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HomeMy WebLinkAbout08/13/2019 B A K E R S F I E L D Staff: Committee Members: Chris Huot Councilmember, Ken Weir - Chair Assistant City Manager Councilmember, Chris Parlier Councilmember, Bruce Freeman SPECIAL MEETING NOTICE PERSONNEL COMMITTEE of the City Council - City of Bakersfield Tuesday, August 13, 2019 9:00 a.m. City Hall North – Conference Room A 1600 Truxtun Avenue, First Floor Bakersfield, California 93301 A G E N D A 1. ROLL CALL 2. ADOPT AUGUST 14, 2018 AGENDA SUMMARY REPORT 3. PUBLIC STATEMENTS 4. NEW BUSINESS A. 2020 Health Care Plan Renewals – Huot 5. COMMITTEE COMMENTS 6. ADJOURNMENT ________________________________________________________________ S:\Council Committees\2018\Personnel\August\August 14 ASR.docx Page 1 ST:mc B A K E R S F I E L D Committee Members Staff: Steven Teglia Councilmember, Ken Weir, Chair Assistant City Manager Councilmember, Willie Rivera Councilmember, Bruce Freeman SPECIAL MEETING OF THE PERSONNEL COMMITTEE Tuesday, August 14, 2018 12:00 p.m. City Hall North – Conference Room A 1600 Truxtun Avenue Bakersfield, CA 93301 AGENDA SUMMARY REPORT Meeting called to order at 12:00 p.m. 1. ROLL CALL Committee members Present: Councilmember, Ken Weir, Chair Councilmember, Bruce Freeman Councilmember, Willie Rivera City staff: Steven Teglia and Chris Huot, Assistant City Managers Virginia Gennaro, City Attorney Lisa McGranahan, Human Resources Manager Mari Blowers, Benefits Technician Nelson Smith, Finance Director Randy McKeegan, Assistant Finance Director Retired employees Fred Baugher, Florn Core, Bill Descary, and Margaret Ursin and BCARE: Others present: Tom Morrison and Johnny Wu, Segal Company Pam Baougher, Kevin Holland 2. ADOPTION OF JULY 20, 2017 AGENDA SUMMARY REPORT A motion to receive and file the Personnel Committee’s July 20, 2017 Agenda Summary Report was approved. /s/ Steven Teglia DRAFT ________________________________________________________________ S:\Council Committees\2018\Personnel\August\August 14 ASR.docx Page 2 ST:mc PUBLIC STATEMENTS There were no public statements. 3. NEW BUSINESS A. 2019 Health Care Plan Renewals - Teglia Assistant City Manager Teglia provided a summary of the annual process to prepare the rate renewal package for 2019. He stated Segal Company had worked with the various plan providers to obtain an understanding of the rates for the new plan year, which begins on January 1, 2019. The same information was provided to the Insurance Committee earlier in the day. He introduced Tom Morrison with the Segal Company (Segal) to present their report by way of a handout and PowerPoint presentation. Mr. Morrison distributed information to the Committee and gave a summary overview. Key points are:  The overall City 2019 contribution for active employee medical benefit is decreasing 2.7% or $443,200. All the plans had decreases - Blue Shield PPO (-2.7%), Blue Shield Full HMO (-0.2%), Blue Shield Narrow HMO (-0.2%), Kaiser HMO (-5.0%), and Kaiser High Deductible Health Plan (-5.0%).  The retiree medical benefit is increasing 1.9% or $158,500. All plans had increases - Blue Shield PPO (2.1%), Kaiser HMO (15%), and Kaiser HMO Senior Advantage (2.2%) with the exception of Blue Shield Medicare Advantage which experienced a decrease (-21.3%).  There is no rate increase to the United Concordia Dental PPO and HMO plans for both, active employees and retirees, due to a three year multi- year rate guarantee contract; 2019 is the third year of the contract.  There is no rate increase to the MES Vision contact as well due to a multi- year guarantee contract; 2019 is the third year of the contract.  There is no rate increase to the Section 125 Flexible Benefits, Long Term Disability, Basic Life Insurance, and AD&D Life Insurance.  The Optum Employee Assistance Program is increasing by 1.75%.  