SUBJECT/RECOMMENDATION:
Title
Approve an amendment with Cigna Healthcare (Cigna) for city medical insurance (under a self- insured funding arrangement) and a purchase order to Evernorth Behavioral Health (Evernorth) for the employee assistance program for period January 1, 2025 through December 31, 2025, pursuant to RFP 26-22, for a total not-to-exceed amount of $29.3 million ($29,240,000 for Cigna and $60,000 for Evernorth), to be funded by city budgeted funds, payroll deductions of employees and retiree premiums, and authorize the appropriate officials to execute same. (consent)
Body
SUMMARY:
Staff is recommending a renewal with Cigna based on the overall satisfaction with the service and current benefits, and a favorable renewal rate of a 2.9% increase. Market trend projections indicate medical costs may exceed 8% nationally, with Florida costs typically 2%-3% higher than national averages. The increase in the City’s health program cost is attributable to higher pharmacy expenses, specifically in the specialty and diabetes pharmaceutical space, and inflationary factors. The original agreements with Cigna and Evernorth were approved by Council in September 2022 pursuant to RFP 26-22. This renewal will be the third of five.
The overall funding increase of 2.9% is expected to cover projected plan expenses for the 2025 Plan Year. Included in the medical premiums for the 2025 plan year is the continuation of the Motivate Me incentive program through Cigna. Under this program, employees can receive incentives (up to $200 per year) when participating in targeted preventative healthcare activities. These rewards are intended to reduce cost drivers on the City’s medical plan and are an essential part of controlling cost increases over the long term. There is a high utilization and participation in Motivate Me, and data indicates successful growth from last year’s participation and incentives paid. The 2024 plan year to date total incentive payouts are approximately $51,000.
Historically, the City’s funding rates for medical insurance were 100% for employees without dependents, 75% for employees with one dependent, and 68% for employees with family coverage. This current 2024 Plan Year, upon recommendation of the employee benefits committee, the City is funding 100%, 75.5%, and 69% in an effort to stabilize employee cost increases to better align with last year’s costs. For the 2025 renewal the employee benefits committee is again recommending the City’s funding contributions at 100%, 75.5%, and 69% and that the 2025 increase of 2.9% be shared between the City and the employees with dependent coverage, where each will see an increase of 2.9% over current contribution costs.
The City’s fiscal 2025 budget for the employer share of health insurance costs is $24,242,529 which includes $22,532,529 across all operations for health plan costs, and $1,710,000 budgeted for the Employee Health Center.
APPROPRIATION CODE AND AMOUNT:
Funds are available in Central Insurance cost codes 5907590-530300 (contractual services), 5907590-545602 (major medical claims), and 5907590-545601 (insurance premiums-EAP).
The Central Insurance Fund is an internal service fund of the City which accounts for all insurance related costs.
STRATEGIC PRIORITY:
Superior Public Service: Promote a Diverse and Talented Workforce Through Competitive Opportunity, Employee Wellness and Rewarding Growth
5.4 Enhance Employee health and productivity through a holistic approach to workplace wellness and benefit resources. The medical plan and the Employee Health Center are an integral part of enhancing employee health and productivity and is a benefit resource to attract and retain employees.
