349,257, resulting in a 23 .71% increase.
Your support for the renewal and these changes as presented by the Administration is respectfully
requested .
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