|Official site of the City of Fort Worth, Texas|
|City Council Agenda|
|COUNCIL ACTION: Approved on 6/12/2012|
|DATE:||6/12/2012||REFERENCE NO.:||C-25660||LOG NAME:||14HEALTH BENEFITS PLAN|
|SUBJECT:||Authorize Execution of Agreement with Aetna Life Insurance Company for Administration of the City's Health Benefits Plan in an Amount of $3,498,591.00 for the First Year (ALL COUNCIL DISTRICTS)|
It is recommended that the City Council authorize the City Manager to execute an Agreement with Aetna Life Insurance Company for administration of the City's self funded group medical and pharmacy benefit program including COBRA, Flexible Spending Accounts, Employee Assistance Program and Disease Management and Wellness Programs effective January 1, 2013, with an initial three year term and two one year renewal options.
The purpose of this Mayor and Council Communication is to seek authorization from the City Council to enter into a new Agreement with Aetna Life Insurance Company (Aetna) for administrative services related to the City's health benefits program. The City of Fort Worth's program is self-funded and utilizes a third party administrator to process claims. Aetna has been providing these administrative services since January 1, 2005 under its previous Agreement with the City. That contract expires December 31, 2012.
In October 2011, an Ad Hoc Selection Committee was formed and included representation from Human Resources, Police, Fire, Water, Planning and Development, Finance, Parks and Community Services, Transportation and Public Works and retirees. The Committee was active in the analysis of the proposals, on site visits and follow up meetings with potential vendors. Human Resources Staff and the City's benefits consultant, Aon Hewitt, facilitated the RFP review and vendor meetings. Twenty-two vendors were solicited from the Purchasing database system, twenty vendors responded representing 45 proposals. Vendors submitted individual or multiple responses based on the services they could provide.
The Committee considered several factors in evaluating the proposals, including price competitiveness, the organization's ability to administer plans with various plan designs, provider networks, qualifications of the organization's staff, customer satisfaction and complaint records, M/WBE participation and responsiveness to customer service issues.
The associated cost and fees are as follows:
A. Administration of Medical and Pharmacy Claim:
Total Estimated Annual Cost - $3,324,666.00
B. COBRA Administration:
Total Estimated Annual Cost - $5,629.00
C. Employee Assistance Program:
Total Estimated Annual Cost - $85,991.00
D. Flexible Spending Accounts:
Total Estimated Annual Cost - $82,305.00
NOTE - Annual totals are based on anticipated enrollment of 5,555 active employees, 1,434 Non Medicare eligible retirees and 1,352 Medicare eligible retirees.
In addition to these savings, Aon Hewitt estimates $2.2 million in savings on pharmacy claims and fees and $961,900.00 savings through pharmacy rebates with this contract. Also, Aetna has agreed to provide the City with a one time amount of $125,000.00 that can be used for the Wellness programs and $25,000.00 each year for the next three years for employee communications. Additionally, Aetna has set aside $180,000.00 each year for open enrollment support for the next three years using a M/WBE vendor. Prices will remain flat for the base three years.
The following is a summary of expected administrative costs from Aetna for nine months from January 1, 2013 through the end of the Fiscal Year ending September 30, 2013:
It is anticipated that the Health Benefit Advisory Committee will make a recommendation to the City Manager on premium contribution rates, plan design and a Medicare supplement plan by July 2012. Open enrollment for the 2013 medical plan is scheduled to begin October 1, 2012. The City Manager's budget proposal for Fiscal Year 2012-2013 will include a recommendation to fund this contract through September 2013. Authority for the remaining fiscal years that are encompassed by the Agreement will be requested annually as part of the overall budget process and the contract will include a standard fiscal funding out clause that would comply with state law requirements by allowing the City to terminate the Agreement without penalty, if in the future, the Council elects not to appropriate funds for the contract to continue.
The Financial Management Services Director certifies that upon approval of the above recommendations, and upon the adoption of the Fiscal Year 2012-2013 Budget by the City Council to include the above recommended item(s), funds will be available in the Fiscal Year 2013 operating budget, as appropriated, of the participating funds.
|Submitted for City Manager's Office by:||
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