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Item Number: H.3. CITY COUNCIL REPORT SUBJECT: Blue Cross Blue Shield of Arizona Professional Services Agreement - Dental Benefits MEETING DATE: April 22, 2025 TO: Mayor and Council FROM: Wendy Jackson, Deputy City Manager/Employee Resources Director REVIEWED: Reyes Medrano Jr., City Manager PURPOSE: Request to authorize the City Manager to enter into a Professional Services Agreement with Blue Cross Blue Shield of Arizona (BCBSAZ) for the administration of dental insurance benefits for eligible City employees and their dependents. The agreement will be effective from July 1, 2025, through June 30, 2027. The total annual not-to-exceed amount is $400,000. To provide continued access to quality dental insurance benefits as part of the City’s total compensation package, while leveraging cost savings through a bundled services approach with BCBSAZ. BACKGROUND: The City of Tolleson previously contracted with a separate provider for dental insurance services. To streamline administration and generate cost efficiencies, the City pursued a bundled benefits strategy through a competitive RFQ process, selecting Blue Cross Blue Shield of Arizona to provide both medical and dental insurance coverage. BCBSAZ has been a long-standing partner for medical benefits and was identified as the top-ranked provider to expand services to include dental. Under the bundled model, BCBSAZ will offer the City a 2% discount on medical insurance premiums, resulting in projected savings of over $100,000 per year during the two-year agreement. This transition will maintain uninterrupted dental coverage while improving overall efficiency and reducing the City’s healthcare-related expenditures. DISCUSSION: The proposed agreement with Blue Cross Blue Shield of Arizona for dental insurance will align with the same term as the medical benefits contract, spanning July 1, 2025 through June 30, 2027, with an option to renew for one additional year. The bundled arrangement will consolidate benefit administration under one provider and enhance the employee experience. BUDGET IMPACT: The annual cost for dental insurance shall not exceed $400,000, and will continue under the current cost share model between the City and employees. The City will also realize significant savings on medical premiums as a result of this bundled approach. RECOMMENDATION: Staff recommends that the Council authorize the City Manager to enter into a two-year agreement with Blue Cross Blue Shield of Arizona to provide dental insurance benefits for eligible employees, retirees, and their dependents, effective July 1, 2025 through June 30, 2027, with an option to renew for one additional year. The agreement shall not exceed $400,000 annually, and will continue under the existing cost share model. ATTACHMENTS: None