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ACCEPT THE ANNUAL HEALTH BENEFITS REPORT AND ADOPT THE MONTHLY PREMIUM RATES FOR THE CITY’S 2026 EMPLOYEE HEALTH PLANS
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RECOMMENDATION
It is recommended that the City Council approve a motion to:
1. Accept the Annual Health Benefits Report for the City’s medical, dental, and vision plans.
2. Approve the recommended monthly premium rates for the City’s 2026 employee health plans.
3. Authorize the City Manager or their designee to take the necessary and appropriate actions to carry out the purpose and intent of this motion.
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Summary
The Annual Health Benefits Report (Attachment A) prepared by the City’s benefit consultant, Alliant Insurance Services, Inc., provides a comprehensive review of the renewal for employee health benefit plans and calculates the premium rates for the upcoming plan year.
Premium rates reflected in Attachment B will be effective January 1, 2026. Employer contributions are dependent upon the provisions of the Memoranda of Understanding with the various bargaining units and the Unrepresented Management/Confidential and Law Employees Compensation Plan (Unrepresented Compensation Plan).
On August 21, 2025, Human Resources met with SCEA, Fire 456, Fire Management, SPOA, SPMA, O&M, T&M, Water Supervisory and B&C Union Representatives to review and discuss upcoming changes.
On September 10, 2025, employees were informed about the rate increases, new plan options, and the open enrollment timeline.
2026 premium changes by plan are listed below:
Existing Plans:
• Kaiser Health Maintenance Organization (Kaiser HMO) +2.3%
• Kaiser High-Deductible Health Plan (Kaiser HDHP) +0.4%
• Kaiser Deductible HMO Plan (Kaiser DHMO) +0.4%
• Sutter Health Plus LG18 (Sutter HMO LG18) +34.94%
• Sutter High-Deductible Health Plan (Sutter HDHP HE08) +35.7%
• Sutter Health Plus Deductible HMO Plan LG24 (Sutter DHMO LG24) +34.82%
New Plan Options:
• Sutter Health Plus LG22 (Sutter HMO LG22) +25.87%
• Sutter High-Deductible Health Plan HL12 (HDHP HL 12) +3.94%
• Sutter Health Plus Deductible HMO Plan LG29 (Sutter DHMO LG29) +2.66%
Dental/Vision Plans:
• Dental PPO -0.9%
• Dental DHMO – 0%
• VSP – 17.38%
The increase in Sutter premium rates is due to higher large claims, more members using non-Sutter Health facilities, and current market conditions. Unlike other providers, Sutter bases its utilization data on all Sutter members, rather than solely on City of Stockton data.
Alliant collaborated with Sutter to help the City retain its existing plans while adding three (3) new health plan options. These additional plans offer employees alternatives with higher out-of-pocket costs but lower premium increases. Instead of a uniform 35% increase, employees can choose plans with premium increases of 2.66%, 3.94%, or 25.87%.
DISCUSSION
Background
In 2025, health premium rates for all plans increased by an average of 20%. In December 2024, Council designated $2 million dollars to help mitigate the financial impact on employees. Human Resources met with Union Representatives and entered into side letter agreements to provide employees with an additional 10% increase towards employer contributions effective January 1, 2025.
Human Resources collaborated with Alliant, third-party administrator, to explore alternative program options and negotiate with carriers to find plans that are both comprehensive and cost-effective. Although Alliant issued an RFP, they were unable to identify opportunities to join a pool program or find affordable plan options among various medical providers. Consequently, the City and Alliant worked directly with Sutter to negotiate renewal rates and plan options. As a result, Sutter agreed to reduce the premium renewal increase from 39% to 35% for 2026. Additionally, Sutter allowed the City to offer three (3) new plan options for Sutter members, providing choices with higher out-of-pocket costs but lower monthly premiums.
On August 21, 2025, Human Resources met with SCEA, Fire 456, Fire Management, SPOA, SPMA, O&M, T&M, Water Supervisory and B&C Union Representatives to review and discuss upcoming changes.
