June 13, 2006
SUBJECT: Employee Assistance Program Contract Renewal 2006/2007
REPORT IN BRIEF
This report recommends approval of the contract between the City of Sunnyvale and Managed Health Network, Inc. (MHN) for the Employee Assistance Program (EAP) to be renewed effective July 1, 2006 for one year. The current contract will not expire until July 31, 2006; however, the early renewal will allow the City to implement a contract with enhanced benefits and at a lower premium rate which will result in savings.
BACKGROUND
The City of Sunnyvale includes in its benefits package for full and part-time regular employees an Employee Assistance Program. This program is designed to assist employees and their families to manage life’s challenges by providing professional counselors and services to resolve a broad range of problems affecting their emotional health, family and work life.
EXISTING POLICY
The Council Policy Manual, Planning and Management Element, Goal 7.3D: Maintain a quality work force, consistent with state and federal laws, City Charter, and adopted policies in order to assure that City services are provided in an effective, efficient, and high quality manner. Action Statement 7.3D.1a: Maintain a competitive pay and benefit package for employees.
The City of Sunnyvale provides a comprehensive benefit package to regular employees that includes the employee assistance program through Memoranda of Understanding and the Salary Resolution.
DISCUSSION
Driver Alliant, the City’s insurance broker negotiated this renewal with a premium rate decrease with MHN through inclusion of the City of Sunnyvale in a pool with the California Entity Insurance Authority (CPEIA). Since the CPEIA is able to have a more advantageous purchasing power with the pool, the City will be able to obtain a five percent (5%) reduction in its rates and an enhancement in benefits.
The enhanced benefits include a substantial increase in allowable visits by the employee and household members from seven (7) visits per year to up to seven (7) visits per incident, per plan year (July 1- June 30). There is no limit to the number of incidents per plan year.
In addition, the definition of covered members would extend to other household members (i.e. extended family such as grandparents, who may live at the employee’s household) as opposed to only immediate family (i.e. spouse/domestic parent and dependent children); there is an increase in the number of professional training hours from six (6) to ten (10); and finally, the billing is done on a quarterly basis as opposed to monthly, thus saving administrative costs. Other ancillary services such as job performance referrals and critical incident debriefings remain unchanged.
FISCAL IMPACT
The current number of employees covered under the EAP program is approximately 930, and the current monthly rate is $6.50 per employee for an annual cost of $72,540. The proposed rate would decrease this amount to $68,857 resulting in savings of $3,683 annually.
Funding for this expenditure is provided through the Benefits Fund and the cost of this renewal has been included in the proposed base budget for Fiscal Year 2006/2007.
PUBLIC CONTACT
Public Contact was made through posting of the Council agenda on the City’s official notice bulletin board, posting of the agenda and report on the City’s web page, and the availability of the report in the Library and the City Clerk’s Office.
ALTERNATIVES
1. Renew the MHN contract through participation in the CPEIA pool with a decrease in the monthly rate and enhanced benefits, effective July 1, 2006.
2. Do not renew the MHN contract through participation in the CPEIA pool.
3. Consider other alternatives.
RECOMMENDATION
1. Staff recommends approval of Alternative #1: Renew the MHN contract
through participation in the CPEIA pool with a decrease in the monthly rate and enhanced benefits, effective July 1, 2006.
Reviewed by:
Erwin Young, Director, Human Resources
Prepared by: Myriam Castaneda, Human Resources Supervisor
Reviewed by:
Mary Bradley, Director, Finance
Approved by:
Amy Chan, City Manager