Drivers of the current rate decreases are: The Budget Reconciliation Act suspended the Insurer Tax under the Affordable Care Act for 2019; it is scheduled to be applied to the rates in 2020; overall medical claims decreased for all Blue Shield groups; prescription claims increased for Blue Shield HMO and the PPO retirees; medical and prescription claims decreased for Kaiser as well. DRAFT ________________________________________________________________ S:\Council Committees\2018\Personnel\August\August 14 ASR.docx Page 3 ST:mc Mr. Morrison also provided a summary of historic active and retiree plans rate information and enrollment comparisons for the last two years as discussed with the Insurance Committee earlier in the day. Assistant City Manager Teglia reported that after careful consideration and thorough discussion, the Insurance Committee voted unanimously to recommend the City accept and adopt the rate renewal package as presented. Staff and Segal were also in agreement with the Insurance Committee’s recommendation. In addition, Assistant City Manager Teglia stated the savings resulting from the positive rate renewals are recommended to be carried over to next year’s budget as a precaution for any rate increase that may occur. The Insurance Committee concurred with the recommendation. Committee member Rivera made a motion to accept staff’s recommendation and submit the item for approval to the full City Council. The motion was unanimously approved. 3. COMMITTEE COMMENTS Councilmember Freeman asked staff to provide a summarization of the City’s Other Postemployment Benefits (OPEB) liability and Trust Fund Balance related to retirees. Assistant City Manager Teglia provided a brief introduction regarding OPEB costs for employees hired before 2006. Finance Director Smith stated that as of June 2017, there was a total liability balance of $140 million and approximately $61 million in the trust fund balance. This results in an unfunded liability amount of approximately $78 million. The City currently budgets more than the annual subsidy amount; the difference between premiums paid and amount budgeted for the year is added to the trust fund. An update of this information is provided as part of the Finance Department’s budget presentation on an annual basis; in addition, Segal typically presents this information to the City Council as well. Councilmember Weir requested staff provide him with a projection of what would happen to the liability and savings if the subsidy were tied to a set benefit number. 4. ADJOURNMENT The meeting was adjourned at 1:07 pm DRAFT Documents Presented At The Personnel Committee August 13, 2019 Meeting Copyright © 2019 by The Segal Group, Inc. All rights reserved. Calendar Year 2020 Renewal Insurance and Personnel Committee City of Bakersfield Tom Morrison, Senior Vice President Johnny Wu, Consulting Actuary August 12, 2019 2 Overview of 2020 Plan Renewals Principle Causes of Rate Change Plan Options and Alternatives Appendix •Medical Rate Increase History •Medical Enrollment by Plan •Financial Ratings Table of Contents 3 Overview of 2020 Plan Renewals 4 The following plans experienced higher claims than in the prior year: •Blue Shield Active PPO •Kaiser Non-Medicare HMO •United Concordia (UCCI) PPO UCCI proposed a two-year renewal premium increase of 10.2% Optum and Voya proposed no increase to the rates Unum initially proposed a 8.8% increase and after negotiation reduced it to a 5.3% increase P&A Group and MES Vision are in the last year of multi-year rate guarantees and there is no increase The City’s overall cost for active employee benefits increased by 9.4% or $1,499,500 for 2020 at the current contribution level of 80%, when compared to the 2019 reduction of 2.7% Kaiser proposed an alternative plan in conjunction with the current plans that will reduce the proposed rate increase for the current Active Traditional and Deductible HMO plans to 4.04% and 2.8%, respectively. The total budgeted active increase would be reduced to 8.6% for all benefits The 2020 premiums for retiree benefits increased by 1.1% or $81,900 without consideration of the subsidy amount paid by the City Executive Summary 5 Active Plan Rate History 1 1 Anthem was replaced with Blue Shield of California in 2016. 2 Kaiser proposed to reduce the rate increase for the Traditional and Deductible HMO plans to 4.04% and 2.8%, respectively, if the City would add a middle plan. Please see page 26 for more details. 