TO: Mayor and City Council
FROM: Beth Beatty, City Manager
SUBJECT:
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Ordinance Amending and Restating Ordinance 17928 which Established Salary Ranges and Fringe Benefits for Non-Union Employees (Amendment to Group Health Insurance)
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BACKGROUND:
The City provides group insurance benefits to its employees. Historically, these benefits were set by ordinance for non-union employees, and by collective bargaining agreements for union employees. This action is to modify the group insurance benefit plans for non-union employees and non-union retirees.
In an effort to respond to employee’s requests for preventative care coverage, staff is proposing updates to group insurance benefit plans for 2025. The new benefit options would include preventative care coverage and comply with the 2010 Affordable Care Act. The most significant change is the creation of a second tier of benefits for non-union employees hired after January 1, 2025, and reducing the City’s cost of employee insurance long term. A complete summary of the changes are as follows:
Coverage Options
Tier 1 - Non-union employees hired before January 1, 2025
Note: Union coverages must be negotiated
(a) Offer current $250 deductible plan with percentage based contribution model.
1. No changes to health, dental and vision benefits
2. Eliminate current $200 preventative care reimbursement
(b) Add new $500 deductible Affordable Care Act compliant plan:
1. Preventative care covered at 100% (current preventative care reimbursement will be eliminated)
2. Under the new plan, all costs count toward out-of-pocket maximum including copays and prescription drugs
3. Virtual doctor visits covered at 100%
4. Increase vision reimbursement from $150 to $200
5. Add coverage for dental implants at 50%
6. Minimal copays for doctor visits, urgent care visits, and ER visits
7. Minimal increase to prescription copays
8. Small increase to deductible and out of pocket maximums
9. Coinsurance after deductible at 90% instead of 100%
Employee Premium Contributions
Change model to percent of calculated premium. Set employee contribution at 5.75% of calculated premium for 2025. See chart below.
Tier 2 - Non-union employes hired after January 1, 2025
Note: Union coverages must be negotiated
(a) Add new $750 deductible Affordable Care Act compliant plan:
1. Same plan design as new $500 deductible plan in Tier 1
2. Under the new plan, all costs count toward out-of-pocket max including copays and prescription drugs
3. Preventative care covered at 100%
4. Virtual doctor visits covered at 100%
5. Vision reimbursement from $150 to $200
6. Dental implants covered at 50%
7. Increased deductible and out of pocket maximums
Employee Premium Contributions
Premiums would be the same as employees in the Tier 1 $500 deductible plan
Employee Opt Out and Spouse Reimbursement
a. Eliminate reimbursement of working spouse’s insurance cost at their non-City of Joliet employer
b. Eliminate stipend for employees not selecting insurance
Retiree Insurance
a. Current retirees from non-union positions will be moved to $500 deductible plan.
b. Current retirees from union positions will have the option to choose their plan. If no option is chosen, the retiree will remain in the $250 deductible plan.
Estimated Financial Impact
a. $233,000 yearly savings for non-union active employees
b. If proposed changes were able to be made to all active employees Citywide, the savings is estimated to be $1,500,000 per year (8.8% of total active employee cost)
Tier 1 - Non Union Employees hired prior to January 1, 2025
Tier 2 - Non-union Employees hired after January 1, 2025
Renewal of Claims Administration and Stop Loss Coverage.
This ordinance includes the annual renewal of our agreement with Blue Cross Blue Shield for the processing of our claims, stop loss coverage, life insurance, and rebates for prescription drugs. Stop loss is insurance coverage to cap the City’s exposure for medical claims to $240,000. If a covered member’s total claims exceed $240,000, stop loss coverage will pay the amount above $240,000. Historically 5-8 members have claims exceeding this amount.
The current fee structure for Blue Cross Blue Shield consists of administration fees for processing claims, stop loss premiums, and life insurance premiums. The City also receives rebates from pharmaceutical drug manufacturers for our prescription drug claims. The following is a summary of the fees for the current year and for the 2025 renewal.
|
Per Member Fees |
2024 |
2025 |
|
Administrative Fees |
$69.67 |
$71.76 |
|
MD Live fees |
$0.52 |
$0.52 |
|
Stop Loss Coverage |
$96.94 |
$118.43 |
|
Total Fees |
$167.13 |
$190.71 |
|
Per Member Rebates |
|
|
|
Medical Rebate |
($2.50) |
($2.50) |
|
RX Rebates |
($171.94) |
($189.46) |
|
Total Rebates |
($174.44 |
($191.96) |
|
|
|
|
|
Net Per Member Cost |
($7.31) |
($1.25) |
|
|
|
|
|
Dental Administration % of claims |
4.6% |
4.3% |
|
Life Insurance per $1,000 coverage |
$0.702 |
$0.702 |
RECOMMENDATION:
recommendation
Based on the above, it is recommended that the Mayor and City Council adopt this Ordinance and the 2025 employee insurance renewal.
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