| | | | | | | | | City of Independence | | AGENDA ITEM COVER SHEET |
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| | | | | | | | | BILL NO. 22-804 | Res.No: 6855 |
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| | | | | | | | Agenda Title:
22-804 - A resolution authorizing and directing the City Manager to implement recommended changes to the City's self-funded health insurance plan. |
| | | | | | | | Recommendations:
Staff recommends adoption of the resolution. Staff further recommends the City Council indefinitely postpone Resolution 22-799. |
| | | | | | | | Executive Summary:
This Resolution outlines the recommended changes for the Stay Well Health Insurance plan for plan year 2023 as agreed to by the Special Stay Well Sub-Committee. The Committee was formed by direction of the City Council on August 15th with the goal of identifying mutually agreeable changes to the Stay Well Plan to address budgetary shortfalls and structural imbalances in the Stay Well Fund. The Special Sub-Committee held five meetings over the course of 13 days, culminating in a series of recommendations being made for City Council approval. These recommendations include:
1. Accepting the pharmacy benefit renewal submitted by Cigna, saving an estimated $479,000.
2. Implementing a series of plan design changes for OAP 1, OAP 2, and the Local Plus plans.
3. Adding a new "Base Plan" in addition to the other three plans currently offered.
4. Expanding access to the Client Specific Network to include the University Health clinic at 606 South Hardy Avenue and virtual urgent care/preventive care through MDLive.
5. Implement City-sponsored HSA contributions to be made quarterly rather than annually.
6. Prohibit sponsoring health benefits for any additional spouses after retirement when a spouse passes away.
In addition to these plan offering and plan design changes, the Sub-Committee has also agreed to reconvene in December 2022 to review the fiscal impact of these changes to the Stay Well Fund and evaluate and deliberate contribution changes to be made effective with the 2024 Plan Year. |
| | | | | | | | Background:
The FY 2022-23 Adopted Budget includes a budget of $22,837,000 for the Stay Well Fund, the self-insured plan for city employees, families, and dependents, and pre-65 retirees, spouses, and dependents. The budget includes additional funding for a 10% premium increase. It also contemplates cost avoidance of a minimum $1,030,000.
On June 21st, 2022, the City Council adopted Resolution 6816, directing the City Manager to produce structural changes by August 1 to ensure the Stay Well Fund is within the budget and to ensure long-term sustainability of the plan.
Over the course of two months, the Stay Well Committee held a series of special meetings to provide recommendations consist with the directive of Resolution 6816. In addition to the recommendations submitted by the Stay Well Committee, the City Manager brought forward recommendations to the City's self-funded health insurance plan at the August 8th Study Session. These recommendations were designed to produce structural changes to ensure Stay Well Health Insurance funding is within the approved budget for Fiscal Year 2022-23 and provides for sustainable funding in future years.
At the August 15th City Council meeting, the City Manager recommended Resolution 22-799 for City Council approval. The Resolution would have authorized the City Manager to implement the recommendations made at the August 8th Study Session. The City Council voted to postpone this Resolution to the September 6th City Council meeting. Furthermore, the City Council voted to form a Special Stay Well Sub-Committee comprised of the Stay Well Committee Chair, the LAGERS Chapter 1 President, the Stay Well Retirees Representative, the City Manager, and the At-Large City Councilmember. The group was charged with identifying recommendations that addressed the directives from Resolution 6816 and that were acceptable to all stakeholders.
The Special Sub-Committee held five meetings over the course of 13 days, culminating in a series of recommendations being made for City Council approval. These recommendations include:
1. Accepting the pharmacy benefit renewal submitted by Cigna, saving an estimated $479,000.
2. Implementing a series of plan design changes for OAP 1, OAP 2, and the Local Plus plans.
3. Adding a new "Base Plan" in addition to the other three plans currently offered.
4. Expanding access to the Client Specific Network to include the University Health clinic at 606 South Hardy Avenue and virtual urgent care/preventive care through MDLive.
5. Implement City-sponsored HSA contributions to be made quarterly rather than annually.
6. Prohibit sponsoring health benefits for any additional spouses after retirement when a spouse passes away.
In addition to these plan offering and plan design changes, the Sub-Committee has also agreed to reconvene in December 2022 to review the fiscal impact of these changes to the Stay Well Fund and evaluate and deliberate contribution changes to be made effective with the 2024 Plan Year. |
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Fiscal Impact:
Plan design changes will generate an additional $2,041,337 for the Stay Well Fund for plan year 2023. Year-over-year changes from 2022 to 2023 are increased by $1,978,238, or 10.3%, as opposed to an increase of $3,962,196, or 20.1%, without these plan design changes.
The pharmacy benefit renewal from Cigna is estimated to save $479,000 over plan year 2022 costs.
The client specific network expansion will generate additional savings subject to how many claims are steered away from an ER or Urgent Care visit and into one of the network facilities.
Additional savings may be realized subject to the overall migration away from OAP 1 and into one of the Qualified High Deductible plans.
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| | | | | | | | | Department: City Manager's Office | Contact Person: Zach Walker |
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| REVIEWERS: | | Department | Action | | City Managers Office | Approved | | Finance Department | Approved | | City Managers Office | Approved | | City Clerk Department | Approved |
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| Council Action: | Council Action: |
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