Insurance Committee recommends UnitedHealthcare Option 5 for city employee plan

The Insurance Committee met at 3 p.m. and voted to recommend that the city transition its employee health plan to UnitedHealthcare under the plan labeled "Option 5," after brokers from MBHealth presented comparative quotes and implementation details.

Gretchen Hendricks of MBHealth said the city’s group is running a loss ratio far above typical benchmarks and that recent claims activity is driving renewal pressure. She told the committee the group’s loss ratio is about 115%, versus an industry “should-run” benchmark near 80%, and that rolling-12 claims were roughly $1.5 million compared with about $1.1 million in the prior period, an increase MBHealth described as the main driver of higher renewal proposals.

MBHealth presented three carrier families and several plan designs. Blue Cross Blue Shield initially proposed a ~25.3% renewal that MBHealth said was negotiated down to about 20%; Aetna’s option carried co-pays and higher out-of-pocket maximums but included an implementation credit MBHealth described as "$400 per enrolled employee, totaling $26,800" for the group. UnitedHealthcare offered two comparable designs; MBHealth highlighted an option that matches the city’s current deductible structure ($3,400 individual / $6,800 family) and reported a net renewal near 6%, plus a $20,000 implementation credit.

A central operational distinction among the proposals is how the city would administer an HRA (health reimbursement arrangement). MBHealth explained that UnitedHealthcare requires Paylocity as the HRA vendor for the quoted options; under that setup, members would pay providers at the time of service, obtain the insurer’s EOB, and submit the EOB to Paylocity for reimbursement. Several committee members voiced concerns about past delays and the practical burden of submitting EOBs; MBHealth and staff committed to member education, portal walk-throughs and in-person assistance to reduce friction during open enrollment.

Committee members also debated the city’s financial exposure: some designs that lower employee premiums introduce higher short-term out-of-pocket costs that the city would later reimburse through the HRA, producing variable city expense if high-cost claims materialize. MBHealth advised the committee that Option 5 offered the most predictable immediate budget impact and an easier transition for members while still materially lowering the renewal compared with staying with Blue Cross.

After discussion, the Chair moved to proceed with UnitedHealthcare Option 5 as the recommended plan for 2026; the motion was seconded (recorded in the minutes as “Second by Jim Anthem”) and adopted by voice vote. The committee directed MBHealth and city staff to prepare implementation paperwork and benefit summaries and to schedule employee education and open-enrollment sessions so the carrier and HRA vendor can complete setup before the planned effective date.

Next steps: MBHealth will provide side-by-side benefit summaries and implementation timelines; staff will follow up on paperwork required by Paylocity and the city treasury so that IDs, booklets and enrollment materials can be ready for the employee open-enrollment process.