CITY OF HALLANDALE BEACH

M E M O R A N D U M

DATE:             August 23, 2007

TO:                  D. Mike Good, City Manager

FROM:            George Amiraian, Director of Personnel/Labor Relations

RE:                  AGENDA ITEM – Group Insurance Renewals

PURPOSE:

To consider renewal of contracts with Group Medical and Dental Carriers.

BACKGROUND:

The City’s current provider of group health insurance is Humana Health Plan, (hereinafter referred to as “Humana”) and dental insurance is provided by Delta Dental (hereinafter referred to as “Delta”).   

Humana has been the City’s health insurance provider for the last two (2) years. Delta has been the City’s dental carrier for the past ten (10) years.

Health Maintenance Organization (HMO) and Point of Service (POS) plans are offered by Humana.  An HMO is a fully funded insurance plan in which the City pays a flat amount based on the number of employee participants, regardless of the cost of claims.  An HMO medical insurance plan controls claims cost by screening employee access to specific network physicians and hospitals. With HMO coverage, employees pay a co-payment per doctor visit with no annual deductible.

A POS medical insurance plan allows employee access to specific network physicians and hospitals, as well as out-of-network physicians and hospitals. With POS coverage, employees pay deductibles of $250/member/calendar year and co-insurance payment percentage of 20% after deductibles have been met.

Employees may choose either an HMO or a POS plan at one of three levels:  employee, employee plus one, or family (employee plus 2 or more). 

DISCUSSION:

The total cost of insurance premiums for the City of Hallandale Beach is approximately $3,900,000, which includes health, dental, and life insurance premiums.

Humana quoted a 10% renewal rate increase for the upcoming fiscal year 2007-08, with the City’s contribution cost of approximately $3,300,000 per year as opposed to $3,000,000 for fiscal year 2006-07. The proposed 10% increased rate would cost the City an additional $300,000 in premiums.

Staff and Gallagher, the City’s Insurance Consultant, has been negotiating with Humana to reduce the health insurance renewal rate. After 2 months of negotiating, staff and Gallagher have negotiated about 3% or $90,000 increase without a change in the City’s current benefit package.

For fiscal year 2007-08 Delta Dental Insurance quoted a renewal rate increase of 0% for the portion of the City’s dental care (HMO) benefits and a 15% rate increase for the Delta Dental (PPO) portion.

Staff and Gallagher negotiated a renewal with a 0% increase rate for both Delta Care and Delta Dental.

The City’s life insurance carrier Fort Dearborn Life has a two-year contract with a 0% increase for fiscal year 2007-08.

RECOMMENDATION

Request authorization for the City Manager to renew and execute an agreement effective October 1, 2007 with Humana Health Plan and Delta Dental based on the negotiated renewal rates and to renew on a year to year basis in the best interest of the City. If approved, sufficient funds have been proposed in the Fiscal Year 2007/2008 budget.

Reviewed and Concurred:

 ____________________________                                       ______

D. Mike Good, City Manager                                                   Date

  _____   Approved      _____     Denied       _____    Hold for discussion

COMMENTS: __________________________________________________________________________________________________________________________________________________________________________________________________________________

GA/ep