|City of Independence|
|AGENDA ITEM COVER SHEET|
Council action is requested to authorize a renewal agreement with Cigna for third party administration and network services pertaining to the Stay Well Open Access Health Care Plans 1 and 2 and Section 125 Flexible Benefit Plan for a 12 month period effective January 1, 2019, allowing for two one-year renewals.
Lockton, our benefits consultant, the Stay Well Committee, and staff recommend acceptance of the Cigna proposal for third party administration and network services for the Stay Well Open Access Health Care Plans 1 and 2 and Section 125 Flexible Benefit Plan effective January 1, 2019 with two one-year renewal.
The current contract with Cigna for the health plan administration and network will expire at the end of 2018. Lockton believes that Cigna made an aggressive renewal offer in order to keep the partnership with the City as the Third Party Administrator for the Stay Well Open Access Health Care Plans 1 and 2 and Section 125 Flexible Benefit Plan. Staff recommends a three year renewal period with Cigna for health insurance plan years 2019, 2020 and 2021.
The attached Cigna Renewal Offer analysis was prepared recently by Lockton, the City's consultant. The analysis showed the following:
- Cigna discounts continue to remain very favorable as compared to other major health plan networks;
- Cigna continues to have a strong national network of providers; and
- The administrative fees and network access fees are below the average as compared to other clients in the Lockton data base.
The City offer employees and retirees a choice of two Open Access Health Care Plans which are administered by Cigna. The City contracted with Cigna for administrative and network services for these self-funded health plans effective May 1, 2010. The Cigna network provides plan participants with a network of physicians, specialists, hospitals, and outpatient facilities which provide health care at a discounted cost. Approximately 1,695 active and retiree members participate in the Open Access Plan 1, and 65 members participate in the Open Access Plan 2.
The City contracted with Cigna for third party administrative services for the Section 125 Flexible Benefit Plan effective January 1, 2013. Approximately 269 employees participate in the Flexible Spending Program.
The renewal offer included the following for all three renewal years:
- No increase in Administrative Service Fees, Network Fees or Your Health First Fees (chronic conditions management program) - $843,902 per year;
- Increased Wellness fund of $115,000 per year ($150,000 total per year);
- Increased Education fund of $10,000 per year ($22,000 total per year);
- Enhanced prescription discounts and rebates (estimated savings of $325,000 per year);
- Addition of Cigna Motivate Me wellness program at no charge (estimated savings of $30,000 per year);
- Continued support of an onsite representative; and
- Continued free Section 125 Flexible Benefit Plan administration.
|Department: Human Resources||Contact Person: Debra Craig|
|Human Resources Department||Approved|
|City Managers Office||Approved|
|City Clerk Department||Approved|
|Council Action: ||Council Action: Accepted|