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, 2015 thru December 31, 2015.
Body
Legislative History
None.
Purpose & Explanation
The purpose of this resolution is to authorize the renewal of the City's health insurance plan with SummaCare. The original renewal quote was in excess of 16% however after negotiations with SummaCare, the amended renewal rate is 11.7%. Staff is recommending entering into a contract with SummaCare for medical and prescription drug coverage for the period of January 1, 2015 thru December 31, 2015.
Staff is once again recommending that the City fund a Health Reimbursement Account (HRA) for each employee equal to the employee's deductible, a maximum of $2,000/$4,000 (single/family) per employee to cover the City's potential liability. For 2014, it is estimated that approximately 49% of the HRA account will be used. We recommend rolling over the HRA savings into 2015 which reduces the estimated cost of health care to an increase of 5.54% as compared to 2014.
Staff is proposing no increase in the employee contribution percentage of 11.5% for the first half of 2015 and increasing employee contribution to 13% for the second half of 2015. The following is a breakdown of the monthly contributions that employees would experience in the first half of 2015: $72.94 per month for single coverage; $151.54 per month for employee/spouse coverage; $144.14 per month for employee/child(ren) coverage; and $214.24 for family coverage. This represents an average increase of 6.4% to employees over 2014.
For the second half of 2015, employee contributions would be $82.46 per month for single coverage; $171.30 per month for employee/spouse coverage; $162.94 per month for employee/child(ren) coverage; and $242.18 for family coverage. This represents an average increase of 17% to employees over 2014.
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 is November 25 through December 9, 2014.
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,
Jane Howington, City Manager,
Jeff Knoblauch, Finance Director