3.6% 9.5%9.6% -5.0% 6.8% 4.9% 3.6% 6.3% 1.6% -5.0% 6.8% 2.7% 9.4% 0.0% 7.4% -2.7% 14.3% 5.7% 9.9% 6.8% 1.1% -0.2%0.0% 3.5% 6.8%6.8% -0.2%0.0% 3.4% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 2016 ¹2017 2018 2019 2020 ²Average ² Active Plan Rate History Kaiser HMO Kaiser DHMO Anthem/Blue Shield PPO Anthem/Blue Shield Full HMO Blue Shield Narrow HMO 6 15.0%15.1%15.0%15.0% 0.0% 12.0% 15.0%14.8%15.0%15.0% 0.0% 12.0% 7.6% 4.1% 2.4%2.1% 0.9% 3.4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2016 ¹2017 2018 2019 2020 Average Retiree Plan Rate History Kaiser HMO Kaiser DHMO Anthem/Blue Shield PPO Retiree Plan Rate History (Non-Medicare Kaiser and Non-Medicare/Medicare Blue Shield) 1 Anthem was replaced with Blue Shield of California in 2016. 7 4.8% 1.2%0.2%1.0% 2.3% 2.3%2.3%2.6% -5.5% 4.6% -29.9% -22.0% 11.5% -21.2% 9.3% -10.5% -35.0% -30.0% -25.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 2014 2015 2016 ¹2017 2018 2019 2020 Average Medicare Advantage Plan Rate History Kaiser Senior Advantage Anthem/Blue Shield Medicare Advantage Medicare Advantage Plan Rate History 1 In 2016, Anthem was replaced with Blue Shield of California. 8 CITY OF BAKERSFIELD Annual City Contribution Based on Rates Effective January 1, 2020 Active Plan Enrollment Current City Contribution at 80% 2020 City Contribution at 80%Annual Change Percentage Change Blue Shield Full HMO 153 $1,938,600 $1,938,300 -$300 0.0% Narrow HMO 75 $758,400 $758,300 -$100 0.0% PPO 607 $7,813,200 $8,929,100 $1,115,900 14.3% Subtotal 835 $10,510,200 $11,625,700 $1,115,500 10.6% Kaiser (1) HMO 438 $4,240,700 $4,527,000 $286,300 6.8% HDHP 30 $141,400 $151,000 $9,600 6.8% Subtotal 468 $4,382,100 $4,678,000 $295,900 6.8% United Concordia (2) HMO 356 $154,100 $154,100 $0 0.0% PPO 988 $865,000 $953,100 $88,100 10.2% Subtotal 1,344 $1,019,100 $1,107,200 $88,100 8.6% MES Vision HMO 700 $46,900 $46,900 $0 0.0% PPO 636 $61,200 $61,200 $0 0.0% Subtotal 1,336 $108,100 $108,100 $0 0.0% Total Medical, Dental, Vision (3)$16,019,500 $17,519,000 $1,499,500 9.4% (1) Kaiser proposed to reduce the rate increase for the Traditional and Deductible HMO plans to 4.04% and 2.8%, respectively, if the City would add a middle plan. Please see page 26 for more details. (2) United Concordia proposed a rate guarantee through December 31, 2021. (3) Voya Life and AD&D, Optum EAP, Unum LTD and P&A Group are not included above. 2020 City Contribution at 80% The projections of annual premium in this report are estimates of future costs and are based on information available to The Segal Company at the time the projections were made. The Segal Company has not audited the information provided. Projections are not a guarantee of future results. Actual experience may differ due to, but not limited to, such variables as changes in the regulatory environment, local market pressure, health trend rates and claims volatility. The accuracy and reliability of health projections decrease as the projection period increases. 9 CITY OF BAKERSFIELD Annual Premium Based on Rates Effective January 1, 2020 Active and COBRA Plan Enrollment Current Annual Premium 2020 Annual Premium Annual Change Percentage Change Blue Shield Full HMO 153 $2,423,200 $2,422,900 -$300 0.0% Narrow HMO 77 $975,500 $975,400 -$100 0.0% PPO 613 $9,836,100 $11,240,900 $1,404,800 14.3% Subtotal 843 $13,234,800 $14,639,200 $1,404,400 10.6% Kaiser (1) HMO 445 $5,350,900 $5,712,100 $361,200 6.8% HDHP 31 $184,400 $196,900 $12,500 6.8% Subtotal 476 $5,535,300 $5,909,000 $373,700 6.8% United Concordia (2) HMO 360 $194,300 $194,300 $0 0.0% PPO 1,024 $1,111,600 $1,224,700 $113,100 10.2% Subtotal 1,384 $1,305,900 $1,419,000 $113,100 8.7% MES Vision HMO 706 $59,000 $59,000 $0 0.0% PPO 659 $78,700 $78,700 $0 0.0% Subtotal 1,365 $137,700 $137,700 $0 0.0% Total Premiums $20,213,700 $22,104,900 $1,891,200 9.4% (1) Kaiser proposed to reduce the rate increase for the Traditional and Deductible HMO plans to 4.04% and 2.8%, respectively, if the City would add a middle plan.Please see page 26 for more details. (2) United Concordia proposed a rate guarantee through December 31, 2021. 2020 Annual Premiums (Active and COBRA) 10 CITY OF BAKERSFIELD Annual Premium Based on Rates Effective January 1, 2020 Retiree Plan Enrollment Current Annual Premium 2020 Annual Premium Annual Change Percentage Change Blue Shield PPO 432 $7,601,800 $7,673,500 $71,700 0.9% Medicare Advantage 32 $110,400 $120,600 $10,200 9.2% Subtotal 464 $7,712,200 $7,794,100 $81,900 1.1% Kaiser HMO 0 $0 $0 $0 N/A HDHP 0 $0 $0 $0 N/A Senior Advantage 154 $434,000 $444,000 $10,000 2.3% Subtotal 154 $434,000 $444,000 $10,000 2.3% United Concordia HMO 211 $57,300 $57,300 $0 0.0% MES Vision (1) HMO 0 $0 $0 $0 N/A Total Premiums $8,203,500 $8,295,400 $91,900 1.1% (1)Vision plan is bundled with the Non-Medicare Kaiser plan, which has no enrollment. 