Council approves 1‑year Aetna health plan renewal after lengthy staff review; 20.44% premium increase
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Summary
Melbourne staff and Aetna negotiated a lower renewal than an initial 34.17% increase, and council approved a one‑year extension of the Aetna group medical contract with a 20.44% premium increase and no plan design changes for active employees.
Melbourne City Council on Jan. 28 approved a one‑year extension to the city’s group medical coverage with Aetna Life Insurance Company at an estimated annual cost of $17.12 million, approving a negotiated renewal rate increase of 20.44% and no plan‑design changes for active employees.
Background and staff review
Human Resources Manager Ruth Lovejoy told council Aetna’s initial renewal proposal in November 2024 sought a 34.17% increase, driven by higher utilization, several high‑cost claimants and pharmacy trends. Staff considered plan‑design changes, increased employee contributions and self‑insurance, and compared neighboring jurisdictions’ benefit packages. After additional claims data from December showed some improvement, staff and Aetna negotiated the 20.44% increase without reducing benefits for active employees.
Retiree coverage and contributions
The city’s retiree premium cost‑share policy (policy section 1.401) was discussed. The city currently contributes 50% of health coverage premiums for retirees hired before Jan. 1, 2011; staff noted 106 retirees participate. Under the approved extension retirees remain responsible for their share of the higher premiums. Council discussed continuing to shop benefits annually and exploring strategies to lower claims costs (for example, greater MinuteClinic access in Brevard County).
Council action and questions
Council approved the renewal. Council members asked Aetna representatives about MinuteClinic and primary‑care access in Brevard County; Aetna said it is evaluating clinic expansion and would provide a follow‑up briefing. Council members asked staff to continue exploring options for lowering future renewal exposure, including alternate benefit vendors and the potential to add MinuteClinic capacity in the county.
Why it matters
The renewal preserves existing benefit design for active employees in a tight labor market, while transferring higher premium costs to retiree participants and absorbing a notable one‑year increase in the city’s budget. Staff recommended no plan‑design reductions to maintain competitiveness for recruitment and retention.
