COUNCIL AGENDA REPORT

City of Anaheim

HUMAN RESOURCES DEPARTMENT

DATE: SEPTEMBER 12, 2006

FROM: HUMAN RESOURCES DEPARTMENT

SUBJECT: 2007 HEALTH AND WELFARE RATES

ATTACHMENT (Y/N): YES ITEM # 26

200 S. Anaheim Blvd.
Suite #332
Anaheim, CA 92805
Tel: (714) 765-5111
Fax: (714) 765-5215
www.anaheim.net

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Subject: 2007 HEALTH AND WELFARE RATES

RECOMMENDATION:

That the City Council, by Motion, approve the 2007 Health and Welfare Plan Rates as listed on Attachment “A” and authorize the Human Resources Manager to sign all required renewal documents on behalf of the City.

DISCUSSION:

The recommended rates as listed on Attachment “A” reflect the implementation of recommendations by the Joint Committee on Medical Programs (“Health Council”), as well as the results of aggressive negotiations by both City staff and the City’s broker on renewal rates for ancillary health and life insurance products.

The HMO plan design for the Kaiser, Blue Shield, Kaiser Senior Advantage, and PacifiCare Secure Horizons will change in 2007. Office visits, chiropractic, and Magellan mental health office visit copays will increase from $10 to $15.

One additional retiree medical option, a senior supplement plan offered by PacifiCare, will provide a more affordable option for those members who have Medicare.

Medical premiums for active plans are increasing 10.4% - 20.0% with a combined annual increase of 18.2%. Retired plan medical premiums are increasing from 9.5% - 59.0% (total of four members in Kaiser Senior Advantage-Northwest) with a combined annual increase of 15.7%.

The 2007 renewal rate increases are driven by paid claims, numerous large claims over $125,000, and medical inflationary pressures (trend).

Dental premiums for the four City plan options range from 0% - 3.5% for the prepaid plans and -3.3% for the Delta PPO plan, for a combined annual decrease of -1.4%.

Renewal rates for the basic term life insurance, the basic accidental death and dismemberment (AD&D), supplemental AD&D, the Employee Assistance Program (REACH) and the Long Term Disability coverage for all employees will remain at the 2006 level. The renewal rate for the comprehensive psychological services provided by Magellan will increase 3.48%.

IMPACT ON BUDGET:

Funds for the Health and Welfare Programs are included in the General Benefits Fund 673, Program 9102. Additional resources of $860,000 are needed in FY 2006/07 to cover the larger than planned 2007 medical insurance rate increases. This expense will be covered by transfers from reserves of the appropriate funds. The impact on the General Fund reserves will be approximately $550,000. No additional authorization of funding is required from City Council.

Respectfully submitted,

David Hill

Human Resources Director

Attachments:

1. Attachment “A” – 2007 Plan Rates