2020 Annual Premiums (Retiree) 11 Enrollment 2019 Rates 2020 Rates Percentage Change 2020 City Contribution 2020 Employee Contribution 2020 City Contribution Change 2020 Employee Contribution Change Active Single 38 $568.08 $568.08 0.00%$454.46 $113.62 $0.00 $0.00 Two-Party 22 $1,141.73 $1,141.73 0.00%$913.38 $228.35 $0.00 $0.00 Family 93 $1,669.11 $1,669.11 0.00%$1,335.29 $333.82 $0.00 $0.00 COBRA/Cal-COBRA Single 0 $568.08 $568.08 0.00% Two-Party 0 $1,141.73 $1,141.73 0.00% Family 0 $1,669.11 $1,669.11 0.00% Enrollment 2019 Rates 2020 Rates Percentage Change 2020 City Contribution 2020 Employee Contribution 2020 City Contribution Change 2020 Employee Contribution Change Active Single 19 $463.22 $463.22 0.00%$370.58 $92.64 $0.00 $0.00 Two-Party 14 $930.98 $930.98 0.00%$744.78 $186.20 $0.00 $0.00 Family 42 $1,361.03 $1,361.03 0.00%$1,088.82 $272.21 $0.00 $0.00 COBRA/Cal-COBRA Single 0 $463.22 $463.22 0.00% Two-Party 1 $930.98 $930.98 0.00% Family 1 $1,361.03 $1,361.03 0.00% Blue Shield - Access+ HMO (Full Network) Blue Shield - Trio ACO HMO (Narrow Network) No City Contribution No City Contribution 2020 Blue Shield of California Monthly Rate Summary 12 Enrollment 2019 Rates 2020 Rates Percentage Change 2020 City Contribution 2020 Employee Contribution 2020 City Contribution Change 2020 Employee Contribution Change Active Single 144 $578.89 $661.57 14.28%$529.26 $132.31 $66.14 $16.54 Two-Party 131 $1,159.76 $1,325.41 14.28%$1,060.33 $265.08 $132.52 $33.13 Family 332 $1,742.72 $1,991.63 14.28%$1,593.30 $398.33 $199.13 $49.78 COBRA/Cal-COBRA Single 4 $578.89 $661.57 14.28% Two-Party 0 $1,159.76 $1,325.41 14.28% Family 2 $1,742.72 $1,991.63 14.28% Retiree Single 294 $1,096.02 $1,106.36 0.94% Two-Party 130 $2,191.90 $2,212.57 0.94% Family 8 $3,287.88 $3,318.89 0.94% Enrollment 2019 Rates 2020 Rates Percentage Change 2020 City Contribution 2020 Employee Contribution 2020 City Contribution Change 2020 Employee Contribution Change Over 65 Retiree Single 32 $287.43 $314.13 9.29% Blue Shield - PPO Varies Varies No City Contribution Blue Shield - Medicare Advantage 2020 Blue Shield of California Monthly Rate Summary 13 Enrollment 2019 Rates 2020 Rates Percentage Change 2020 City Contribution 2020 Employee Contribution 2020 City Contribution Change 2020 Employee Contribution Change Active Single 119 $463.58 $494.88 6.75%$395.90 $98.98 $25.04 $6.26 Two-Party 83 $927.16 $989.75 6.75%$791.80 $197.95 $50.07 $12.52 Family 236 $1,311.93 $1,400.50 6.75%$1,120.40 $280.10 $70.86 $17.71 COBRA Single 5 $463.58 $494.88 6.75% Two-Party 2 $927.16 $989.75 6.75% Family 0 $1,311.93 $1,400.50 6.75% Under 65 Retiree Single 0 $1,647.01 $1,647.01 0.00% Two-Party 0 $3,294.03 $3,294.03 0.00% Family 0 $4,661.05 $4,661.05 0.00%Varies No City Contribution Kaiser Permanente - HMO 2020 Kaiser Monthly Rate Summary Note: If the City offers the intermediate plan option, Kaiser will reduce the proposed rate increase for the current Active Traditional and Deductible HMO plans to 4.04% and 2.8%, respectively. Please see page 26 for more details. 14 Enrollment 2019 Rates 2020 Rates Percentage Change 2020 City Contribution 2020 Employee Contribution 2020 City Contribution Change 2020 Employee Contribution Change Active Single 17 $318.04 $339.51 6.75%$271.61 $67.90 $17.18 $4.29 Two-Party 9 $636.09 $679.03 6.75%$543.22 $135.81 $34.35 $8.59 Family 4 $900.07 $960.86 6.75%$768.69 $192.17 $48.63 $12.16 COBRA Single 0 $318.04 $339.51 6.75% Two-Party 1 $636.09 $679.03 6.75% Family 0 $900.07 $960.86 6.75% Under 65 Retiree Single 0 $1,421.65 $1,421.65 0.00% Two-Party 0 $2,843.29 $2,843.29 0.00% Family 0 $4,023.25 $4,023.25 0.00% Enrollment 2019 Rate 2020 Rate Percentage Change 2020 City Contribution 2020 Employee Contribution 2020 City Contribution Change 2020 Employee Contribution Change Over 65 Retiree Single 154 $234.87 $240.25 2.29% Kaiser Permanente - Deductible HMO Kaiser Permanente - Senior Advantage Varies No City Contribution Varies 2020 Kaiser Monthly Rate