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September 23, 2021 City Council Regular Meeting
20. Authorize the City Manager to Execute a Contract for Other Post Employee Benefits with United Healthcare in the Amount of $1,379,297. Contract will be Used by the Human Resources Department to Provide Group Medicare Advantage Plan with Part D Coverage for Retirees (65 and Older) and Spouses Who are Medicare Primary. Annual Cost is for Approximately 775 Covered Individuals.
Strategic Priority
Good Government

Recommend approval to award an annual contract for Other Post Employee Benefits to United Healthcare in the amount of $1,379,297.

The Human Resources Department will use this contract to provide a group Medicare Advantage Plan with Part D coverage for the City of Savannah retirees over age 65 and their spouses who are Medicare primary. Changes in governmental accounting standards require recognizing the cost of post-employment benefits over the working career of an employee.  In order to reduce this liability while maintaining retiree medical benefits, the best solution is a group-sponsored fully insured Medicare Advantage Plan. The City of Savannah has offered the following coverage since 2008.

Request for proposals were received from Humana, Aetna, Anthem and United Healthcare. These companies are the current leaders in this market. After a thorough evaluation, United Healthcare is recommended as the selected vendor. Based upon 100% enrollment, the estimated annual cost for the approximately 775 covered retirees and spouses equals an estimated $1,379,297 a 13.8% decrease from the 2021 incumbent rates, $1,600,000. The City will pay on average 50% of the premium with an estimated fiscal impact up to $800,000 with the retirees and spouses paying the remainder of the total cost. Other selection criteria included:  

1) Customer Service & Clinical Programs                               
2) Medical Plan & PPO Network                                                                                
3) Rx Benefits, Pharmacy Network & Formulary                                 
4) Technology & Client Services                                                                                
5) Experience, Excellence, & Overall Response                                   
6) Cost Effectiveness of Proposal              

The bid was advertised, opened, and reviewed. The contract term will begin January 1, 2022, and expires on December 31, 2022. This contract also includes four available annual renewal options. Delivery: As needed. Terms: Net 30 days. The bidders were:

B.P.        United Healthcare (9900 Bren Road East, Minnetonka, MN 55343)(D)                          $1,379,297.00


 (D) Indicates non-local, non-DBE business. (BP) Indicates best proposal.





Jeff Grant, Director of Human Resources
Financial Impact
Expenditure of $800,000 from the Risk Management Fund
Review Comments
Exhibit 1- Funding Verification - Other Post Employee Benefits
Exhibit 2: Purchasing Notes - Other Post Employee Benefits
Agenda Plus