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HomeMy WebLinkAboutOrdinance 7691 ORDINANCE NO. 7 G � , AN ORDINANCE APPROPRIATING REVENUE OF THE CITY IN EXCESS OF ITS TOTAL ESTIMATED INCOME AS SET FORTH IN THE ANNUAL BUDGET TO PROVIDE FUNDS FOR THE PAYMENT OF ADDITIONAL EXPENSE OF EMPLOYEE HEALTH INSURANCE COVERAGE; PRO- VIDING A SEVERABILITY CLAUSE; MAKING THIS ORDINANCE CUMULATIVE OF PRIOR APPROPRIATION ORDINANCES; REPEALING ORDINANCES IN CONFLICT HEREWITH; AND PROVIDING AN EFFECTIVE DATE. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS: SECTION I. That the City Manager of the City of Fort Worth shall be provided with such revenue as may be secured from the various sources included in Ordinance No. 7598 and in the Budget of the City Manager; and, in addition thereto there is hereby approp- riated an additional initial sum of Two Hundred Twenty-five Thousand and N0/100 Dollars ($225,000.00) from the General Fund Reserves of excess revenue and/or unappropriated surplus to the appropriate accounts for the payment of additional expense in- curred and to be incurred in connection with employee health insurance coverage during the fiscal year 1977-1978. SECTION II. Should any part, portion, section or part of a section of this ordinance be declared invalid or inoperative or void for any reason by a court of competent jurisdiction, such decision, opinion or judgment shall in no way affect the remaining portions, parts, sections or parts of sections of this ordinance, which provisions shall be, remain and continue to be in full force and effect. SECTION III. That this ordinance shall be cumulative of Ordinance No. 7598, but all other ordinances and appropriations for which provision has been heretofore made are hereby expressly repealed if in conflict with the provisions of this ordinance. SECTION IV. That this ordinance shall take effect and be in full force and effect from and after the date of its passage, and it is so ordained. APPROVED AS TO FORM AND LEGALITY: S. G. Johndroe, Jr. City Attorney ADOPTED: j /'70 1 g 7 4 LINE City of Fort Worth, Texas °A"IF9 = Ma or and Council Communication aRAWJA DATE REFERENCE SUBJECT: Contract for Health Insurance PAGE NUMBER 1/17/78 C-4058 1 or 3 Background Information: Effective December 20, 1977, the City Council authorized a 90-day extension of the current health insurance contract with Blue Cross-Blue Shield of Texas (M&C G-3663) to include a substantial rate increase based on bids submitted to the City. The staff was instructed to continue negotiations during the 90-day period on requested rate increases and administrative costs as bid by Blue Cross and the Aetna Insurance Company. The staff was directed to consider administra- tive and procedural problems involved in changing carriers. It has now been determined that the City payroll and accounting procedures can be modified so that a change in carrier is possible. The staff has discussed the proposed bids with representatives of Blue Cross and the Aetna Insurance Company. A review of both revised proposals indicates that the Aetna bid provides for a considerably smaller retention or administra- tive cost than the Blue Cross proposal, as shown below: Blue Cross Aetna 1st Year $217,881 $116,232 2nd Year $217,881 $117,667 This means that a savings of approximately $100,000 per year should be realized by adopting the Aetna plan. For several years the City of Fort Worth has been concerned about the continu- ing rise in the cost of health insurance. An analysis of health premiums from 1971 through 1978 shows the following: Total Health Insurance Premium* 1971-72 $ 966,200 1972-73 1,179,878 1973-74 1,374,523 1974-75 1,648,345 1975-76 2,036,648 1976-77 2,409,384 1978 3,670,680 (Projected) *The City pays the total charge for employees (estimated to be $1,928,000 in 1978) , and the employee pays for dependent coverage. Based on these new rates it will be necessary to appropriate an additional $225,000 from Reserves in the various funds to cover the expense. While this rise must be attributed in large measure to increased utilization and inflation, it is the opinion of staff that certain administrative changes could be made that may contribute to a reduction in the cost of health insur- ance. These proposed changes are as follows: r • DATE NUMBERCE SUBJECT: Contract for Health Insurance PAGE 1/17/78 C-4058 2 or 3 I. Changes ,.Concerning Future.-Employees A. Current Provisions — New employees and their dependents are covered after a 30—day eligibility period. No health questions are asked of either the employee or dependents. All pre—existing conditions are covered immediately without any restrictions. Changes — New employees and their dependents are covered after the 30—day eligibility period. No health questions will be asked, but any pre—existing conditions will be subject to the following provi— sions: Hospital and Other Medical Expenses incurred in connection with any pre—existing condition during the first twelve months that an individ— ual' s coverage is in force are not included as Covered Medical Expenses. A pre—existing condition is any injury or disease for which an individual either received treatment or services or took prescribed drugs or medicines during the three—month period preceding the effec— tive date of insurance. Summary — While this new pre—existing condition provision still guar— antees a new employee and his dependents health coverage, it also protects the City' s Group Programs from uncontrolled medical expense on new employees. B. Current Provision — A new employee who joins the City' s Group Pro— gram, but does not include his dependents, currently has the right to add his dependents any January 1 , during the open enrollment, with— out answering any health questions and all pre—existing conditions are covered immediately without any restrictions. Changes — If a new employee does not include his dependents when he is first employed, he may do so at any later date, but those depend— ents must prove insurability. A form of insurability must be complet— ed and submitted to the carrier. If the dependents are insurable, they will be added to the group coverage and will be subject to the pre—existing condition provision described in "A". If they are not insurable, they will not be issued coverage. Summary — The suggested provision still allows an employee to add his dependents at a later date, but only if they are insurable. This will prevent employees from carrying themselves only until that time when a dependent needs medical expenses covered and then dropping the coverage until it is needed again. II. Suggestions Concerning Current Employees All employees and dependents who are currently on the group insurance pro— gram will retain all coverages. Also, during the initial changeover period any amployee whose dependents are not covered may add his dependents within a one—month grace period. During this one—month grace period, the employee may add his dependents with no health questions asked and pre—existing conditions will be cov— DATE PAGE REFERENCE SUBJECT: Contract for Health Insurance NUMBER 1/17/78 C-4058 3 w 3 ered without any restrictions. If the employee does not add his dependents during this grace period, but chooses to add them at a later date, the dependents must prove insurability and, if they are accepted, they will be subject to the pre-existing condition provision described in "A". Summary - The current employees and dependents on the group coverage will retain all existing benefits.- In addition, a one-time-only opportunity will be made available to current employees to add dependents, but the group program will be protected in the future from employees who have not paid premiums to provide dependents coverage but choose to do so at a future date when medical expenses arise. Recommendations: It is recommended that: 1. The Council adopt the attached Supplemental Appropriation Ordinance trans- ferring the funds required. 2. The Aetna Insurance Company be awarded a one-year contract to provide health insurance services for the City of Fort Worth according to the fol- lowing rates: Monthly Rate Employee Only $31.60 Employee & Spouse 80.74 Employee, Spouse, & Children 87.39 Employee & Children 71.64 3. The Council approve the proposed administrative changes designed to help control the rise in the cost of health insurance premiums. 4. The City Manager be authorized to enter into a contract with the Aetna Insurance Company, effective February 1, 1978. MCM:ia SUBMITTED BY: DISPOSITI Y COUNCIL: PROCESSED BY APPROVED ❑ OTHER (DESCRIBE) � ACOP I ED ORC NAN'CE NO. � c� SECRETARY IL DATE / CITY MANAGER .