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ACCEPT THE ANNUAL HEALTH BENEFITS REPORT AND ADOPT THE MONTHLY PREMIUM RATES FOR THE CITY’S 2027 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 2027 employee health plans; and
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 2027 Health Premiums Rates (Attachment B) will be effective January 1, 2027. 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).
Premiums changes are based on City of Stockton utilization and current market conditions, 2027 premium changes by plan are listed below:
• Kaiser HMO +6.2%
• Kaiser HDHP +8.5%
• Kaiser Deductible HMO +8.1%
• Sutter HMO LG18 +9.4%
• Sutter HMO LG22 +6.4%
• Sutter HDHP HE08 +9%
• Sutter HDHP HL12/17 +5.8%
• Sutter Deductible HMO LG24 +3.8%
• Sutter Deductible HMO LG29 +20.2%
• Dental PPO +1.1%
• Dental DHMO 0%
• VSP -1.4%
DISCUSSION
Background
In 2026, City employees were impacted by 35 plus percentage increases to Sutter health benefit premiums. In December 2025, the Council designated additional funds to be used towards employer contributions to help mitigate the financial impact on employees. Human Resources met with Union Representatives to provide an increase in employer contributions. In addition, Human Resources worked with Alliant, our third-party administrator, to research additional plan offerings through Sutter. The City added three (3) more Sutter plans to provide an option for higher out-of-pocket plan designs with lower monthly premiums.
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.
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)
Total enrollment for the fully insured plans as of August 12, 2026:
|
Fully Insured Plan |
Enrollment as of 8/12/2026 |
|
Kaiser HMO |
701 |
|
Kaiser HDHP |
164 |
|
Kaiser Deductible HMO |
50 |
|
Sutter HMO |
310 |
|
Sutter HDHP |
117 |
|
Sutter Deductible HMO |
48 |
|
Total enrollment in fully insured plans |
1,390 |
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 2026-2027 (effective January 1, 2027) employer contribution rates are:
|
Tier Contribution Amount |
|
|
Employee |
$973.54 |
|
Employee + 1 |
$1,766.49 |
|
Employee + Family |
$2,353.73 |
Health Plan Premiums
Monthly health insurance premiums for 2027:
Monthly Dental premiums for 2027:
|
Delta Dental HMO |
Delta Dental PPO |
|
$17.32 |
$57.30 |
|
$33.40 |
$114.57 |
|
$72.94 |
$148.94 |
Monthly Vision premiums for 2027:
OE3’s 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 (WS) have 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. The employer contribution costs are budgeted and funded through the Health Internal Service Fund (ISF). Currently, 16 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 2026-2027 Health Internal Service Fund budget.
Attachment A - Annual Health Benefits Report
Attachment B - 2027 Health Premiums Rates