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ITEM 16

City Council Memorandum Human Resources Memo No. N/A

Date:

November 4, 2024

To:

Mayor and Council

Thru:

Joshua H. Wright, City Manager
Tadd Wille, Assistant City Manager
Rae Lynn Nielsen, Human Resources Director

From:

Fernanda Acurio, Benefits & Compensation Manager

Subject:

Agreement No. HR2-948-4453, Amendment No. 1, with Blue Cross Blue Shield of Arizona, for Group Medical and Pharmacy Program Administration

Proposed Motion:

Move City Council approve Agreement No. HR2-948-4453, Amendment No. 1, with Blue Cross Blue Shield of Arizona, for Group Medical and Pharmacy Program Administration, in an amount not to exceed $2,190,000 per year, for the period of two years, beginning January 1, 2025, through December 31, 2026.

Background/Discussion:

The City's medical benefit is reviewed throughout the year by staff in collaboration with the City-wide Healthcare Task Force, along with assistance from a benefits consulting firm. Since 2015, the City has offered three different plan options for employees to choose from: the Red, White, and Blue plans. The Red and Blue benefit plans include well-established benefit designs of co-insurance, deductibles and out-of-pocket maximums. The White plan is a high-deductible health plan, which currently enrolls over 55% of City employees. No benefit plan design changes will be made to the Red, White, and Blue plans in 2025. All plans will continue to provide preventative services at 100% coverage, such as well woman, well man, and well baby visits. The contracted network and network discounts apply to all plans.

The pharmacy benefit will continue to operate with a co-pay feature immediately in the Red and Blue plans. The same co-pay structure is established in the White Plan, but is not applicable until the employee has reached their deductible based on the legal requirements of a high-deductible health plan.

On August 18, 2024, after review and consideration of the financial attestation provided by the City's healthcare actuary and in accordance with the City of Chandler Health Care Benefits Trust Agreement, the City's Health Benefits Trust Board approved an 8% increase to medical premium rates for all three plans. The contribution strategy will remain at an 80/20 split for the Red and the Blue plans, in which the City pays 80% and the employee 20%, and the White plan will remain at a 5/95 split, in which the City pays 95% and the employee 5%.

Evaluation:

On October 27, 2022, City Council approved an agreement with Blue Cross Blue Shield of Arizona, for group medical and pharmacy program administration, for a two-year period, with the option of up to three two-year extensions. Staff recommends the two-year extension of the agreement.

Fiscal Impact

Account No.

Fund Name

Program Name

Dollar Amount

CIP Funded Y/N

741.1290.5219.0.0.0

Medical Self Insurance

N/A

$2,190,000

Attachments

CY 2025 BCBSAZ Amendment

Exhibit 1 CY 2025 ASA