HomeMy WebLinkAboutA001 - Council Action Form dated May 27, 2025ITEM #:22
DATE:05-27-25
DEPT:HR
SUBJECT:HEALTH BENEFITS BROKERAGE, CONSULTING AND ACTUARIAL
VALUATION SERVICES CONTRACT RENEWAL
COUNCIL ACTION FORM
BACKGROUND:
The City provides health benefits to full-time and regular part-time employees including
medical insurance, dental insurance, life and accidental death/dismemberment (AD&D)
insurance, disability insurance, prescription drug coverage, flex spending, an employee
wellness plan, and optional vision coverage. The medical and prescription drug plans are
administered by Wellmark/Blue Cross of Iowa. As of April 1, 2024, the prescription drug plans
are being managed by Wellmark/Blue Cross of Iowa and will continue with the July 1, 2025
renewal. The dental and vision plans are administered by Delta Dental of Iowa, and the flex
spending plan is administered by TASC. Life/AD&D and disability insurance is provided by
National Insurance Services.
The City has three group benefit plans including Wellmark’s Classic Blue (indemnity plan that
is closed to new enrollments), Alliance Select (PPO plan), and Blue Advantage (HMO plan).
These plans are “non-grandfathered medical plans” under the Patient Protection and
Affordable Care Act (ACA). As permitted by the ACA, a non-grandfathered medical plan can
make changes to certain aspects of the plan, including employee contributions, as long as
they meet the minimum requirement under ACA regulations, such as 100% covered
preventive services and not exceeding the maximum out of pocket expenses for extenuating
services.
The ACA regulations include significant compliance requirements, and the complexity
of analyzing and valuing proposed plan changes is not something City staff is
equipped to address without the assistance of contracted, qualified professionals.
Along with this type of service, professional assistance is necessary to broker best in
class offers for insurance coverage and other benefits, including the continued
actuarial valuation services.
On March 9, 2023, the City issued a Request for Proposals (RFP) for health benefits
brokerage, consulting and actuarial valuation services for the self-funded health plan. After
an extensive process, the City awarded a one-year contract to Gallagher Benefit
Services, Inc., with an option to renew for four additional one-year periods. The first
renewal term expires on June 30, 2025. Gallagher's rate for the second of the four
renewal periods (July 2025 - June 2026) is $56,500. The adopted FY 2025/26 Budget
contains $56,645 for these services. The City has had very good results with managing
the health and life/disability insurance programs by partnering with Gallagher.
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ALTERNATIVES:
1. Approve a renewal of the contract with Gallagher for health benefits brokerage,
consulting, and actuarial valuation services for the period of July 1, 2025 through June
30, 2026.
2. Direct staff to conduct a new RFP for these services.
CITY MANAGER'S RECOMMENDED ACTION:
Gallagher has an extensive record of providing benefits brokerage, consulting and
actuarial services to city government and public organizations throughout Iowa.
Utilizing Gallagher ’s services will continue to strengthen administration of City self-
funded health and life/disability benefits by providing actuarial analysis, evaluating,
and supporting compliance, and analyzing cost saving approaches. Renewing this
contract will provide the best value to the City by providing independent professional
assistance in administering the City's health insurance plan. Therefore, it is the
recommendation of the City Manager that the City Council adopt Alternative No. 1 as
described above.
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