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HomeMy WebLinkAbout10/02/2012 Agenda Summary Report ________________________________________________________________ S:\Council Committees\2012\Personnel\October\october 2 Agenda Summary Report.docx Page 1 ST:al B A K E R S F I E L D City Council members: /s/ Steven Teglia Ken Weir, Chair Staff: Steven Teglia David Couch Assistant to the City Manager Harold Hanson SPECIAL MEETING OF THE PERSONNEL COMMITTEE Tuesday, October 2, 2012 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: Councilmember Ken Weir, Chair Councilmember David Couch Councilmember Harold Hanson City staff: Alan Tandy, City Manager Steven Teglia, Assistant to the City Manager Rhonda Smiley, Assistant to the City Manager/PIO Chris Huot, Admin. Analyst, City Manager’s Office Nelson Smith, Finance Director Virginia Gennaro, City Attorney Christi Tenter, Human Resources Manager Ginger Rubin, Benefits Technician Retired employees Fred Baugher, Florn Core, Bill Descary, Tim Taylor, and /BCARE: Margaret Ursin Others present: Johnny Wu and Tom Morrison, Segal Company Billy Owens, SEIU Brian West and Todd Dickson, BPOA Members of the media ________________________________________________________________ S:\Council Committees\2012\Personnel\October\october 2 Agenda Summary Report.docx Page 2 ST:al 2. ADOPTION OF AUGUST 3, 2012 AGENDA SUMMARY REPORT Adopted as submitted 3. PUBLIC STATEMENTS None 4. NEW BUSINESS A. Discussion and recommendation regarding 2013 Health Plan Renewals Assistant to the City Manager Teglia reported that the information to be presented to the Committee on this day has already been presented to the Insurance Committee. Tom Morrison, Segal Company, distributed a report and gave an overview of the contents. Kaiser and Anthem initially requested significant rate increases; however, after additional information was provided, and subsequent to receiving the RFI (Request for Information) results, the proposals were more favorable. The following is a list of percentage increases/decreases for each plan:  Anthem HMO / active employees = + 8.68%  Anthem PPO / active employees = - 6.38%  Anthem PPO / retirees, under age 65 = +18.78%*  Anthem PPO Senior Secure = +19.10%  Kaiser HMO / active employees = + 4.00%  Kaiser HMO / retirees under age 65 = + 0.30%*  Kaiser High Deductible / active employees = + 3.90%  Kaiser High Deductible / retirees under age 65 = + 0.30%*  Kaiser HMO Senior Advantage = - 0.20%* *Amount varies by years of service Rates for the Pacific Union Dental Plans did not change, while rates for the Met Life PPO Dental Plan increased by 2.0%. Optum/PacifiCare Behavioral Health rates increased by 7.8%. There was no increase to the EAP rate, which is paid by the City. ________________________________________________________________ S:\Council Committees\2012\Personnel\October\october 2 Agenda Summary Report.docx Page 3 ST:al As part of an agreement in effect through 2015, there is no increase to the visions plan by Medical Eye Services. Based on historical data compiled from the previous seven years, rates for all medical plans available to active employees averaged increases, as follows: Kaiser HMO – 4.1%; Anthem HMO – 3.2%; Anthem PPO – 3.2% and Kaiser High Deductible – 3.9%. For this same period, the rates for all medical plans available to non - Medicare eligible retirees also averaged increases, as follows: Kaiser HMO – 17.4%; Anthem PPO – 0.5%; and Kaiser High Deductible – 0.3%. It should be noted that the Kaiser High Deductible Plan has only been an option for employees for one year. According to this data, these averages are less than the national and state average, and comparable to other governmental entities in the Central Valley and Southern California. Specific costs to each retiree are included in the report, and the information covers the time period between 2006 through 2013. In May, 2012, responses to an RFP (Request for Proposals) resulted in a recommendation to replace Dearborn National with ING as the life insurance carrier. The premiums, which are borne by the City, will decrease by 32% for basic life insurance and 50% for AD&D coverage. A section of the Segal report focused on the Anthem PPO Claims Stabilization Reserve Account. The calculations reflect that after deducting for expenses, the costs paid for claims, and an amount required for retention, the City is eligible to receive a refund in the amount of $1,616,593. Appendices to the report list enrollment information per plan, general claims data, and ratings of all insurance companies that do business with the City. It should be noted that all of these insurance companies have an A or A+ rating by the Standard & Poor index. Assistant to the City Manager Teglia reported that all of this information was provided to the Insurance Committee on September 11, 2012, and that Committee recommended approval of the proposed rate renewals presented today, and that ING replace Dearborn National as the life insurance carrier. Further, it was recommended that the refund that the City is eligible to receive from Anthem should be deposited into the irrevocable trust for payment of the OPEB liability. ________________________________________________________________ S:\Council Committees\2012\Personnel\October\october 2 Agenda Summary Report.docx Page 4 ST:al Committee Chair Weir recognized Mr. Tim Taylor, who had a question regarding calculations for retirees as they correlate to years of service together with the lowest cost HMO medical plan. He believed that basing the calculation on another plan might save the retirees some money. Staff explained that making the proposed change would result in an increase to the OPEB liability by approximately 18% or $1.4 million per year, for a total of around $29 million over the life of the liability, which is 26 years. City Manager Tandy and Assistant to the City Manager Teglia explained that the Kaiser High Deductible Plan was included as an option last year for those active employees and retirees who seek low premiums or who have additional coverage through a spouse or other entity. The Insurance Committee discussed the pros and cons of this plan at the time before unanimously approving it. Committee Chair Weir asked if the MOU would have to be revised to enact the proposed change. City Manager Tandy said that the change could be made, but the City is not in a financial position to bear the increased cost to the liability. Assistant to the City Manager Teglia stated that staff recommends approval of the 2013 health care rate renewal package as proposed, and allocating the $1.6 million stabilization refund to the irrevocable trust. The Committee unanimously approved staff’s recommendation. 5. COMMITTEE COMMENTS None 6. ADJOURNMENT The meeting was adjourned at 12:33 p.m.