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HomeMy WebLinkAbout4.4 Dental Plan AmendCITY CLE K File # ^ ~~' ~ AGENDA STATEMENT ~ ~ ~~ ~ ~ CITY COUNCIL MEETING DATE: January 6, 1998 SUBJECT: EXHIBITS ATTACHED RECOMMENDATION Report on Results of Seeking Dental Insurance Proposals and Proposed Amendment to Benefit Plan (Prepared by: Lou Ann Riera-Texeira, Assistant to the City Manager) Resolution Amending the Benefit Plan Approve Resolution FINANCIAL STATEMENT: Based on current enrollment, the approximate cost of this increase for the remainder of Fiscal Year 1997-98 (January - June 1998) is $750. Sufficient funds are included in the 1997-98 budget to cover this cost. DESCRIPTION: In October, following the renewal of the 1997 Dental Insurance contract, the City Council directed staff to work with the City's Insurance Broker to review the existing Delta Dental plan and compare its competitiveness within the current insurance market. Insurance Broker Evaluation of Plans Available On the City's behalf, the insurance broker solicited quotes from ten dental insurance carriers. The quotations were obtained based upon the current composition of the covered staf£ In terms of coverage provided Delta Dental is a leading provider of dental insurance ben~fits. Delta has existing contracts with 94% of the dentists in California. Given the extensive network of dentists, none of the carriers responding to the Insurance Broker request could compete fully with the current Delta Dental program. The sizable number of participating dentists makes the patient claims process easier, since member dentist bills the insurance company, prior to requesting co-payments from the employee/patient. Also, the benefit levels offered by competing plans were found by the Insurance Broker to be correspondingly inferior (i.e., additional out-of-pocket expenses for participants), when compared to the current Delta insurance coverage. The amount of savings to the City based upon the current participant group and current rates ranged from approximately $480 per month to $569 per month. The deductible rate and maximum benefits were the same as the current coverage obtained from Delta Dental Insurance. The solicitations provided for a contract renewal date of July 1, 1999. Although the other plans could be obtained for less premium, the corresponding level of benefits expected to be paid was also typically less. ------------------------------------------------------------------- COPIES TO: H/cc-fo rms/agdelta2.d oc ITEM NO. l.~`S,/~l'n . .- In several cases the Insurance paid benefits based upon a schedule representing "Usual and Customary, Fees" In the past the City has had insurance plans which were structured in this manner. One of the risks is that the schedule used by the Insurance Company may not reflect the market rate for services in this region. Also, the plan coverage document would need to be analyzed to determine whether the Company utilized any regular schedule to adjust the "Usual and Customary" allowed charges. Under this type of plan in the event that the dentist charges fees in excess of the scheduled rate, the difference is the responsibility of the patient. Under the Delta Insurance Plan, the member dentists have contractually agreed to accept certain established fees and patient co-payments for each procedure. < . The Insurance Broker also advised that in the event of an early termination of the Delta Insurance coverage, the City would remain responsible for payment of elaims exceeding cumulative premiums paid since October 1, 1997. The current renewal date is October 1 st. This cost is difficult to estimate given the small number of participants and the unpredictability of dental elaims. The impact of this elause would reduce any savings achieved by changing dental insurance carriers, prior to a regular renewal date. Further Discussion With Delta Dental By Insurance Broker The Insurance Broker also continued discussions with Delta Dental to ascertain any ability to achieve a longer term contract than the current I year agreement. On October 1, 19Q7, the City approved a one year contract renewal. The new rates represented a 15% increase in insurance premiums from the previous contract. The City originally became a Delta Dental participant in 1989 During the first four years of service, the City was able to secure two year contract terms with favorable premium rates. In seeking alternatives the Insurance Broker recommended that the City seek a January 1 st renewal date since most plans utilize a calendar year to calculate applicable contributions towards deductibles. This also coincides with the current schedule for modifications by the City Health Insurance providers. In response to the effort by the Broker to market the coverage among other providers, Delta did agree to rcspond with a proposal for fixed premiums over a 26 month period. Under the Delta proposal current rates would increase by an additional 2.63%. The rate change would be effective for all premiums paid since October 1, 1997 In addition the Company would provide an extended contract term of26 months ( I 0/ 1/97 through 12/31/99). The City would maintain the same level of benefits as currently provided in the contract. As indicated ab(lve, the additional cost to the City to accept this extended renewal based on current enrollment would be approximately $750 for the remainder of Fiscal Year 1997-98. . Recommendation Given the offer by Delta Dental Insurance to stabilize insurance premium costs, without affecting benefits or access to dentists, Staff recommends that the offer by Delta be aeccpted. Provided that the City Council concurs with this recommendation the City Manager will execute a contract extension with Delta Dental as outlined above. It will also be necessary for the City Council to amend the Bencfit Plan, to increase the City's current contribution to the new premium rates. A proposed res(llution Amending the Benefit Plan is attached as Exhibit 1 Staff recommends that the City Council review the proposed change and adopt the attached resolution. . e . . , ~ , RESOLUTION NO. - 98 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN ********* AMENDING THE BENEFIT PLAN WHEREAS, the Personnel System Rules require the City Council to adopt a Benefit Plan; and WHEREAS, the Benefit Plan prescribes the current benefits provided to employees by the City. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin hereby amends Resolution No. 65-97 to include the following: Section 3 Dental Insurance. Beginning with the October 1997 premium, the City will contribute on behalf of each employee scheduled to regularly work at least 30 hours per week, a maximum of $14404 per month to a dental insurance plan selected by the City Beginning with the October 1997 premium, the City will contribute on behalf of each regular employee scheduled to work between 20 and 29 hours per week, a maximum of $44,69 per month to a dental insurance plan selected by the City PASSED, APPROVED AND ADOPTED this 6th day of January, 1998. AYES: NOES: ABSENT ABSTAIN. Mayor ATTEST City Clerk