Summary Note: If the City offers the intermediate plan option, Kaiser will reduce the proposed rate increase for the current Active Traditional and Deductible HMO plans to 4.04% and 2.8%, respectively. Please see page 26 for more details. Plan Options and Alternatives -Kaiser Monthly Rate Summary Kaiser Permanente -HMO (Current) Enrollment 2019 Rates 2020 Rates Percentage Change 2020 City Contribution 2020 Employee Contribution 2020 City Contribution Change 2020 Employee Contribution Change Active Single 119 $463.58 $482.33 4.04%$385.86 $96.47 $15.00 $3.75 Two -Party 83 $927.16 $964.65 4.04%$771.72 $192.93 $29.99 $7.50 Family 236 $1,311.93 $1,364.99 4.04%$1,091.99 $273.00 $42.45 $10.61 COBRA Single 5 $463.58 $482.33 4.04% No City ContributionTwo-Party 2 $927.16 $964.65 4.04% Family 0 $1,311.93 $1,364.99 4.04% Kaiser Permanente -Deductible HMO (Proposed) (1) Enrollment 2019 Rates 2020 Rates Percentage Change 2020 City Contribution 2020 Employee Contribution 2020 City Contribution Change 2020 Employee Contribution Change Active Single 0 N/A $427.82 N/A $342.26 $85.56 N/A N/A Two -Party 0 N/A $855.64 N/A $684.51 $171.13 N/A N/A Family 0 N/A $1,210.72 N/A $968.58 $242.14 N/A N/A COBRA Single 0 N/A $427.82 N/A No City ContributionTwo-Party 0 N/A $855.64 N/A Family 0 N/A $1,210.72 N/A (1)Proposed plan would be effective January 1, 2020. Plan Options and Alternatives -Kaiser Monthly Rate Summary Kaiser Permanente -Deductible HMO (Current) Enrollment 2019 Rates 2020 Rates Percentage Change 2020 City Contribution 2020 Employee Contribution 2020 City Contribution Change 2020 Employee Contribution Change Active Single 17 $318.04 $326.91 2.79%$261.53 $65.38 $7.10 $1.77 Two -Party 9 $636.09 $653.83 2.79%$523.06 $130.77 $14.19 $3.55 Family 4 $900.07 $925.20 2.79%$740.16 $185.04 $20.10 $5.03 COBRA Single 0 $318.04 $326.91 2.79% No City ContributionTwo-Party 1 $636.09 $653.83 2.79% Family 0 $900.07 $925.20 2.79% 15 Enrollment 2019 Rates 2020 Rates Percentage Change 2020 City Contribution 2020 Employee Contribution 2020 City Contribution Change 2020 Employee Contribution Change Active Single 90 $20.75 $20.75 0.00%$16.60 $4.15 $0.00 $0.00 Two-Party 81 $38.05 $38.05 0.00%$30.44 $7.61 $0.00 $0.00 Family 185 $60.00 $60.00 0.00%$48.00 $12.00 $0.00 $0.00 COBRA Single 2 $20.75 $20.75 0.00% Two-Party 1 $38.05 $38.05 0.00% Family 1 $60.00 $60.00 0.00% Retiree Single 108 $15.85 $15.85 0.00% Two-Party 97 $28.85 $28.85 0.00% Family 6 $44.60 $44.60 0.00% Enrollment 2019 Rates 2020 Rates Percentage Change 2020 City Contribution 2020 Employee Contribution 2020 City Contribution Change 2020 Employee Contribution Change Active Single 245 $35.97 $39.63 10.18%$31.70 $7.93 $2.93 $0.73 Two-Party 209 $73.96 $81.49 10.18%$65.19 $16.30 $6.02 $1.51 Family 534 $123.29 $135.84 10.18%$108.67 $27.17 $10.04 $2.51 COBRA Single 14 $35.97 $39.63 10.18% Two-Party 14 $73.96 $81.49 10.18% Family 8 $123.29 $135.84 10.18%No City Contribution No City Contribution United Concordia (UCCI) - Dental PPO United Concordia (UCCI) - Dental HMO No City Contribution 2020 Dental Monthly Rate Summary Note: UCCI proposed a premium increase of 10.18% with a 24 month guarantee ending December 31, 2021. 16 Enrollment 2019 Rates 2020 Rates Percentage Change 2020 City Contribution 2020 Employee Contribution 2020 City Contribution Change 2020 Employee Contribution Change Active Single 201 $3.45 $3.45 0.00%$2.76 $0.69 $0.00 $0.00 Two-Party 135 $6.90 $6.90 0.00%$5.52 $1.38 $0.00 $0.00 Family 364 $8.97 $8.97 0.00%$7.18 $1.79 $0.00 $0.00 COBRA Single 5 $3.45 $3.45 0.00% Two-Party 1 $6.90 $6.90 0.00% Family 0 $8.97 $8.97 0.00% Retiree Single 0 $3.45 $3.45 0.00% Two-Party 0 $6.90 $6.90 0.00% Family 0 $8.97 $8.97 0.00% Enrollment 2019 Rates 2020 Rates Percentage Change 2020 City Contribution 2020 Employee Contribution 2020 City Contribution Change 2020 Employee Contribution Change Active Single 156 $4.83 $4.83 0.00%$3.86 $0.97 $0.00 $0.00 Two-Party 154 $9.70 $9.70 0.00%$7.76 $1.94 $0.00 $0.00 Family 326 $12.65 $12.65 0.00%$10.12 $2.53 $0.00 $0.00 COBRA Single 10 $4.83 $4.83 0.00% Two-Party 8 $9.70 $9.70 0.00% Family 5 $12.65 $12.65 0.00% No City Contribution No City Contribution Varies Medical Eye Services (MES) - Vision HMO Medical Eye Services (MES) - Vision PPO 2020 Vision Monthly Rate Summary 17 