TO: Finance Committee
FROM: Kevin Sing, Director of Finance
SUBJECT:
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Group Health, Dental, Vision, and Life Insurance Renewal for active employees
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BACKGROUND:
The City provides group health, dental, vision, and life insurance benefits ("benefits") to its employees. Benefits are governed by ordinance for non-union employees and by collective bargaining agreements for union employees. The City provides insurance for approximately 120 non-union employees/officials, 725 union employees, and 745 retirees.
The purpose of this agenda item is to renew the contract with Blue Cross Blue Shield for health, dental and vision, and adopt benefits for active employees. Retiree benefits will be reviewed in a future separate action. The City has seen positive results both financially and in employee/official satisfaction to the changes we made in 2025. Positive financial results are supported by the average claim per covered member. The new $500 & $750 deductible plans were an average of $5,435.71 per covered member, while the legacy $250 deductible plan was $8,047.23 per covered member. Based on this information, we have calculated that the City saved between $250,000 and $500,000 by implementing the new plan designs. This cost savings is supported by the shift to virtual visits and primary care doctors versus immediate care and emergency room visits.
Blue Cross Blue Shield is estimating that our cost in 2026 will increase by 11.79%. Included in this cost increase is the cost of claims administration, prescription drug rebates, and the cost of stop loss coverage for claims more than $240,000 per covered individual.
Renewal of Claims Administration and Stop Loss Coverage.
The current fee structure for Blue Cross Blue Shield consists of administration fees for processing claims, stop loss premiums, and life insurance premiums. Stop loss is insurance coverage to cap the City's exposure for medical claims to $240,000. If a covered member's total c...
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