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TO: Mayor Thomas J. Weisner
FROM: Alisia Lewis, Director of Human Resources
DATE: October 9, 2015
SUBJECT:
A Resolution Authorizing Agreement for Administrative Services with Cigna Health and Life Insurance Company (Cigna) for PPO Group Health, Dental, C.O.B.R.A. and Stop Loss Plan Administration for Period January 1, 2016 through December 31, 2018
PURPOSE:
To authorize an agreement for third-party administrative services (TPA) with Cigna for the City’s PPO health insurance plan, dental insurance, prescription benefits management (PBM), C.O.B.R.A and stop loss insurance coverage.
BACKGROUND:
Allied Benefit Systems has been the City’s third -party administrator for the City’s PPO health plan, Section 125 Flex Plan, Medicare Part D and COBRA administration for PPO participant employees, retirees and their dependents since 2006. In years that followed, the City also utilized providers associated with Allied to provide PBM, dental and stop loss insurance. Currently, BlueCross BlueShield administers the city's dental plan. Last year the city implemented a high deductible health plan (HDHP) administered by Allied. In light of rising insurance costs and the upcoming Affordable Health Care (ACA) Cadillac Tax, which will tax employers on plans that are considered overly rich in benefits and exceed the established financial thresholds, the city procured the services of Group Alternatives, an independent consultant to implement and oversee a competitive bid process for insurance services. They also evaluated both the city's insurance plans and responses received from bidders for current market value and industry best practices. The process included soliciting bids from carriers that offered a comprehensive package that could administer both the city's PPO and HMO requirements.
DISCUSSION:
In assessing all the variables included in the bid processes, we are recommending changing the TPA to Cigna for the administration of PPO, HDHP, dental, PBM, flexible spending plan, C.O.B.R.A, and stop loss coverage. The move will save the city an estimated $535,517.00 in the first year. In fact, CIGNA will be guaranteeing a claims savings of $379,676.00 with a refund of $65,117.00 for medical and $27,907.00 for prescription in the event the savings falls short of that amount. No other bidder offered these guarantees.
Moving the city's dental plan to CIGNA offers employees an enhanced discounted dental network and lowers the medical cost by 1%. In addition, Cigna will be administering much of the the banking and other related financial processes associated with the benefits plan that was formerly administered by the city's internal staff. By bundling all of the services with Cigna previously purchased separately, the city is achieving greater savings overall.
As a result, the city will be able to pass on the savings by lowering the premiums for active employees by approximately 5.9%.
Additional benefits at no additional cost to the city includes a wellness credit of $27,000 to be applied to a wellness program of the city's choosing. A local call center will provide concierge customer service around the clock 365 days of the year. Participants will be able to monitor their claims benefits in real time, research providers and receive custom messaging with a Cigna application on their phone or computer. Cigna will also offer telemedicine which will provide live at home medical service via the internet.
Human Resources is seeking a three (3) year agreement with Cigna. A detailed document is attached for additional information on the renewal process.
IMPACT STATEMENT:
No impact
RECOMMENDATIONS:
Place on the Finance Committee agenda for approval to City Council.
cc: Alderman O’Connor, Chairman
Alderman Mervine
Alderman Bohman
Alderman Peters, Alternate
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution Authorizing Agreement for Administrative Services with Cigna Health and Life Insurance Company (Cigna) for PPO Group Health, Dental, C.O.B.R.A. and Stop Loss Plan Administration for Period January 1, 2016 through December 31, 2018
.
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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, HDHP, dental, Section 125 flexible spending accounts, COBRA, HIPAA and Medicare Part D; and
WHEREAS, the 2016 proposed City budget provides $520,180.00 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, 2016 through December 31, 2018.
PASSED AND APPROVED on ______________.
AYES ____ NAYS ____ NOT VOTING ____ ABSENT ____
____________________________ __________________________
Alderman Bohman, Ward 1 Alderman Garza, Ward 2
____________________________ __________________________
Alderman Mesiacos, Ward 3 Alderman Donnell, Ward 4
____________________________ __________________________
Alderman Peters, Ward 5 Alderman Saville, Ward 6
____________________________ __________________________
Alderman Hart-Burns, Ward 7 Alderman Mervine, Ward 8
____________________________ __________________________
Alderman Bugg, Ward 9 Alderman Johnson, Ward 10
____________________________ __________________________
Alderman Irvin, At Large Alderman O’Connor, At Large
ATTEST:
____________________________ __________________________
City Clerk Mayor
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