2020 Life and AD&D Monthly Rate Summary 2019 Rates 2020 Rates (1)Percent Change City Costs Basic Life $0.130 $0.130 0.00% Basic AD&D $0.020 $0.020 0.00% Voluntary Employee Costs Supplemental Life (Employee and Spouse) <30 $0.070 $0.070 0.00% 30-34 $0.100 $0.100 0.00% 35-39 $0.120 $0.120 0.00% 40-44 $0.180 $0.180 0.00% 45-49 $0.270 $0.270 0.00% 50-54 $0.440 $0.440 0.00% 55-59 $0.760 $0.760 0.00% 60-64 $1.170 $1.170 0.00% 65-69 $2.260 $2.260 0.00% 70-74 $3.660 $3.660 0.00% 75+$3.660 $3.660 0.00% Supplemental Dependent Life $0.200 $0.200 0.00% Supplemental AD&D Subscriber Only $0.050 $0.050 0.00% Family $0.080 $0.080 0.00% Voya - Life and AD&D Insurance (Rate per $1,000) (1) Voya proposed a two-year rate guarantee between January 1, 2020 through December 31, 2021. 18 Optum -EAP 2019 Rate 2020 Rate Percentage Change Active $1.74 $1.74 0.00% P&A Group -Section 125 Flexible Benefits 2019 Rates 2020 Rates Percentage Change FSA and/or DCAP $4.00 $4.00 0.00% Unum -Long Term Disability (Rate per $100) 2019 Rate 2020 Rate Percentage Change Long Term Disability $0.57 $0.60 5.26% 2020 EAP, Flexible Benefits, and LTD Summary 19 Principle Causes of Rate Change 20 Blue Shield Medical and Prescription claims increased by approximately 45.1% and 11.8%, respectively, for the Active Blue Shield PPO plan •The claims for five individuals exceeded the pooling point of $200,000 •Whereas last year, one individual’s claims exceeded the pooling point Reinstatement of the Health Insurance Tax (HIT) constitutes about 2.1% of the proposed increase Principle Causes of Rate Change 21 Kaiser Medical claims increased by approximately 18.5% for Kaiser’s active plans •Inpatient claims increased by 157.6% on a per member per month (PMPM) basis •Outpatient and Pharmacy PMPM claims reduced by 6.4% and 2.6% respectively •The claims for three individuals exceeded the pooling point of $215,000 •Whereas last year, no individuals’ claims exceeded the pooling point •Reinstatement of the HIT fee constitute about 1% of the proposed increase Principle Causes of Rate Change 22 United Concordia (UCCI) Retention includes ACA Insurer fee that was suspended in 2019 •Reinstatement of the HIT fee constitute about 3% of the proposed increase Claims have been high relative to premiums with a loss ratio averaging 93% since the plan’s effective date of January 1, 2017 Principle Causes of Rate Change 23 Plan Options and Alternatives 24 Blue Shield proposed the following plan design options: Plan Options and Alternatives (Blue Shield) Benefits Current Proposed Proposed Rate Reduction (1) PPO -Active PPO -Retiree HMO Access+ & Trio Coinsurance (In-Network/Out-of-Network)90% / 50%80% / 50%-2.58%-2.50%N/A In-Network Out-of-Pocket Maximum (Individual/Family)$2,000 / $6,000 $3,000 / $9,000 -2.63%-2.50%N/A Out-of-Network Out-of-Pocket Maximum (Individual/Family)$7,000 / $21,000 $10,000 / $30,000 -0.08%-0.07%N/A Emergency Room Copay $100 Copay $150 Copay -0.013%-0.012%N/A Pharmacy Plan Copays (2) PPO Retail: $10 / $20 / $20 Mail Order: $20 / $30 / $30 HMO & Trio Retail: $10 / $25 / $45 Mail Order: $20 / $50 / $90 PPO, HMO & Trio Retail: $10 / $25 / $40 Mail Order: $20 / $50 / $80 -1.24%-2.47%-1.27% (1)All proposed rate reduction factors are multiplicative, and not additive. (2)In addition to copays, the current formulary would transition to Blue Shield's Value Formulary. The list below contains changes in the proposed formulary: a). Certain drugs are moved to a higher tier or removed from the formulary b). High-cost generics are placed on higher tiers c). Non-formulary drugs require a medical necessity exception. 25 Kaiser proposed to reduce the rate increase for the Traditional and Deductible HMO plans to 4.0% and 2.8%, respectively, if the City would add a middle plan Plan Options and Alternatives (Kaiser) Note: There is no minimum enrollment required for the proposed plan. Kaiser Traditional HMO (Current) Medium Benefit HMO (Proposed) Deductible HMO (Current) Plan Deductible (Individual/Family)None $1,000/$2,000 $1,000/$2,000 Out-of-Pocket Maximum (Individual/Family)$1,500/$3,000 $3,000/$6,000 $3,000/$6,000 Pharmacy Deductible (Individual)None None $100 Physician Services Primary Care Visits $25 Copay Per Visit $20 Copay Per Visit (Deductible Does Not Apply) $30 Copay Per Visit (Deductible Does Not Apply) Physician Specialist Visits $25 Copay Per Visit $20 Copay Per Visit (Deductible Does Not Apply) $30 Copay Per Visit (Deductible Does Not Apply) Preventive Care Services No Charge No Charge (Deductible Does Not Apply) No Charge (Deductible Does Not Apply) Hospital Services Emergency Room (Waived if Admitted)$100 Per Visit 20% After Plan Deductible 30% After Plan Deductible Inpatient Services $250 Per Admit 20% After Plan Deductible 30% After Plan Deductible Outpatient Services $25 Per Procedure 20% After Plan Deductible 30% After Plan Deductible Prescription Drugs Retail (up to 30-day supply) Generic $10 Copay $10 Copay $10 Copay Brand $30 Copay $30 Copay $30 Copay Specialty 20% up to $150 20% up to $150 20% up to $150 Mail-Order (up to 100-day supply) Generic $20 Copay $20 Copay $20 Copay Brand $60 Copay $60 Copay $60 Copay 2020 Monthly Proposed Premium at 4% Increase Single $482.33 $427.82 $326.91 Two-Party $964.65 $855.64 $653.83 Family $1,364.99 $1,210.72 $925.20 26 CITY OF BAKERSFIELD Annual City Contribution Based on Rates Effective January 1, 2020 Active Plan Enrollment Current City Contribution at 80% 2020 City Contribution at 80%Annual Change Percentage Change Blue Shield Full HMO 153 $1,938,600 $1,938,300 -$300 0.0% Narrow HMO 75 $758,400 $758,300 -$100 0.0% PPO 607 $7,813,200 $8,929,100 $1,115,900 14.3% Subtotal 835 $10,510,200 $11,625,700 $1,115,500 10.6% Kaiser HMO 438 $4,240,700 $4,412,200 $171,500 4.0% HDHP 30 $141,400 $145,400 $4,000 2.8% Subtotal 468 $4,382,100 $4,557,600 $175,500 4.0% United Concordia (1) HMO 356 $154,100 $154,100 $0 0.0% PPO 988 $865,000 $953,100 $88,100 10.2% Subtotal 1,344 $1,019,100 $1,107,200 $88,100 8.6% MES Vision HMO 700 $46,900 $46,900 $0 0.0% PPO 636 $61,200 $61,200 $0 0.0% Subtotal 1,336 $108,100 $108,100 $0 0.0% Total Medical, Dental, Vision (2)$16,019,500 $17,398,600 $1,379,100 8.6% (1) United Concordia proposed a rate guarantee through December 31, 2021. (2) Voya Life and AD&D, Optum EAP, Unum LTD and P&A Group are not included above. Plan Options and Alternatives (Kaiser) Below is the annual City contribution for active employees if the City would add a Kaiser middle plan 27 Maximum Allowable Cost (OON MAC) UCR 70th Percentile $2,000 Annual Maximum OON MAC, $2,000 Annual Maximum, & Preventive Incentive UCR 70th Percentile, $2,000 Annual Maximum, & Preventive Incentive % Impact of Benefit Change -4.6%-2.0%-2.5%-6.2%-3.6% UCCI proposed the following plan alternatives: •Change the Out-of-Network Reimbursement from the 90th percentile Usual, Customary and Reasonable (UCR) Fee Schedule to the Maximum Allowable Cost (MAC), based on UCCI’s Fee Schedule •Change the Out-of-Network (OON) Reimbursement to the UCR Fee Schedule from 90th to 70th percentile •Reduce the Annual Maximum from $2,500 to $2,000 •Combination of all the above options with Preventive Incentive (PI) –PI is where Class I services do not count against the Annual Maximum Plan Options and Alternatives (UCCI) 28 Below is the utilization percentage for in and out of network Plan Options and Alternatives (UCCI) 29 Appendix 30 2016 2017 2018 2019 2020 Kaiser HMO $406.68 $445.31 $487.98 $463.58 $494.88 Kaiser DHMO $309.79 $329.44 $334.78 $318.04 $339.51 Anthem/Blue Shield PPO $554.19 $554.19 $594.93 $578.89 $661.57 Anthem/Blue Shield HMO $527.03 $563.03 $568.95 $568.08 $568.08 Blue Shield Narrow HMO $441.83 $459.11 $463.93 $463.22 $463.22 $0 $100 $200 $300 $400 $500 $600 $700 Active Rate History Active Plan Rate for Single Employee –Rate History 31 2016 2017 2018 2019 2020 Kaiser HMO $1,082.01 $1,245.38 $1,432.19 $1,647.01 $1,647.01 Kaiser DHMO $936.20 $1,074.97 $1,236.22 $1,421.65 $1,421.65 Anthem/Blue Shield PPO $1,006.76 $1,048.38 $1,073.10 $1,096.02 $1,106.36 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 Retiree Rate History Retiree Plan Rate for Single Retiree –Rate History 32 2016 ¹2017 2018 2019 2020 Kaiser Senior Advantage $212.00 $214.22 $229.69 $234.87 $240.25 Anthem/Blue Shield MC Advantage $419.38 $327.29 $364.95 $287.43 $314.13 $0.00 $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 $350.00 $400.00 $450.00 Medicare Advantage Rate History Medicare Advantage Plan Rate for Single Retiree –Rate History 1 In 2016, Anthem was replaced with Blue Shield of California. 