On September 10, 2025, employees were informed about the rate increases, new plan options, and the open enrollment timeline.
Present Situation
Fully Insured Medical Plans
The City is proposing to offer nine (9) fully insured medical plans:
1. Kaiser High-Deductible Health Plan (Kaiser HDHP)
2. Kaiser Health Maintenance Organization (Kaiser HMO)
3. Kaiser Deductible HMO Plan (Kaiser DHMO)
4. Sutter High-Deductible Health Plan HE08 (HDHP HE08)
5. Sutter High-Deductible Health Plan HL12 (HDHP HL12)
6. Sutter Health Plus LG18 (Sutter HMO LG18)
7. Sutter Health Plus LG22 (Sutter HMO LG22)
8. Sutter Health Plus Deductible HMO Plan LG24 (Sutter DHMO LG24)
9. Sutter Health Plus Deductible HMO Plan LG29 (Sutter DHMO LG29)
Plan enrollment as of June 30, 2025:
|
Fully Insured Plan |
Enrollment as of 6/30/2025 |
|
Kaiser HMO |
567 |
|
Kaiser HDHP |
162 |
|
Kaiser Deductible HMO |
44 |
|
Sutter HMO |
433 |
|
Sutter HDHP |
117 |
|
Sutter Deductible HMO |
28 |
|
Total enrollment in fully insured plans |
1,351 |
Employer Contribution
The employer contribution rates for the upcoming fiscal year are dependent upon completed MOUs with bargaining units and the Unrepresented Compensation Plan. The FY 2025-2026 (effective January 1, 2026) employer contribution rates are:
|
Tier |
Contribution Amount |
|
Employee |
$814.00 |
|
Employee + 1 |
$1,477.00 |
|
Employee + Family |
$1,968.00 |
Health Plan Premiums
Monthly health insurance premiums for 2026:
|
|
Kaiser HMO |
Kaiser HDHP |
Kaiser DHMO |
Sutter HMO LG18 |
Sutter HMO LG22 |
Sutter HDHP HE08 |
Sutter HDHP HL12 |
Sutter DHMO LG24 |
Sutter DHMO LG29 |
|
Employee only |
$926.77 |
$745.14 |
$793.40 |
$1,243.40 |
$1163.30 |
$1,057.70 |
$809.90 |
$1071.90 |
$819.90 |
|
Employee + one |
$1,668.18 |
$1,341.25 |
$1,428.12 |
$2,238.90 |
$2,095.30 |
$1,903.80 |
$1,457.70 |
$1,930.20 |
$1,476.60 |
|
Employee + family |
$2,224.25 |
$1,788.33 |
$1,904.16 |
$2,985.90 |
$2,794.40 |
$2,538.40 |
$1,943.60 |
$2,574.40 |
$1,969.60 |
Monthly Dental premiums for 2026:
|
Delta Dental HMO |
Delta Dental PPO |
|
$19.84 |
$56.15 |
|
$38.26 |
$112.27 |
|
$83.55 |
$145.95 |
Monthly Vision premiums for 2026:
OPERATING ENGINEERS’ LOCAL 3 (OE3) Health Plan Options
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 have seven (7) additional health plan options available through the Operating Engineers’ Public and Miscellaneous Health and Welfare Trust Fund. Each year on January 1st, 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. The employer contribution costs are budgeted and funded through the Health Internal Service Fund (ISF). Currently, twenty employees participate in an OE3 plan. The administrative cost to manage each OE3 plan is $27.55 per employee per month. This administrative fee is paid by the employees enrolled in these plans.
FINANCIAL SUMMARY
Health plan premium rates for medical, dental, and vision employer contributions are reflected in the FY 2025-2026 Health Internal Service Fund budget.
Attachment A – 2026 Annual Health Benefits Report
Attachment B – 2026 Health Premiums Rates