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ACCEPT THE 2025 ANNUAL HEALTH BENEFITS REPORT AND ADOPT THE 2025 HEALTH PREMIUM RATES FOR THE CITY’S HEALTH PLANS
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RECOMMENDATION
It is recommended that the City Council approve a motion to:
1. Accept the 2025 Annual Health Benefits Report for the City’s medical, dental, and vision plans;
2. Approve the 2025 Health Premium Rates for the City’s health plans; and
3. Authorize the City Manager or their designee to execute health benefit policies and plans to address the health care needs of the City’s employees.
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Summary
Council is being asked to approve the 2025 Health Premium Rates (Attachment A) for employee benefit plans effective January 1, 2025. It is important to note that the employer contributions in this report are dependent upon the provisions of the Memoranda of Understanding (MOU) with the various bargaining units and the Unrepresented Management/Confidential and Law Employees Compensation Plan (Unrepresented Compensation Plan).
The 2025 Annual Health Benefits Report (Attachment B) prepared by Alliant Insurance Services, the City’s insurance broker, provides a comprehensive review of the renewal for health benefit plans that are offered to City employees, and calculates the premium rates for the upcoming plan year.
Premiums are trending upward nationally. The increase in costs is attributable to a combination of various factors impacting the market including inflation for goods and services, labor shortages, increased labor cost, increased demand for care, market trends and increased utilization. Premiums for other comparable public agencies within California are also trending up with increases as high as 23.5%.
Our current medical plans are seeing a significant increase in premiums for 2025. These rate increases reflect actual City of Stockton utilization reporting and usage as well as current market conditions.
• Kaiser POS increase +19.5%
• Kaiser HDHP increase +18.9%
• Kaiser HMO increase +19.0%
• Sutter HMO increase +18.0%
• Sutter HDHP increase +18.9%
• Delta DHMO increase +0.5%
• Delta PPO decrease -0.2%
• VSP Vision decrease -6.3%
We recognize the importance of maintaining affordable benefits while ensuring their quality and comprehensiveness. We have worked with our insurance broker to negotiate with carriers and explore additional benefit plans to ensure that our offerings are both comprehensive and cost-effective. Based on this, we are recommending the removal of the Kaiser POS plan due to low enrollment and high premium cost, and the addition of two non-HSA HMO deductible options from Kaiser and Sutter. The addition of these two plans will provide employees with lower cost alternatives to the standard HMO.
DISCUSSION
Background
The City of Stockton has undergone significant benefit design and delivery changes to its health plans over the last several years due to strategic and financial decisions, the Affordable Care Act (ACA), and the general change of the benefits marketplace in the Stockton area.
Eligible employees have the option to enroll in a Kaiser or Sutter medical plan, an HMO or PPO Delta Dental plan, and a VSP vision plan.
Employees in the OE3 bargaining groups including the Operations and Maintenance Unit (O&M), Trades and Maintenance Unit (T&M), and the Water Supervisory Unit (WS) can enroll in the City’s plan or select one of the seven (7) additional health plan options available through the Operating Engineers’ Public and Miscellaneous Health and Welfare Trust Fund. Each year on January 1, the OE3 plan rates are established and set by the Board of Trustees of the Operating Engineers’ Public and Miscellaneous Health and Welfare Trust Fund. Currently, 23 employees participate in an OE3 plan. The employer contribution costs are budgeted and funded through the City’s Health Internal Service Fund (ISF). The administrative cost to manage these plans is $27.55 per employee per month. This administrative fee is paid for by the employees enrolled in these plans.
Present Situation
Fully Insured Medical Plans
The City is proposing to offer (6) fully insured medical plans:
1. Kaiser High Deductible Health Plan (Kaiser HDHP)
2. Kaiser Health Maintenance Organization (Kaiser HMO)
3. Kaiser HMO Deductible Plan (Kaiser HMOD) * New
4. Sutter High Deductible Health Plan (Sutter HDHP)
5. Sutter Health Plus (Sutter HMO)
6. Sutter Health Plus HMO Deductible Plan (Sutter HMOD) * New
The City is proposing to remove one (1) fully insured medical plan:
1. Kaiser Point of Service (Kaiser POS)
Enrollment as of June 30, 2024
1,323 full-time employees are enrolled in the following health plans:
|
PLAN |
EMPLOYEE’S ENROLLED |
|
Kaiser HMO |
589 |
|
Kaiser HDHP |
189 |
|
Kaiser POS* |
1 |
|
Sutter HMO |
421 |
|
Sutter HDHP |
123 |
*The (1) current enrollee in the Kaiser POS plan will not be impacted by the removal
Health Plan Premiums
The following table shows the monthly insurance premium rates for January 1, 2025, through December 31, 2025:
|
|
Employee Only |
Employee + one |
Employee + family |
|
Kaiser POS (removing) |
$2,028.65 |
$3,651.02 |
$4,867.78 |
|
Kaiser HDHP |
$790.07 |
$1,421.60 |
$1,895.20 |
|
Kaiser HMO |
$953.75 |
$1,716.21 |
$2,288.02 |
|
Kaiser HMOD (adding) |
$838.02 |
$1,507.89 |
$2,010.27 |
|
Sutter HMO |
$969.87 |
$1,745.39 |
$2,326.80 |
|
Sutter HDHP |
$827.27 |
$1,488.49 |
$1,984.40 |
|
Sutter HMOD (adding) |
$843.47 |
$1,517.89 |
$2,023.50 |
|
Dental HMO |
$19.84 |
$38.26 |
$83.55 |
|
Dental PPO |
$56.67 |
$113.32 |
$147.31 |
|
Vision |
$7.43 |
$14.87 |
$19.31 |
Employer Contributions
The monthly employer contribution rates for the upcoming fiscal year are dependent upon completed MOUs with bargaining units and the Unrepresented Compensation Plan. The FY 2024-2025 (effective July 1, 2024) employer contribution rates are:
|
TIER |
EMPLOYER CONTRIBUTION |
|
Employee |
$725.00 |
|
Employee + 1 |
$1,316.00 |
|
Employee + Family |
$1,753.00 |
The FY 2025-26 (effective July 1, 2025) employer contribution rates are:
|
TIEREMPLOYER CONTRIBUTION |
|
|
Employee |
$740.00 |
|
Employee + 1 |
$1,342.00 |
|
Employee + Family |
$1,788.00 |
FINANCIAL SUMMARY
Implementation of health plan premium rates for medical, dental, and vision benefits are critical to the City’s efforts to maintain fiscal sustainability. The projected premium rates will be reflected in the FY 2024-2025 Health Internal Service Fund budget.
Attachment A - 2025 Health Premium Rates
Attachment B - 2025 Annual Health Benefits Report