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Staff outlines benefit renewal: Cigna renewal capped at 15%, recommend increasing basic life benefit
Summary
Benefits consultant presented renewal analysis showing an initial 26% renewal for medical but a 15% cap negotiated under last year’s RFP; staff recommended renewing with Cigna, bundling worksite products, and increasing the city-provided basic life insurance to 1x annual earnings up to $150,000.
City staff and benefits consultant presented the employee-benefits renewal analysis for plan year 2025–26 and recommended renewing medical coverage with Cigna under a contract provision that caps the renewal at 15% despite an initial renewal estimate of 26% based on claims experience.
Heath Hagood of HUB International reviewed recent claims trends and renewal drivers. For the 2023–24 plan year the city’s loss ratio finished about 92.6%; year-to-date figures for the current plan year showed a higher loss ratio (about 117.7% through the reporting period), driven by a roughly 24% increase in medical claims and a modest decrease in pharmacy claims.
Hagood explained the initial renewal request from the carrier was about 26% but a 15% contractual cap negotiated in last year’s RFP reduces the expected increase to about 15% overall; the consultant presented a combined annual premium number of roughly $5.12 million after the cap and included wellness and communication credits. Hagood recommended renewing with Cigna at the capped renewal and evaluating additional cost-containment measures in future years such as a possible spousal carve-out or surcharge.
On life insurance, the consultant recommended increasing the city-provided basic life and AD&D from one times annual earnings up to $100,000 to one times up to $150,000 for active employees; staff estimated the additional employer cost at about $4,325 annually. Hagood recommended bundling accident and critical-illness products with Cigna to capture a roughly $26,000 premium credit noted in the RFP response.
The presentation noted several administrative contracts are in rate guarantees or unchanged (dental, vision, HSA administration, EAP). No council vote to finalize benefits was recorded in the public portion of the meeting during this presentation; staff proposed recommended changes for council consideration and next steps in procurement/renewal.
