Resolution No. 2012-205RESOLUTION NO.,2012-205
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING THE PAYMENT OF PREMIUMS FOR
INSURANCE FOR MEDICAL, DENTAL, AND LIFE, BENEFITS
FOR EMPLOYEES DURING THE 2013 CALENDAR YEAR
WHEREAS, the City.Council of the City of Vernon in prior
fiscal years has approved for each fiscal year the City's payment of
premiums for insurance for medical, dental, and life, benefits for
full-time regular employees and their dependents; and
WHEREAS on November 6, 2012, the City Council considered the
City's payment of premiums for insurance for medical, dental, and
life, benefits, and the funding of the Health Savings Account ("HSA"),
applicable for the 2013 calendar year; and
WHEREAS, on June 19, 2012, the City Council of the City of
Vernon adopted Resolution No. 2012-113, to continue paying the premium
for medical, dental and life benefits for full time regular employees;
and
WHEREAS, by memorandum dated October 22, 2012, the Director
of Human Resources has recommended the approval of the 2013.medical-
dental and life insurance premiums and the renewal.of_'the Aetna
medical insurance benefit package for full time employees and retirees
under the age of 65, at an approximate annual premium cost of
$3,613,418 for medical and dental premiums, $219,000 for HSA
contributions for employees enrolled under the HSA PPO Medical plan,
and $9,583.92 for Life Insurance premiums for calendar year 2013; and
WHEREAS, the City Council of the City of Vernon wishes to
adopt its policy applicable to the 2013 calendar year, only,
respecting payment of premiums for the City's insurance for medical,
dental and life benefits for employees, and the funding of the Health
Savings Account, and to declare that such benefits are not vested
rights and will expire at the conclusion of the calendar year unless
authorized and approved by the City Council for any subsequent
calendar year.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon hereby
finds and determines that the above recitals are true and correct.
SECTION 2: The City Council of the City of Vernon hereby
adopts the following policy and declares that such benefits are not
vested rights: The City will contribute up to $1,050 a month for
miscellaneous employees enrolled in an HMO Medical Plan, and
contribute up to $800 a month for those employees enrolled in a PPO
Medical Plan to be used towards medical and dental premiums only. The
City will pay the insurance premium up to said amounts for the medical
and dental benefits as such benefits are in effect as of
January 1, 2013, and will continue to pay the insurance premium for
life benefit, for all full-time regular employees.
SECTION 3: The City will fund $1,500 on January 1, 2013,
and $500, each, in March, June and September for those enrolled in
Health Savings Account ("HSA") PPO Medical Plan.
SECTION 4: The City's agreement to pay said premiums
provided for above, shall not create or -ripen into a vested right for
any employee to any such medical, dental, or life, benefit beyond
December 31, 2013.
- 2 -
SECTION 5: The Interim City Clerk of the City of Vernon
shall certify to the passage, approval and adoption of this
resolution, and the Interim City Clerk of the City of Vernon shall
cause this resolution and the Interim City Clerk's certification to be
entered in the File of Resolutions of the Council of this City.
APPROVED AND ADOPTED this 6th day of November, 2012
Name: Wi11i m J. Davis
Title: Mayor /cr
ATTE T
DandRygd, tnteri4m City Clerk
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I, Dana Reed, Interim City Clerk of the City of Vernon, do hereby
certify that the foregoing Resolution, being Resolution No. 2012-205,
was duly passed, approved and adopted by the City Council of the City
of Vernon at a regular meeting of the City Council duly held on
Tuesday, November 6, 2012, and thereafter was duly signed by the Mayor
or Mayor Pro-Tem of the City of Vernon.
Executed this FD day of November, 2012, at Vernon, California.
