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MEMORANDUM RANCHO PALOS VERDES <br /> TO: HONORABLE MAYOR AND CITY COUNCIL <br /> FROM: ASSISTANT CITY MANAGER <br /> DATE MAY 20, 1997 <br /> SUBJECT: SELECTION OF MEDICAL AND DENTAL INSURANCE PROVIDERS <br /> AND PROVIDER FOR OTHER MISCELLANEOUS BENEFITS <br /> RECOMMENDATION: <br /> Adopt the three attached Resolutions providing medical insurance coverage from the <br /> Public Employee Retirement System (PERS) and establishing City contribution <br /> amounts for employee insurance premiums. <br /> BACKGROUND AND ANALYSIS: <br /> For the past several years the City's health, dental, life, and other insurance benefits <br /> have been provided for through a joint arrangement with several cities through the <br /> Southern California Joint Powers Insurance Authority (SCJPIA). HCM Benefits, Inc. <br /> (HCM) was the broker used by SCJPIA for coordination of the program. In February <br /> 1997 the participating SCJPIA cities were notified by HCM that the health insurance <br /> premiums through Prudential Insurance were likely to increase substantially. This was <br /> primarily the result of two factors. First, only 7 percent of the SCJPIA cities eligible <br /> employees were actually enrolled through SCJPIA. The other 93 percent were <br /> employees of cities that were contracting independently for their main health insurance <br /> coverage. In some cases it appeared that some cities were using the SCJPIA pool for <br /> only certain employee groups (such as part time employees). HCM notified the <br /> participating SCJPIA cities that this adverse selection would result in significantly <br /> increased insurance rates or discontinuation of coverage. HCM noted that each city <br /> could obtain similar insurance at a rate lower that would be offered by Prudential. <br /> In March the City asked HCM to conduct a "marketing" of our insurance needs. HCM <br /> contacted twelve large insurance carriers. Ten companies provided quotations. HCM <br /> provided the City with an analysis of the four carriers who offered competitive quotes. <br /> These carriers included Prudential, Pacificare, CareAmerica, and the Health Insurance <br /> Plan of California (HIPC). The City also obtained a quotation from PERS. After an <br /> analysis of the benefits offered by the five companies, two companies were eliminated <br /> from further consideration. CareAmerica's benefits were not competitive with the other <br /> companies, and Prudential refused to offer coverage for active City Council members. <br />