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TO: Mayor Richard C. Irvin
FROM: Alisia Lewis, Director of Human Resources
DATE: August 21, 2020
SUBJECT:
A Resolution Authorizing Agreement for Administrative Services with Cigna Health and Life Insurance Company (Cigna) for PPO and Value HSA(HDHP) Group Health, Prescription Benefits Management (PBM), Flexible Spending, Dental, Vision, C.O.B.R.A. and Stop Loss Plan Administration for period January 1, 2021 through December 31, 2021.
PURPOSE:
To authorize an agreement for third-party administrative services (TPA) with Cigna for the City's PPO and Value HSA(HDHP) health insurance plan, dental insurance, vision coverage, prescription benefits management (PBM), flexible spending, C.O.B.R.A. and stop loss insurance coverage.
BACKGROUND:
Cigna has been the City's third-party administrator for the City's PPO, Value HSA(HDHP), dental, vision, PBM, flexible spending, C.O.B.R.A. and stop loss coverage for participating employees, retirees and their dependents since January 2016. The PEPM (per employee per month) fee for 2020 was $31.44.
DISCUSSION:
CIGNA’s administration fee for medical/dental/vision is increasing 2% and the stop loss is increasing 12%. CIGNA is applying a $7,062 administration credit and $67,619 stop loss credit in 2020 to fully offset the increase in rates in 2021. New for 2021 is an Enhanced Care Management program projecting an estimated claim decrease of $180,000. The additional administrative fee of $1.10 PEPM for the Enhanced Care in 2021 is being offset by a $9,451 credit in 2020.
Additional cost savings/incentives include:
Rx Specialty Coupon Program projected savings of $180,000
Rx Rebates are increasing approximately $30,000
Wellness Fund increase from $20,000 to $30,000
$10,000 Communication Fund
$10,000 Discretionary Fee Credit
Human Resources is seeking approval to enter into a one (1) year agreement with Cigna.
IMPACT STATEMENT:
No impact.
RECOMMENDATIONS:
Place on the Finance Committee agenda for approval to City Council.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution Authorizing Agreement for Administrative Services with Cigna Health and Life Insurance Company (Cigna) for PPO and Value HSA(HDHP) Group Health, Prescription Benefits Management (PBM), Flexible Spending, Dental, Vision, C.O.B.R.A. and Stop Loss Plan Administration for period January 1, 2021 through December 31, 2021.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, it is in the best interests of the City of Aurora to enter into a contractual relationship by and between the City of Aurora and Cigna for administration of PPO group health plan administration for City employees and retirees; and:
WHEREAS, it is desirable to have Cigna administer the Preferred Provider Organization (PPO) plan, Value HSA(HDHP), dental, vision, flexible spending accounts, prescription benefits program, COBRA, and HIPAA; and
WHEREAS, the 2021 proposed City budget will provide funding for this item in employee health account numbers 602-0000-410.28-02; 602-0000-410.28-04; 602-0000-410.28-21; and retiree health account numbers 704-0000-410.28-52; 704-0000-410.28.54; 704-0000-410.28-62; 704-0000-410.28-64; 704-0000-410.28-72 and 704-0000-410.28-74.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: I. That the Mayor is hereby authorized to enter into an administration contract with Cigna.
II. That said contract is for the period January 1, 2021 through December 31, 2021.