Dana Reed, Interim City Clerk
(SEAL)
- 4 -
0C 4aVeCI
RECEIVE61Z
OCT 2 3 1012
CITY ADMINISTRATION
OCT 2 5 2012
CITY CLERK'S OFFICE
STAFF REPORT
HUMAN RESOURCES DEPARTMENT
DATE: October 22, 2012
TO: Honorable Mayor Pro Tem and City Council
FROM: Teresa McAllister, Director of Human Resource,4P
RE: Health Benefits Renewal 2013
Aetna Medical and Dental for Full Time Employees and Retirees under the
Age of 65
Background
FIA Insurance (FIA), the City's insurance broker for medical benefits, solicited quotes from
Aetna, Vernon's current medical benefit provider, Kaiser, Cigna, Blue Shield of California,
United Healthcare, and Health Net. Quotes were received from Aetna, Cigna and Kaiser. All
others declined.
Upon review of said quotes, it is recommended to renew our medical plan for calendar year 2013
with Aetna, at an approximate annual premium cost of $3,266,225 for medical. This cost reflects
FIA's negotiated renewal rate of 0% increase in the PPO plans, and 7.7% increase in the HMO
plans. The medical commission rate remains at 5% and is included as part of the City's total
premium rates.
In addition, AETNA dental plan for calendar year 2013 is approximately $347,193 based on our
current enrollment figures. In an effort to assist the City in cost reduction measures, city staff
was able to successfully negotiate a decrease in FIA's dental commission rate from 10% to 7%.
This reflects an overall cost reduction of 4% for the 2013 dental premium renewal rates.
Aetna will continue to offer four medical plans designed for employees to choose from. They
are HMO deductible Plan California (Low HMO), HMO California (High HMO), Open
Access Managed Choice POS California (Low PPO), and the Open Access Managed Choice
POS California HSA 5 (High PPO). Aetna dental plans will consist of two different plans
designed for employees to choose from. They are the dental PPO Plan and the dental DMO Plan
56.
Per Resolution 2011-106, the City contributes up to $1,050 a month towards medical and dental
premiums for miscellaneous employees enrolled in an HMO Plan and up to $800 a month
towards medical and dental premiums for those employees enrolled in a PPO Plan. Based on the
current enrollment of full time employees, the approximate cost to the City is
$1,600,928.
Per Resolution 2012-114, certain categories of retires qualify for City paid medical premiums or
subsidized medical premiums. Based on the current enrollment of retirees under the age of 65,
the approximate cost to the City is $153,507.
Per Resolution 2012-95 and 2012-94, approving the Memorandum of Understandings with the
Vernon Police Officers Benefit Association and the Vernon Firemen's Association respectively,
the City will contribute up to $1,100 a month for employees and eligible dependents towards
medical and dental premiums for employees enrolled in a HMO Plan and up to $850 per month
for employees and eligible dependents enrolled in the PPO plan. Based upon the current
enrollment of safety employees, the approximate cost to the city is $1,518,951.
In addition, pursuant to Resolution No. 2012-113 the City contributes $3,000.00 annually into a
Health Savings Account for employees enrolled under the HSA PPO Medical Plan to help offset
the high deductible associated with the HSA plan. Based upon the current enrollment of
employees under this plan, the approximate cost to the city is $219,000 annually.
Consequently, city staff will continue to participate in a city-wide committee to examine all
components of the City's medical and retiree medical insurance programs to ensure plans meet
the needs of the city, its employees and eligible dependents. A review of current rate structures
and proposals will be examined during the upcoming year to ensure the City is receiving the best
practical rates in comparison to our local comparative industry.
It is also recommended that the City continues to fund Life Insurance benefits for employees for
calendar year 2013 with Lincoln Financial Group. Based on the current employee enrollment the
approximate cost to the city remains at $9,583.92 annually.
Fiscal Impact
Sufficient funds have been budgeted by each Department for this expenditure.
Recommendation
It is recommended the attached resolution be approved, authorizing the 2013 medical -dental and
life insurance premiums and the renewal of the Aetna medical insurance benefit package for full
time employees and retirees under the age of 65 at an approximate annual premium cost of
$3,613,418 for medical and dental premiums, $219,000 for HSA contributions for employees
enrolled under the HSA PPO Medical plan and $9,583.92 for Life Insurance premiums for
calendar year 2013.
