This is an annual renewal for the Medicare Advantage Plan w/Part D with United Health Care (UHC) in an amount not to exceed $2,549,905. The purpose of this is to provide a briefing on the projected Medicare Advantage renewal rates and the recent impact of the Inflation Reduction Act.

The Medicare renewal contract is designed to provide a group Medicare Advantage Plan with Part D coverage for City retirees over 65 and their spouses who are Medicare primary. Changes in governmental accounting standards require recognizing the cost of post-employment benefits over an employee's working career. The best solution to reduce this liability while maintaining retiree medical benefits is a group-sponsored fully insured Medicare Advantage Plan. The City of Savannah has offered coverage since 2008. The Medicare Advantage Plan was awarded to United Health Care (UHC) as of January 1, 2022,
with four renewal options. In 2023, UHC provided renewal pricing, which yielded a 14% premium decrease for low option members and .71 increases monthly for high option members, which went into effect as of 01/01/2024.

For 2025, UHC has provided pricing with a premium increase of 115% due to the announcement of the Inflation Reduction Act changes on August 15, 2024. The Inflation Reduction Act was passed by Congress in 2022. One of the purposes of the act is to reduce the federal government's drug cost and lower prescription drug prices for Medicare beneficiaries. However, as a result, third-party providers of Medicare plans are passing these costs on to employers in 2025.

For 2026, UHC has provided pricing with a premium increase of 26.1% due to the Inflation Reduction Act. The renewal history since 2022 is as follows:

                                        ENROLLEES          2022                2023            2024              2025                2026
LOW PLAN                             550               $105.78           $105.78         $95.00          $198.48           $244.01
HIGH PLAN                           199                $174.29           $174.29         $175.00        $297.90           $393.40
ANNUAL PREMIUM                                  $1,114,353     $1,114,353    $1,044,900     $2,021,353    $2,549,905
TOTAL ANNUAL CHANGE                            $0                -$69,453       +$976,453    +$528,552

The following are key changes that will be impacting all UHC Plans:

• Implementing a $2,100 Out-of-Pocket Maximum: The maximum out of pocket was $8,000 in 2024 and $2,000 in 2025.
• The Personal Emergency Response System (PERS) benefit through Lifeline is being discontinued across all UHC MAPD plans, with retirees having the option to convert to private pay and continue their services at a discounted rate.
• Self-paced, digital mental health support through Calm Health will be available effective 1/1/2026 at no cost to our retirees.

Based on the current surplus in the OPEB account, the recommendation is for the City of Savannah to absorb the increased cost and to not increase the premiums for the over 65 Retirees for 2026. The increases to the Medicare Advantage plans should stabilize after 2026, and we will begin to implement a 5-year strategy to increase the Retiree premiums at a level that does not provide a significant financial burden.

The contract term will begin January 1, 2026, and expires on December 31, 2026.  This contract also has one available renewal option remaining.  Delivery: As needed.  Terms: Net 30 days.  The vendor:

United Healthcare ( Minnetonka, MN) (D) $2,549,905

(D) Indicates non-local, non-DBE business.  
 

Approval