SUBJECT/RECOMMENDATION:
Title
Authorize an amendment with Cigna Healthcare (Cigna) for city medical insurance (under a self- insured funding arrangement) and a purchase order to Evernorth Behavior Health (Evernorth) for the employee assistance program for period January 1, 2026 through December 31, 2026, pursuant to RFP 26-22, for a total not-to-exceed amount of $31.0 million ($30,940,000 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)
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SUMMARY:
Staff is recommending renewal with Cigna and Evernorth based on overall satisfaction with the services and current benefits, and a favorable renewal rate of a 5.1% total increase. The increase is attributable to higher pharmacy costs, specifically in the specialty and diabetes pharmaceutical space, and inflationary factors. Market trend projections indicate medical costs may exceed 8.5% nationally in 2026 with Florida’s costs typically 3%-4% higher than the national averages. The original agreements with Cigna and Evernorth were approved by Council in September 2022 pursuant to RFP 26-22. This renewal is the fourth of five.
The overall funding increase of 5.1% is expected to cover projected plan expenses for the 2026 Plan Year and allow the City to maintain required reserves. Included in the medical premiums for the 2026 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 specific preventative healthcare activities. These rewards are directly tied to cost drivers on the City’s medical plan and are an essential part of controlling increases over the long term. There is a high utilization and participation in the Motivate Me program. The 2025 plan year-to-date total incentives payouts are approximately $27,685.
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. In the plan years 2024 and 2025, upon recommendation of the employee benefits committee, the city funded 100%, 75.5%, and 69% in an effort to stabilize employee costs. For the 2026 renewal the employee benefits committee is recommending this percentage to be the new funding percentage moving forward and the 5.1% increase be shared between the City and the employees with dependent coverage.
The City’s fiscal 2026 budget for the employer share of health insurance costs is $25,610,608 which includes $23,773,578 across all operations for health plan costs, and $1,837,030 budgeted for the Employee Health Center.
APPROPRIATION CODE AND AMOUNT:
Funds are available in 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.
