May 8, 1998



September 21, 2017

MEMORANDUM

TO: Mayor Craig A. Moe

City Council Members

VIA: Martin A. Flemion, City Administrator

FROM: E. Michael Greene, Human Resource Officer

SUBJECT: Employee Benefit Insurance

With the help of the Meltzer Group the City has bid employee health and dental insurance. The desire was to receive bids on the five forms of employee benefit insurance the City currently provides, including:

1. an Open Access HMO Health Plan,

2. an HMO Health Plan with Out-of-Network benefits,

3. a Maximum Allowable Charge (MAC) PPO Dental Plan,

4. a 90th Percentile Usual Customary and Reasonable (90th UCR) PPO Dental Plan, and

5. a vision plan that would provide for the purchase of eyeglasses or contact lenses.

The City currently offers all of these coverages to full-time and part-time employees, elected officials and eligible dependents of these groups. Enrollment is optional and requires enrollee payments of 20% of the cost of their selected option with the exception of the vision coverage. Retirees may also enroll in these plans with a maximum reimbursement of $400 per month.

The FY2018 Budget provides $2,500,000 for employee coverage and $275,000 for retiree coverage under Department Code 10950 - Employee Insurance (within the Non-Departmental section).

The City received an initial renewal offer from Cigna HealthCare, our current provider, with a rate increase of 6% for health insurance. This has been negotiated to approximately 4.4%-4.8%. In the same renewal offer Cigna raised their rates for vision coverage by 6.2% (with a 2 year rate lock) and their dental insurance by 20%.

Through Meltzer the City sent RFPs to 12 other dental insurance carriers including Aetna, Ameritas, CareFirst, Delta, Dominion, Guardian, Lincoln, MetLife, Reliance, SunLife, United Healthcare and Unum. Most declined to bid or were not competitive with the pricing or benefits currently provided. However, Aetna has offered a bid at nearly the same benefits and a premium reduction of approximately 0.5% with a rate cap of 7% next year. The proposal was evaluated to consider provider network and disruption, the benefit package, out of pocket expenses and premium.

The FY2018 Budget provides $41,750 for employee Life and AD&D coverage and $32,400 for employee Long Term Disability coverage under the same Department Code 10950 - Employee Insurance.

Aetna currently provides employee Group Term Life Insurance, Accidental Death and Dismemberment Insurance (AD&D) and Long Term Disability Insurance all of which are currently up for renewal. Aetna originally quoted a renewal rate increase of 14.5% for Life and AD&D, but have agreed to maintain their current rates (with a 2 year rate lock) if we purchase their Dental Insurance.

They are also quoting a 35.2% (estimated $9,833) increase for Long Term Disability; a coverage where claims have exceeded premiums for three of the last four calendar years.

It is recommended that the City renew with Cigna Healthcare for health and vision coverage and award dental coverage to Aetna Dental both starting November 1, 2017. It is further recommended that Group Term Life Insurance, Accidental Death and Dismemberment Insurance and Long Term Disability Insurance remain with Aetna at the negotiated prices starting November 1, 2017.

The adopted budget is adequate to cover the City’s share of health, dental and vision coverage plus the increased premium for Long Term Disability Insurance. It is also sufficient to increase the retiree health benefit from $400 per month to $500 per month.

cc: Lou Ann Crook

Kim Rau

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MAYOR AND CITY COUNCIL OF LAUREL

Department of Budget AND Personnel Services

8103 Sandy Spring Road ( Laurel, Maryland 20707-2502

Phone: (301) 725-5300 FAX (301) 725-7951 ( Internet:

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