33 Enrollment for Active Plans Blue Shield Full HMO, 171, 13.0% Blue Shield Narrow HMO, 75, 5.7% Blue Shield PPO, 609, 46.4% Kaiser HMO, 426, 32.5% Kaiser DHMO, 31, 2.4% 2018 Enrollment -Actives and COBRA Blue Shield Full HMO, 153, 11.6%Blue Shield Narrow HMO, 77, 5.8% Blue Shield PPO, 613, 46.5% Kaiser HMO, 445, 33.7% Kaiser DHMO, 31, 2.4% 2019 Enrollment -Actives and COBRA 34 Enrollment for Retiree Plans Blue Shield PPO, 442, 99.8% Kaiser HMO, 1, 0.2% Kaiser DHMO, 0, 0.0% 2018 Enrollment -Retirees Blue Shield PPO, 432, 100.0% Kaiser HMO, 0, 0.0% Kaiser DHMO, 0, 0.0% 2019 Enrollment -Retirees 35 Enrollment for Medicare Advantage Plans Blue Shield Medicare Advantage, 23, 13.0% Kaiser Senior Advantage, 154, 87.0% 2018 Enrollment -Medicare Advantage Blue Shield Medicare Advantage, 32, 17.2% Kaiser Senior Advantage, 154, 82.8% 2019 Enrollment -Medicare Advantage 36 Company Rating Agency Rating Blue Shield of California Life & Health Insurance Company A.M. Best A P&A Group Not Rated Not Rated Kaiser Foundation Health Plan Inc.Standard & Poor’s AA- Medical Eye Services, Inc.Not Rated Not Rated UnitedHealthcare Insurance Company (Parent of Optum)Standard & Poor’s AA- United Concordia Dental Plans of California, Inc.A.M. Best A Unum Life Insurance Company of America A.M. Best A Voya Insurance and Annuity Company A.M. Best A Financial Ratings for 2020 Renewals 37 Segal believes it is important to consider the financial strength of insurance companies and managed care organizations, which are candidates for initial selection or renewal as insurers or service providers to employee benefit plans. Therefore, we are providing the current claims paying ability rating that was available to us on the date this document was prepared for the insurance company or managed care organization under consideration. When available, we select Standard & Poor’s because of its excellent overall reputation as a rating service. In addition, it evaluates more insurance companies than any of the other comparable rating services. Several other rating services (e.g., Duff & Phelps, Moody’s, and A.M. Best) also provide claims paying ability evaluations of insurance companies and managed care organizations, which we provide when a Standard & Poor’s rating is not available. You may wish to consult these other services before making a decision regarding the initial selection or renewal of an insurance company or managed care organization. Insurance company and managed care organization rating categories explanations are attached. For example, Standard & Poor’s ratings range from “Vulnerable” to “Secure”. In particular, they regard “vulnerable” companies (i.e., ratings of BB+ and lower) to be at relatively serious risk in terms of meeting both claims and creditor obligations. Insurance companies in this category should be researched carefully before being selected. To the right is a chart, which explains the Standard & Poor’s rating categories. (Duff & Phelps uses the same rating system as Standard & Poor’s; A.M. Best’s rating system is shown in parentheses). Financial Ratings Investment Grade or Secure: AAA (A++)Companies rated AAA have the highest rating assigned. Capacity to pay interest and repay principal is extremely strong. AA (A+)Companies rated AA have a very strong capacity to pay interest and repay principal and differ from the highest rated issuers only to a small degree. A (A, A-)Companies rated A have a strong capacity to pay interest and repay principal, although they are somewhat more susceptible to adverse changes in economic conditions than those in higher rated categories. BBB (B++, B+)Companies rated BBB are regarded as having an adequate capacity to pay interest and repay principal, however, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal. Below Investment Grade or Vulnerable: BB (B) B (B-) CCC (C++, C+) CC (C, C-) Companies rated BB, B, CCC and CC are regarded, on balance, as speculative with respect to their credit worthiness. While such companies may have some protective characteristics, uncertainties and major risk exposure or adverse conditions outweigh them. R; NR The rating R is reserved for companies who “have experienced a REGULATORY ACTION regarding solvency.” The rating NR indicates that the insurer’s financial solvency is not rated.