Explanation
BACKGROUND: To maintain the insurance programs in accordance with the negotiated labor contracts, it is necessary to modify the existing contract and to make additional appropriation for the continuation of the prescription drug insurance program. Additional appropriation is needed due to higher than projected prescription drug claims.
In November, 2014, $32,097,000 was appropriated in the Employee Benefits Fund, fund 502, to Catamaran; however, to date claim costs have exceeded $30 million thereby necessitating additional appropriation to meet anticipated annual expenses. Total projected expense is $47.9 million. Year to date, $32 million has been appropriated for prescription drug claims, and therefore an additional $15,900,000 is needed.
This ordinance reduces $10.9 million from the following encumbering documents:
Encumbrance # Vendor Line of Coverage Subfund OCA Amount to decrease
EA012922-002 UHC medical 208 462004 $ 6,000,000
EA012882-002 Delta Dental dental 207 462012 $ 1,000,000
DL021945 Consumer Life life 203 462012 $ 300,000
EA012870-002 Dearborn disability 211 462042 $ 500,000
DL021644-002 VSP vision 204 462052 $ 300,000
EA011406-002 UHC drug 209 460005 $ 800,000
EA012934-001 UHC drug 209 460005 $ 2,000,000
$ 10,900,000
It is then necessary to transfer $8,100,000 between subfunds in the Employee Benefits Fund. In addition, this ordinance increases fund 502, subfund 209, by $7.8 million from the unencumbered cash in Fund 502.
Emergency action is requested to ensure the prescription drug insurance program for city employees is able to commence as soon as contractually possible, thereby maintaining continuity of service.
Contract compliance number: 75-2578509
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