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Dental Renewal Rates
City of Vernon Policyholder Number: 469704
Effective Date 01/01/2013 Control Number: 469704
• This exhibit outlines your Renewal Rates effective January 01, 2013 through December 31, 2013
• Please refer to the Financial Conditions and Plan Design Exhibits for an outline of the level of benefits
quoted, as well as the terms and conditions of this proposal.
Coverage Categories
Current
Employees
t
-_
% Change
EmpOnly94
$57.37
..
Emp + Spouse
26
$122.51
low
Emp + Child ren
31
$116.49
4» _
Emp + Family
80
$189.76
Monthly Total
231
$27,370.03
Current
Coverage Categories
Employees
% Change
Emp Only
19
$19.22
Emp + Spouse
4
$36.51
-+ _
Emp + Child(ren)
6
$38.43
Emp + Family
37
$54.77
Monthly Total
66
$2,768.29
Monthly Totals 297 $30,138.32 •+4,
Financial Conditions
Rates may be adjusted if:
> covered population changes by 10% or more; current enrolled lives are 297;
> legislation or regulation is enacted that affect the benefits payable, eligibility
or contractual provisions;
> there is any other material change in the condition under which the plan operates.
> Commissions payable to a broker or consultant change.
Terms:
> 6'tr; Of 7 II .
> For Voluntary plans, where permitted by state law, late entrant rules will be applied at
annual enrollment (i.e., no true 'open enrollment") as well as throughout the year.
Aetna" is the brand name used for products and services provided by one or more of the
Aetna group of subsidiary companies. PPO/PDN is underwritten by Aetna Life Insurance Company.
DMO is underwritten by Aetna Life Insurance Company, except as follows: Arizona, Georgia: Aetna
Health Inc. California: Aetna Dental of California Inc. Maryland, Missouri, North Carolina, Texas:
Aetna Dental Inc. New Jersey: Aetna Dental Inc. and Aetna Life Insurance Company.
nLincoln
Financial Group* Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates.
September07, 2012
The Lincoln National Life
Insurance Company.
8801 Indian Hills Drive
Omaha, NE 68114-4066
toll free (800) 423-2765
City of Vernon www.LFG.com
4305 Sante Fe Ave
Vernon, CA 90058
RE: Renewal for Policy Number(s): 01-0109858
We are proud to provide your company with quality group products and services at a cost that delivers
sound value.
Each renewal period, we analyze current benefit and rate structures to determine the appropriate rates for
continued group insurance protection for your valued employees. This process includes recalculation of the
premium rates to reflect factors like:
• plan features
• demographics
• nature of business
• experience
• any adjustments to our underlying rate structure
Based upon our review, your renewal rates, effective 1 /1 /2013, are as follows:
Life
per$1,000
0.100
$538.80 0.100
$538.80
$0.00
1/1/2014
AD&D
per$1,000
0.035
$188.58
0.035
$188:58
$0.00
1/1/2014
Dependent Life
per dep unit
0.330
$71.28
0.330
$71.28
$0.00
1/1/2014
Premium Totals:
$798.66
- $798.66
- $0:00
The monthly premium shown is based upon current billed lives and volume.
We appreciate your business and look forward_ to the continued opportunity to meet your group insurance
needs. If you have any questions or if we can be of further assistance, please contact your local group
representative at 1-866-607-8011.
Sincerely,.
Carol Goodman
Group Underwriting
CITY CLERK'S OFFICE
INTEROFFICE MEMORANDUM
DATE: November 14, 2012.
TO: Teresa McAllister, Director of Human Resources
FROM: Ana Barcia, Deputy City Clerk
RE: Resolution No. 2012-205 - A Resolution of the City Council of the City of Vernon
Approving the Payment of Premiums for Insurance for Medical, Dental, and Life Benefits
for Employees During the 2013 Calendar Year
Transmitted herewithis a copy of Resolution No. 2012-205 referenced above, which was approved by
City Council on November 6, 2012.
Thank you.
AB: yb
Attachment
c: Resolution No. 2012.205
Veronica Avendano
Karina Rueda