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HomeMy WebLinkAboutResolution No. 2025-60ov 71� ic'm KENAI CITY OF KENAI RESOLUTION NO. 2025-60 Sponsored by: Administration A RESOLUTION AUTHORIZING A CONTRACT EXTENSION FOR EMPLOYEE HEALTH CARE EFFECTIVE JANUARY 1, 2026. WHEREAS, as part of a comprehensive employee benefit package and pursuant to KMC 23.40.120 the City provides group life, medical, dental, and vision insurance to its employees; and, WHEREAS, pursuant to KMC 7.15.060(g) group insurance coverage for employees may be procured by direct negotiation subject to Council approval by resolution; and, WHEREAS, the City's current provider for group medical, dental, and vision is PREMERA Blue Cross Blue Shield of Alaska; and, WHEREAS, the City worked with the City's health insurance broker to negotiate a renewal of the City's contract with PREMERA to be effective on January 1, 2026; and, WHEREAS, PREMERA Blue Cross Blue Shield of Alaska has provided a quote for continuing group medical and vision coverage with a premium increase of 4.1 % and dental coverage at a premium increase of 6.0%; and, WHEREAS, the City's health care insurance broker and the administration recommend the City enter into a contract renewal with PREMERA Blue Cross Blue Shield of Alaska to provide group medical, dental, and vision insurance to the employees of the City of Kenai effective January 1, 2026, for an estimated annual premium of $2,713,177; and, WHEREAS, sufficient funds are budgeted in the FY26 annual budget through June 30, 2026, and an amount sufficient to maintain the contract will be proposed in the FY27 annual budget; and, WHEREAS, providing quality medical, dental, and vision insurance is a component of a comprehensive compensation package that allows the City to recruit and retain quality employees to provide the services of the City for its residents is in the best interests of the City. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA: Section 1. That the City Manager is authorized to execute a contract renewal with PREMERA Blue Cross Blue Shield of Alaska to provide group medical, dental, and vision insurance to the employees of the City of Kenai, effective January 1, 2026, for an estimated annual premium of $2,713,177. Section 2. That this Resolution takes effect immediately upon passage. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, THIS 15T" DAY OF OCTOBER, 2025. Brian Gabriel Sr., Mayor EST: iciell� M. Steer, M�bQC, City Clerk New Text Underlined; [DELETED TEXT BRACKETED] Resolution No. 2025-60 Page 2 of 2 Approved by Finance: ___] New Text Underlined; [DELETED TEXT BRACKETED] K F, N A City of Kenai 1 210 Fidalgo Ave, Kenai, AK 99611-7794 1 907.283.7535 1 www.kenaixity MEMORANDUM TO: Mayor Gabriel and Council Members THROUGH: Terry Eubank, City Manager FROM: Stephanie Randall, Human Resources Director DATE: September 23, 2025 SUBJECT: Resolution 2026-60 - Authorizing a Contract Extension for Employee Health Care Effective January 1, 2026. The City provides health insurance coverage to employees through Premera Blue Cross Blue Shield of Alaska. The current plan, which began January 1, 2025, is a level -funded plan that offers flexibility and potential cost -savings. Under this structure, if the City renews the plan, it is eligible to receive a 50% refund of any premium amounts paid in excess of actual claims, after the payment of preset plan administration costs and stop loss insurance premiums. The plan includes two options for employees and expires on December 31, 2025, with an option for renewal. As part of the FY26 budget process, the City Council established a goal to ensure employee health insurance benefits remain sustainable while maintaining the quality of coverage. Administration worked with IMA, the City's health insurance broker, to obtain a quote for renewal of medical, dental, and vision insurance coverage for employees. The initial renewal proposal from Premera reflected a 6% increase to current premiums if no additional bids were sought. Through negotiations, IMA was able to reduce the no bid option to a 4.1% increase for medical and 6.0% increase for dental. Based on current claims experience, the City is projected to receive a refund of approximately $170,248 at the end of the plan year. This refund amount will change depending on claims activity in the final 5 months of 2025. With renewal, the City's estimated annual premium for 2026 would be approximately $2,713,177. IMA recommends accepting the renewal without requesting additional bids. Under Kenai Municipal Code 7.15.060(g), group insurance coverage for employees —including life, medical, dental, and vision —along with other forms of insurance such as general liability, workers' compensation, property, marine, and airport liability, may be procured by direct negotiation, subject to Council approval by resolution. In line with this authority, Administration is requesting Council approval of the attached resolution to renew employee health insurance coverage for the 2026 plan year. If the Council approves the passage of Resolution, Administration can proceed with open enrollment for employees for the 2026 calendar year plan. Your consideration is appreciated.