FROM: Stacey Barnier, Director of HR and Risk Management
SUBJECT: Informational: Update on Keenan and Associates’ Work on Employee Benefits Insurance Broker and Consulting Services
RECOMMENDATION:
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Informational Update on Keenan and Associates’ Work on Employee Benefits Insurance Broker and Consulting Services.
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BACKGROUND:
Keenan and Associates, a niche insurance brokerage and consulting firm that was founded to serve California public agencies and retirement systems, was selected to assist SBCERA with its employee health and welfare benefits and insurance. A contract with Keenan was approved by the SBCERA Board in October 2021.
Over the past several years, SBCERA has worked on Strategic Priorities designed to provide greater control over its contracted critical services including, but not limited to, employee health and welfare benefits and insurance, property and casualty insurance, and payroll services. To achieve these goals, we have implemented the required payroll infrastructure to be able to manage and administer our employee benefits internally.
Currently, SBCERA contracts with San Bernardino County for its health and welfare benefits offerings. SBCERA does not have access directly to the insurance carriers and/or health care plans, and instead must work through the County to address any enrollment or benefits problems, issues, or questions, resulting in delays and concerns by SBCERA employees. We engaged Keenan to go out to market to determine if we can provide SBCERA employees with a broad array of benefits, acceptable total cost, and direct access to carriers and plans.
Over the course of the last several months, Keenan has marketed and negotiated with various carriers and explored pooled arrangements on behalf of SBCERA. They explored ten different options for medical insurance including some pooled arrangements as well direct with the carriers in addition to a non-traditional option. They explored four different dental carriers, five different vision options, six options for life insurance, five different disability carrier options, as well as 3 different options for our flexible spending account, FMLA and COBRA administration. One of the pooled arrangements is no longer available to us as the pool is closed to new applicants. Keenan also conducted a survey of SBCERA employees to determine what, if any, voluntary plan options staff were interested in purchasing so they could market those as well.
There are three packaged options available to SBCERA that staff believes are viable for consideration. Each option includes the full array of benefit offerings including medical, dental, vision, life insurance, disability coverage, flexible spending account administration as well as FMLA and COBRA administration. Each option includes Kaiser as one of the medical carrier options.
Option A
Option A is attached as Exhibit A and most closely matches the current plan offerings through San Bernardino County and includes two Blue Shield HMO options, a Blue Shield PPO option as well as two Kaiser HMO options. This option is available to SBCERA through an existing pooled arrangement with the Public Agency Coalition Enterprise (PACE), which is established for the purpose of the establishment, operation, and maintenance of a joint program for employee benefits coverage, and such other coverages and associated services as the Board may later determine, by its members, and to provide a forum for discussion, study, development, and implementation of programs regarding employee benefits, insurance, and self-insurance. There is a two-year commitment to the PACE program should we elect the options available to us in Option A which would allow SBCERA to keep our medical insurance plans with Kaiser and Blue Shield which are the same medical carriers we have with San Bernardino County. We would also be required to maintain the high and low plans for both Kaiser and Blue Shield.
Option B
Option B is attached as Exhibit B and would replace the existing Blue Shield HMO and PPO plans with similar plans through HealthNet. This option also includes two Kaiser HMO options just as we currently have available through San Bernardino County. There is no pooled medical option available for this package so we would be rated based on our actual claims and utilization as opposed to having the benefit of the larger pool.
Option C
Option C is attached as Exhibit C and would replace the existing Kaiser and Blue Shield plans with similar plans available from the carriers directly. Just as with option B, there is no pooled medical option available for this package so we would be rated based on our actual claims and utilization as opposed to having the benefit of the larger pool.
Options A through C all include a dental HMO and PPO through Delta Dental which is our current dental carrier and vision coverage through EyeMed which is also the same carrier. Notably, under our current arrangement with San Bernardino County, represented staff do not currently qualify to have spouse and/or dependent vision coverage. The new coverage would be open to all SBCERA employees and their dependents.
Life insurance for all options would transition to The Standard and would be a significant enhancement across the board for staff as all would now receive a $100,000 life insurance policy at no cost to them which would also include an Accidental Death and Dismemberment benefit which is not currently included in the SBCERA benefit package available through San Bernardino County. Current SBCERA life insurance coverage ranges from $20,000 to $50,000 and varies by position and benefit group (general unit or exempt benefit unit). Supplemental life insurance for the employee, spouse and family would still be available on a voluntary basis through the new carrier just as with the current carrier.
Disability benefits enhancements are available to SBCERA through each option and include an increase in our short-term disability benefit from 55% to 60% as a wage replacement during covered periods of disability. Long-term disability benefits would also be extended to our current general unit employees who are not currently eligible for long-term disability benefits through San Bernardino County.
We would also have access to an enhanced employee assistant program through The Standard as well as a third party administrator to handle our flexible spending account and COBRA administration.
The adoption of one of these options requires negotiation with SEIU which is ongoing. The current offer on the table related to these specific benefits enumerated above is as follows and a breakdown of the employee payroll deductions is also included as Exhibit D:
• Medical Insurance: SBCERA has proposed to cover 100% of employee only premiums, and 75% of the premium difference for employee+1 or family coverage.
o Opt Out: Unify at $230 per pay period, indexed annually at the same time and rate as CPI for the COLA.
• Dental Insurance: SBCERA has proposed to cover 100% of premiums for employee, employee+1 and family coverage.
• Vision Insurance: SBCERA has proposed to cover 100% of premiums for employee, employee+1 and family coverage. Coverage is proposed to be available to all dependents.
• Life Insurance: $100,000 basic life coverage for all employees, which is proposed to include a $100,000 accidental death and dismemberment policy at no cost to the employee. Additional coverage may be purchased at the employee’s expense for employee, spouse, and dependents (subject to guaranteed issue amounts and carrier approval for additional coverage).
• Short-Term Disability Insurance: 60% income replacement benefit; SBCERA has proposed to cover 100% of premiums.
• Long-Term Disability Insurance: New coverage available to all employees with a 60% income replacement benefit; SBCERA has proposed to cover 100% of premiums.
The incremental cost to implement the package under Option A is approximately $85,000 per year versus current costs with San Bernardino County. This would at least be partially offset by administrative cost savings for our staff.
The above options assume an October 1, 2022 effective date and rates are subject to change from the carriers if SBCERA does not move forward with that effective date. Should we reach an agreement with SEIU to adopt one of these benefit package options, SBCERA would conduct a special open enrollment as staff would need to be provided with an opportunity to make new elections depending on their own personal choices for the new offerings.
BUDGET IMPACT:
Costs for this item are included in the current year administrative budget.
STRATEGIC PLANNING GOAL/OBJECTIVE:
Quality Employer and Workplace
STAFF CONTACT:
Stacey Barnier
ATTACHMENTS:
Exhibit A: Health Option A - PACE Program
Exhibit B: Health Option B - Health Net & Kaiser
Exhibit C: Health Option C - Blue Shield & Kaiser
Exhibit D: Employee premium comparisons