From
Lisa Norris, Human Resources Director
Title
Enter into a three-year agreement with Metlife for fully insured dental insurance benefits effective January 1, 2015 through December 31, 2017 in the amount of $2,049,121 over the three years, based on the following recommendations:
1) Two-year rate guarantee, with a maximum capped increase of 8% in year three, for Dental PPO Fully insured benefits for an estimated annual amount in years one and two of $619,323 per year and an amount of $668,869 in year three for a total contract value of $1,907,514 over three years; and
2) Two-year rate guarantee, with a maximum capped increase of 7.5% in year three, for Dental Maintenace Organization benefits (DMO) for an estimated annual amount of $46,051 in years one and two and an estimated $49,505 in year three for a total contract value of $141,607 over three years.
3) These agreements shall include the option for the city manager to authorize annual renewals so long as such renewal costs are appropriated in the annual budget and do not exceed $50,000, or more than a 25% increase, over the original contracted rate, for all renewals in total.
Presenter
Lisa Norris, Human Resources Director
Recommend Action
Approve
Analysis
Effective December 31, 2014, our current agreements with Delta Dental (Dental PPO) and Metlife (Dental DMO) expire. The City issued a Request for Proposal (RFP) in May for quotes on our existing plans and/or other options through through the City's Purchasing Department. Responses were due in mid-May 2014. Many companies reviewed the RFP, with 11 carriers responding to the Dental PPO proposal and 8 carriers responding to the DMO dental portion. Proposers were competitive in both areas. Analysis and scoring of proposals received by Dental Plan (PPO versus DMO) are attached. Analysis was completed by our Benefits Consultant, Morgan Young, and our city Human Resources benefit team.
The City currently offers three different types of plans to offer employees choice in costs and benefits. Dental premiums are paid in full by employees, with no city subsidy provided. The Dental PPO has the strongest participation with approximately 700 participants, Metlife maintains about 279 participants and QCD generally carries about 100 participants.
1) The Dental PPO plan, currently administered by Delta Dental, is a traditional PPO plan with a $50 deductible per person and coinsurance levels provided for preventative (100% covered), basic (80%), major dental (50%) and orthodontia treatment (50%) for adults and children. The maximum benefit eligible amount to be paid on a calendar year basis per participant is $1,500 for preventative, basic and major services combined, and $1,500 for orthodontia services. While this plan costs employees the most in monthly contributions, it offers the greatest flexibility to employees to go to any dentist or specialist of their choice.
2) Metlife offers a dental maintenance organization that works like a dental HMO to offer benefits within a fixed network of providers on a copay basis depending on what procedure is done in the office. The amount due at the time of service is determined by what procedures are done, the copays associated with those procedures, and are set based on a schedule of benefits outlined to employees. Metlife does not have an annual plan maximum and offers a discount only to participants if referred to a network specialist.
3) Quality Care Dental is a no cost / low cost option to employees which provides a discount off the retail cost of services through a small network of providers. This service was not bid as we have an existing contract through December 31, 2015, with renewal options. As a result, this plan remains available to employees, but no action is needed for this plan by council at this time.
Staff recommends that the City contract with Metlife for both the Dental PPO and DMO insurance effective January 1, 2015, and ending the contract with Delta Dental effective December 31, 2014 when it expires. Metlife matched benefits and offered a two-year rate guarantee with a maximum capped increase to premiums in year three of both dental plans, as well as allowing a savings of 12% on premiums for the DHMO and about 7.5% for the Dental PPO premiums. Employees will enjoy these savings since premiums are fully paid by the employees!
Financial Consideration
Dental premiums are budgeted in the FY 2014/2015 Employee Insurance Fund (213010) as follows (and as attached):
64070 (Dental PPO): $759,215 budgeted for FY 2014/2015. Annual projected premiums for Metlife Dental PPO benefits are $619,323, so no additional funding is needed.
64200 (DMO Premiums): $53,256 budgeted for FY 2014/2015. Annual projected premiums for Metlife DMO benefits are $46,050, so no additional funding is needed.
Premiums for both plans will fluctuate from budgeted if enrollment changes from year to year so actual premiums paid will vary annually.