TRANSMITTAL LETTER FOR BOARD MEETING OF JUNE 18, 2026
COMMITTEE ON PENSION, HUMAN RESOURCES AND CIVIL SERVICE
Mr. John P. Murray, Executive Director
Title
Authority to amend health insurance benefits for represented and non-represented employees and non-Medicare eligible retirees effective January 1, 2027
Body
Dear Sir:
The Human Resources Department is continuously exploring health plan options in the marketplace to ensure it offers a robust benefits program to employees while controlling rising health care costs. One component of the health benefits program that can have a significant impact on costs for both employees and the District is the health plan network.
The District currently offers employees the choice of a Preferred Provider Organization (PPO) or Health Management Organization (HMO) plan under the medical insurance program. Both plans are administered by Blue Cross Blue Shield of Illinois (BCBS). The PPO plan offered to employees is the BCBS Illinois PPO plan which is a statewide plan offering the broadest network available. This network has resulted in over 98% of employee medical claims being paid to an in-network provider. This benefits the employee given that the employee portion (co-insurance) of an in-network claim is 15% versus a co-insurance of 30% if the employee utilizes an out-of-network provider. It also benefits the District because BCBS has negotiated discounted fees for medical services with in-network providers.
BCBS offers an alternate PPO plan option to employers called the Blue Choice Options PPO. This option offers employees a lower co-insurance when selecting a provider participating in a smaller subset of the network. This creates a third tier within the PPO network. The new network would be structured as follows: Tier 1 providers (Blue Choice Options network) result in an employee co-insurance of 10%; Tier 2 providers (existing PPO network) result in an employee co-insurance of 15%; and Tier 3 providers (out-of-network) result in an employee co-insurance of 30%. The addition of the new Blue Choice Options tier can only benefit employees given that there is no change to the co-insurance for employees that are utilizing a provider in the existing PPO network. An analysis of provider utilization indicates that approximately 89% of providers and 94% of hospitals used by employees in 2025 participate in the new Blue Choice Option network (Tier 1). Employees that utilize those providers will see a reduction in their co-insurance from 15% to 10% under the new network design. The District will also benefit from the utilization of these providers because BCBS has negotiated even lower fees for medical services with these providers under this new network tier. Employees that continue to use in-network providers under the existing network that are not part of the new Blue Choice Options network will pay the same 15% co-insurance they do today.
The Blue Choice Options PPO (three-tier plan) would replace the BCBS Illinois PPO (two-tier plan) currently offered to employees and non-Medicare eligible retirees effective January 1, 2027. This change would be communicated to employees through written communications and live meetings during the open enrollment period in October 2026. It is important to note that the PPO plan design itself (ex. covered services, deductible amounts, maximum out-of-pocket limits, pharmacy co-pays, etc.) would not change. The only change would be the addition of a third tier to the provider network. It should also be noted that the City of Chicago and Chicago Park District currently utilize the Blue Choice Option network for their PPO plan.
Authorization is requested to implement this plan change to the health insurance benefits for represented and non-represented employees and non-Medicare eligible retirees as outlined above effective January 1, 2027.
Recommended, Thaddeus J. Kosowski, Director of Human Resources TJK:JEF
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for June 18, 2026