title
AUTHORIZE BUDGET AMENDMENT TO ADDRESS THE IMPACT OF HEALTH CARE PREMIUM INCREASES
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a Resolution to:
1. Authorize a transfer of $2,000,000 from the General Fund Reserve balance to the Health ISF Fund to address the impact of health care premium increases of the City’s employees.
2. Authorize the City Manager to take appropriate and necessary actions to carry out the purpose and intent of this Resolution.
body
Summary
At the Council meeting on September 10, 2024, the City Council accepted the 2025 Health Benefits Report and Adopted the 2025 Health Premium rates for the City’s Health Plan, and directed city staff to bring back to City Council options to help bridge the gap between premium increases and employer contributions.
DISCUSSION
Background
The employer contributions 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), excluding the Stockton Police Officers Association MOU which is dependent on the Measure A side letter.
The City moved to a calendar year renewal effective January 2024 and pre-negotiated premium increases that go into effect July of each fiscal year. This additional funding will help address the impact to city employees until additional employer contributions go into effect.
The 2025 Annual Health Benefits Report prepared by Alliant Insurance Services, the City’s insurance broker, provided a comprehensive review of the renewal for health benefit plans that are being offered to City employees, and calculated 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%
Present Situation
City Council directed city staff to bring back to City Council options to help bridge the gap between premium increases and employer contributions. The City has identified $2,000,000 available from General Fund reserve balance to address the impact of the health care premium increases on the City’s employees. It is recommended that this commitment be funded out of the year-end balance before reserves or special projects are considered.
This funding will be allocated to Human Resources for authority to work with the appropriate unions to help address the premium increases.
FINANCIAL SUMMARY
Following is the budget amendment needed to complete the recommended action:
Authorize a $2,000,000 transfer from the General Fund Reserve balance to the Health ISF Fund and appropriate the amount in the Health ISF Fund to assist city employees with the health insurance premium increases.