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Home My WebLink About09531 City Clerk’s Office Item # R-26 Background Paper for Proposed Ordinance COUNCIL MEETING DATE: AUGUST 12, 2019 TO: President Dennis E. Flores and Members of City Council CC: Mayor Nicholas A. Gradisar VIA: Brenda Armijo, City Clerk FROM: Marisa Pacheco, Director of Human Resources, SUBJECT: AN ORDINANCE AMENDING SECTION 6-7-1 OF TITLE VI OF THE PUEBLO MUNICIPAL CODE RELATING TO EMPLOYEE MEDICAL BENEFITS AND PROVIDING FOR A SELF-FUNDED HEALTH BENEFIT PLAN SUMMARY: The proposed Ordinance will amend the current Ordinance to provide for self-funding of the City provided health benefit plan. PREVIOUS COUNCIL ACTION: Not applicable. BACKGROUND: The City currently provides health insurance to all permanent, full time-employees at an annual cost of approximately $12 million. Because medical costs continue to rise, the cost of health care also continues to rise. In an effort to address this trend, the City Benefits Committee, which consists of members of all four unions and members of management, have been working diligently for several years to attempt to bend this curve and mitigate the rising expense for the City as well as employees. After much research and on the advice of the City’s Benefits Broker, HUB International, it has been recommended that the City transition to a self-funded health benefit plan beginning with the 2020 Plan Year as a long-term cost savings measure. This Ordinance adds language to Section 6-7-1 of Title VI that provides for this transition. FINANCIAL IMPLICATIONS: Due to the creditability of our claims experience, self-funding is the most cost-efficient way for an organization of our size to fund a medical plan with the administrative & insurance costs minimized and the majority of the funds used to pay claims. The move from fully insured to self-funding allows the City more control over the plan and the ability to adopt cost containment programs that can reduce expenses in the future. If the City continues to run well, costs will be lower in the self-funded plan, versus staying in a fully insured model. This benefits the City’s overall budget costs as well as out of pocket expenses for employees. BOARD/COMMISSION RECOMMENDATION: Not Applicable. STAKEHOLDER PROCESS: Not Applicable. ALTERNATIVES: Continue to provide health insurance to all permanent, full-time employees on a fully insured basis. RECOMMENDATION: Pass and approve the proposed Ordinance. Attachments: None. ORDINANCE NO. 9531 AN ORDINANCE AMENDING SECTION 6-7-1 OF TITLE VI OF THE PUEBLO MUNICIPAL CODE RELATING TO EMPLOYEE MEDICAL BENEFITS AND PROVIDING FOR A SELF-FUNDED HEALTH BENEFIT PLAN BE IT ORDAINED BY THE CITY COUNCIL OF PUEBLO, that: (brackets indicate matter being deleted, underscoring indicates new matter being added) SECTION 1. Section 6-7-1 of Title VI of the Pueblo Municipal Code is hereby amended to read as follow: Sec. 6-7-1. – \[Health, accident, hospitalization and major medical insurance\] Self-Funded Health Benefit Plan . For calendar year 2020 and thereafter, the City shall provide a self- (a) funded health benefit plan for all eligible Classified and full time Unclassified employees. Employees who are eligible and select an offered plan shall pay the cost of any applicable premium by payroll deduction subject to any contributions provided under any applicable collective bargaining agreement. The health benefit plan provided and the contribution rate for full time Unclassified employees and full time Classified non-bargaining unit employees shall be the same health benefit plan and contribution rate as is provided employees in the bargaining unit for other classified employees. All contractual services necessary to establish and administer the self-funded health benefit plan including but not limited to third party administrator, stop loss insurance, pharmacy benefit management and network and other services shall be procured pursuant to approved best value procedures and recommendation of City’s benefit consultant, and applicable rules and regulation of the City Purchasing Agent are amended to be consistent with the requirements of this Section.\[ The City shall obtain and pay for health, accident, hospitalization and major medical insurance or benefits for all permanent, full-time employees. The obtaining of such insurance or benefits is hereby expressly excepted from the competitive bidding requirement of the City Charter. Such insurance or benefits may be in one (1) or more individual group policies or health benefit plans. The City shall contribute to a health benefit plan provider on behalf of all classified employees and eligible unclassified employees, a monthly amount not to exceed two hundred fifty-two dollars ($252.00) for firefighters, two hundred sixty-nine dollars ($269.00) for police officers or two hundred eighty-one dollars ($281.00) for all classified employees and eligible unclassified employees, except firefighters and police officers in the bargaining unit, or such lesser monthly amount as required by the health benefit plan selected by an employee or \] selected by the exclusive bargaining agent for the employees in a bargaining unit. (b) Effective January 1, 1990, all eligible unclassified employees, and classified employees, except classified employees within a bargaining unit, shall receive an additional amount equal to fifty dollars ($50.00) per month, which amount may at the employee's option be applied to the employee's share of the monthly cost of coverage under a health benefit plan. Dental insurance shall be procured in the same manner (c) Dental Policy. as is provided for contractual services in above subsection (a). For eligible full time Unclassified employees and full time Classified non-bargaining unit employees,the City shall pay twenty-four dollars and sixty-six cents ($24.66) toward the full cost of an individual employee policy or family policy.\[ The City shall pay twenty dollars ($20.00) toward the full cost of an individual employee policy or family policy for police officers in the bargaining unit, whichever is the lesser, and twenty-four dollars and sixty-six cents ($24.66) toward the full cost for eligible unclassified employees and classified employees, except firefighters and police officers \] in the bargaining unit, whichever is the lesser. \[ (d) The insurance or benefits obtained shall be of such nature that individual employees may, by voluntary additional contribution, apply for and obtain additional \] coverage including both individual and family benefits. \[\] (d)\[\] Eligible Classified, (e) Permanent part-time employees shall receive the benefit of this Section on a pro rata basis, provided that such part-time employee shall elect to pay the difference between the City's pro rata contribution and the basic cost for the individual employee; otherwise the City shall not be obligated to provide insurance for such part-time employee. SECTION 2. The officers and staff of the City are authorized and directed to perform any and all acts consistent with the intent of this Ordinance to effectuate the policies and procedures described herein. SECTION 3. This Ordinance shall become effective on the date of final action by the Mayor and City Council. Action by City Council: Introduced and initial adoption of Ordinance by City Council on August 12, 2019 . Final adoption of Ordinance by City Council on August 26, 2019 . President of City Council Action by the Mayor: ☒ Approved on August 28, 2019 . □ Disapproved on based on the following objections: Mayor Action by City Council After Disapproval by the Mayor: □ Council did not act to override the Mayor's veto. □ Ordinance re-adopted on a vote of , on □ Council action on _______ failed to override the Mayor’s veto. President of City Council ATTEST City Clerk