May 6, 2024 TRUST SPECIAL MEETING OF THE CITY OF NEDERLAND
EMPLOYEE BENEFITS TRUST
4:40 p.m. May 6, 2024
1. MEETING
The meeting was called to order at 4:40 p.m. by Chairperson Albanese at the
Nederland City Office Building, 207 N. 12th Street, Nederland, Texas.
The following statement was posted:
"PURSUANT TO SECTION 30.07, PENAL CODE (TRESPASS BY LICENSE HOLDER
WITH AN OPENLY CARRIED HANDGUN), A PERSON LICENSED UNDER
SUBCHAPTER H, CHAPTER 411, GOVERNMENT CODE (HANDGUN LICENSING
LAW), MAY NOT ENTER THIS PROPERTY WITH A HANDGUN THAT IS CARRIED
OPENLY."
2. APPROVAL OF MINUTES
A motion was made by Trustee Root and seconded by Trustee Guillot to approve the
minutes of the May 8, 2023 meeting of the Employee Benefits Trust as written.
MOTION CARRIED.
Ayes: Chairperson Albanese, Trustees Root, Sonnier, and Guillot.
Noes: None.
Absent: Trustee Duplant
3. HEALTH INSURANCE
Mr. Duque said the City's health insurance provider is Blue Cross/Blue Shield of
Texas (BCBSTX) which expires on June 30th. The current plan year (July 2023-
March 2024) loss ratio (total paid medical and prescription claims over paid
premiums) is 88%. Bids were opened on Thursday, April 18th
Utilizing BCBSTX as the City's health insurance provider, the City provides a three-
option plan design (Standard Plan, High Deductible Health Plan, and a Health
Maintenance Organization Plan) with varying levels of dependent coverage (employee-
only, employee+spouse, employee+children, and family) and differing monthly
premiums. However, the City utilizes two defined contributions: one for the Standard
Plan and the HSA Plan and another for the HMO Plan. The City provides a Standard
Plan that includes a $1,500 deductible and a $6,500 maximum out of pocket, which
includes the deductible amount.
Due to the recent history of high loss ratios, the submitted bids were high. The City's
insurance consultant (HUB International) reviewed the received bids and assessed the
bids of the two finalists - Blue Cross/Blue Shield of Texas (BCBS) and United
Healthcare (UHC). HUB negotiated a best and final offer from both vendors. BCBS
presented a 11.3% rate increase. While UHC provided a slight rate reduction while
maintaining the same standard plan design (a $1,500 deductible and $6,500
maximum out of pocket benefit) and blended rates (active employees indirectly
subsidize retiree insurance). UHC is also providing a $5,000 one-time wellness credit
that further reduced the best and final renewal. The HSA plan was revised to reflect
the latest IRS requirements and the deductible available from UHC (in-network
deductible increased from $3,000 to $3,500). UHC will continue to offer the HMO
plan. Two defined contributions are recommended: one for the Standard Plan and the
HSA Plan and another for the HMO Plan.
The recommended Standard Plan/HSA Plan and HMO Plan Defined Contributions will
reduce the City's annual costs by $1,323 (0.10%) and will reduce the employees'
dependent coverage costs by approximately 1.14%. Across all tiers of coverage, the
defined contributions were adjusted to ensure the Standard Plan's employee costs
were not affected. The defined contributions and premium decreases result in the
employees' costs decreasing at varying amounts based on their selected dependent
contribution and the existing dependent coverage percentage decreasing.
Staff recommends adjusting the HMO Defined Contributions to match the Standard
Plan/HSA dependent Defined Contributions. The HMO (health maintenance
organization) Plan's deductible, maximum out-of-pocket, in-network co-pays,
prescription costs, etc. are all the same as the Standard Plan. The long-term strategy
may be steering employees into this HMO plan. The two significant features of the
HMO plan are: 1) the requirement for all employees to select a primary care physician
from a network of contracting doctor (if needing a specialist, then the employee is
referred by their primary care physician) and 2) out of network coverage is not
available unless due to an emergency.
A motion was made by Trustee Root and seconded by Trustee Sonnier to award a bid for
employee health insurance to United Healthcare. MOTION CARRIED.
Ayes: Chairperson Albanese, Trustees Root, Sonnier, and Guillot.
Noes: None.
Absent: Trustee Duplant
4. DENTAL INSURANCE
Mr. Duque stated the City utilizes Blue Cross/Blue Shield of Texas as its dental
insurance provider. Under the dental insurance plan design, the City pays 100% of
the employee premiums and 0% of dependent premiums, regardless of whether the
employee chooses the HIGH or LOW plan. The majority of City employees and
retirees utilize the HIGH plan (107 out of 123 active employees OR 87%). The dental
loss ratio is 105%. The City annually spends over $36,300 on dental insurance
premiums.
The BCBS of Texas renewal offer is a 21% rate increase from the current premiums.
Staff's recommendation is to renew the dental insurance bid to BCBS of Texas
maintaining the same plan design and contribution model. The additional annual cost
to the City is approximately $7,800. The additional annual cost to the employees is
approximately $6,800.
Cigna provided a quote, and their quote is a much lower premium increase (3%).
However, their provider network is smaller than BCBS of Texas, resulting in a 42%
provider disruption, which is considerable and would greatly negatively impact the
employees. Therefore, the Cigna quote was not further pursued.
A motion was made by Trustee Root and seconded by Trustee Sonnier to award a bid
for employee dental insurance to Blue Cross Blue Shield of Texas. MOTION
CARRIED. Ayes: Chairperson Albanese, Trustees Root, Sonnier, and Guillot.
Noes: None.
Absent: Trustee Duplant
5. ADJOURN
There being no further business a motion was made by Chairperson Albanese and
seconded by Trustee Root to adjourn the meeting at 4:52 p.m. MOTION CARRIED.
Ayes: Chairperson Albanese, Trustees Root, Sonnier, and Guillot.
Noes: None.
Absent: Trustee Duplant
Don Albanese, Chairperson
City of Nederland Employee Benefits Trust
ATTEST: •
Sylvia Root, Secretary
City of Nederland Employee Benefits Trust