Title
A RESOLUTION AUTHORIZING THE CITY MANAGER TO ENTER INTO A CONTRACT WITH SUMMACARE FOR CERTAIN HEALTH BENEFIT PLAN SERVICES; AND DECLARING AN EMERGENCY
Executive Summary: The City of Hudson provides certain (medical and prescription drug coverage) health benefits to regular full-time city employees. The attached legislation seeks Council's authorization for the City Manager to enter into a contract with SummaCare for certain health benefit plan services for the period of January 1, 2014 thru December 31, 2014.
Body
Legislative History
None.
Purpose & Explanation
Annually during the month of October, the City begins preparing for health insurance for the upcoming year. During this period staff reviews, analyzes and recommends a health benefit plan to City Council that meets the goal of providing employees with an equitable health benefit plan at a fiscally responsible cost.
To achieve the above-stated goal, staff recently considered several insurance plans including SummaCare, Medical Mutual and the plan offered through Summit County. Medical Mutual did not provide a quote as they indicated that it would not be competitive. The Summit County Plan was attractive but it required a three-year commitment with no guarantee of rates in years two and three. Consequently, staff focused on SummaCare. SummaCare originally quoted a 15.73% increase for medical and prescription coverage. After negotiations with SummaCare, staff is recommending entering into a contract with SummaCare for medical and prescription drug coverage for the period of January 1, 2014 thru December 31, 2014 at an increase of 8.19%.
The renewal with SummaCare includes a plan that is similar to the City's current plan, except for a Health Care Reform change which requires that co-pays for medical and prescriptions be included in the out-of-pocket maximum. The City and its employees will not be impacted by this change in 2014.
Staff is once again recommending that the City fund a Health Reimbursement Account (HRA) for each employee equal to the employee's deductible, or in other words, a maximum of $4,000 per employee to cover the City's potential liability. However, employees managed their health care wisely and based on actual usage through October and estimated usage for November and December, it is estimated that only 51.7% of the HRA account will be used. By rolling over the savings into 2014, the estimated cost of health care to the City is reduced -4.31% compared to 2013.
As a result of the employee's efficient use of their HRA accounts and overall savings, staff is proposing no increase in the employee contribution percentage of 11.5% for 2014. The following is a breakdown of the monthly contributions that employees would experience in 2014: $68.21 per month for single coverage; $142.43 per month for employee/spouse coverage; $135.81 per month for employee/child(ren) coverage; and $198.59 for family coverage.
The City will enter into separate contracts with HealthEquity, Inc. to manage the associated health reimbursement account (HRA) program, and HealthSmart (formerly Klais & Company, Inc.) for dental and vision coverage. The contract with HealthEquity, Inc. for management of the HRAs will provide for a seamless process for the employees, as claims will be sent nightly from SummaCare to HealthEquity, Inc. and processed to automatically pay any deductible amounts from the employee's HRA account. After reaching the maximum, all claims will then be paid by SummaCare. The renewal with HealthSmart will maintain the existing dental and vision plans.
Timing Considerations
Open enrollment for health insurance will begin in November and shall run for at least a 14-day period prior to plan renewal. Consequently, approval at the November 12, 2013 City Council Meeting with emergency language is necessary.
Fiscal Impact
Currently Budgeted
Supplemental Appropriation Required
X Appropriation Not Required.
Recommendation
Suggested Action
Staff recommends City Council approve the attached Resolution authorizing the City Manager to enter into the health benefit plan contract with SummaCare, 10 N. Main Street Akron, Ohio, 44308. Staff also recommends the legislation be passed as an emergency measure.
Submitted by,
Anthony J. Bales, City Manager,
Scott N. Schroyer, Asst. City Manager