4. Health Insurances Rates for 2013 Meeting Date: 08/28/2012
Agenda Item: � /
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City Council Agenda Report
City of Scandia
14727 209'h St. North
Scandia, MN 55073 (651) 433-2274
Action Requested: Discuss the 2013 renewal of the health insurance plan for city
employees. Give any direction needed so that action may be taken at
the September 18, 2012 meeting.
Deadline/ Timeline: Decision on the renewal must be made by October 1, 2012.
Background: • The city provides an employee health insurance plan through Blue
Cross Blue Shield (BCBSM),as a member of the Southwest/West
Central Service Cooperative, a pool of 124 cities,counties and other
goverrunental units insuring over 6,000 members. In summary,the
current coverage is a major medical plan with a$1,600 per year
deductible($3,200 for family coverage)paired with a Health Savings
Account(HSA)with 100%coverage after the deductible is met.
Prescription coverage is included and counts toward the deductible.
• Five full-time employees are currently eligible for the plan, 2
currently taking family coverage.
• The City currently contributes 100%of the premium cost ($452.50
per month) for employees taking single coverage, and 80%
($1,160.00) of the premium ($1,450.00) for employees taking
family coverage. The City also contributed $105 per month to a
health savings account (HSA) for each eligible employee taking
single coverage, and $140 per month for employees taking family
coverage.
• The draft 2013 budget assumed a 10%increase in rates,but the
city has been notified that the increase will actually be 15%. The
city's share of the costs would be about $2,650 more than assumed
by the budget.
• As in previous years,because the city's experience rating for the
covered time period was poor, the pool protected the city from a
much larger increase. The carrier(Blue Cross) said a 126.3%
increase was needed based on our experience. Because the rating
looks back for a 24 month period (March, 2010 through February,
2012) the city is still seeing the affects of some catastrophic claims
from a former employee. Until those claims are far enough in the
past, the experience rating would make it difficult to find better
rates than those available through the pool.
• The city could consider changing to a different plan; however, it
Page 1 of 2
08/24/12
could mean a significant increase in the employees' deductible
and-out-of pocket costs far exceeding the premium savings.
Recommendation: • The Council should discuss the information on health insurance
and give direction needed to make a decision on the 2013 health
insurance plan. This will also affect the 2013 budget.
• The 2013 budget made some assumptions about the salary and
health insurance coverage for the New City Administrator. It now
appears that there is likely to be some savings that would more
than offset the overall increase in the city's share of health
insurance premiums. Therefore, even with the 15%vs. a 10%
premium increase, the draft 2013 budget should be adequate to
absorb the increase.
Attachments/ Excerpts from January 1, 2013 Southwest Service Cooperative/BCBS
Materials provided: Renewal Documents:
1) Renewal Rate Exhibit
2) Renewal Formula
3) Rating Period Report
4) Alternative Plan Information
Contact(s):
Prepared by: Anne Hurlburt, Administrator
(2013 health insurance rates)
Page 2 of 2
08/24/12
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RENEWAL FORMULA
For Coverage Year January 1, 2013 — December 31, 2013
Membership of the Minnesota Cities/Counties/Other Governmental Units' Group Insurance Pool has elected a
sixteen-member Executive Committee. The purpose of this committee is to respond to the needs of the pool
membership;to request and review data;to advise and make recommendations to the pool members,to
administration and to the SW/WC Service Cooperative Board of Directors; and to act on behalf of the pool
membership in the interim of annual meetings.
Minnesota Statute 62L requires that Blue Cross file an index rate as the basis for small group rating. This index rate is
3% lower for Service Cooperative groups than commercial groups. All qualifying groups must be within 25%below
(MIN)and 25%above(MAX)the index rate. Further,the renewal can increase no more than 15%, plus the difference
in index rate from the prior year. These limits, in combination with age and member changes limit your renewal.
These limits must take prioritv over anv pool limits. Your statutory limits,and final renewal are shown below. Please
consult your Blue Cross Account Manager if you have additional questions.
At the Executive Committee meeting on July 17, 2012,the following formula was approved by Committee
members for presentation to pool membership. This formula proposes the renewal rate increases which will
be applied to rates for members purchasing health/hospitalization insurance for the coverage year beginning
January 1, 2013.
Renewal Formula for January 1, 2013—December 31, 2013
If Needed Increase is less than 6%, Give 6% Increase
If Needed Increase is less than 33%, Give Actual Needed Increase
If Needed Increase is more than 33%, Give 33% Increase
Renewal Rate Increase for
City of Scandia
C1226
1/1/13 Reform Minimum -14.70%
1/1/13 Reform Maximum 15.00%
1/1/13 Needed Increase as Identified by Carrier 126.30%
1/1/13 Adjustment Due to High Cases - 9.90%
1/1/13 Adjusted Increase Applied to Formula 116.40%
1/1/13 Actual Increase (According to Formula or MIN/MAX) 15.00% *
#=Minimum according to MNCare
*=Maximum accordingto MNCare
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, Southwest West Central Service Cooperative
Renewal Effective: January 1, 2013
Group Name: City of Scandia
Group Number: CI226
Current Plan Information
Renewai Rates
Sin le Famil
$520.50 $1,667.50
Alternate Plan information
2013 CDHP Plans Alternate Rates
Plan Name Sin le Famil
$1200 70/30 CDHP PLAN (Plan#820 ̼) $477.50 $1,530.00
$1850 80/20 CDHP PLAN (Plan#821 ̸) $467.00 $1,495.00
$2250 80/20 CDHP PLAN (Plan#822 ̹) $454.50 $1,456.00
$2600 80/20 CDHP PLAN (Plan#823 ̺) $447.00 $1,431.00
$1200 100% CDHP PLAN (Plan#830 ͂) $550.50 $1,763.00
$1850 100% CDHP PLAN (Plan#831 ̓) $514.00 $1,645.50
$2250 100% CDHP PLAN (Plan#832 ̈́) $494.00 $1,581.50
$2600 100% CDHP PLAN (Plan#833 ͅ) $479.00 $1,534.00
$600 70% CDHP PLAN (Plan#840̻) $519.00 $1,662.00
$3125 100%CDHP Plan (860/865) $463.50 $1,484.50
$5000 100% CDHP Plan (850/855) $385.00 $1,233.00
2013 Std. SG Plans -All SG Plan Alternates include GenRx Alternate Rates
Plan Name Sin le Famil
Plan#113 (CMM $30 Copay-w/GenRX) $538.00 $1,723.50
Plan#118 (CMM $300 Ded. -w/GenRx) $525.00 $1,682.00
Plan#120 (CMM $500 Ded. -w/GenRx) $511.00 $1,636.50
Plan#122 (CMM $1000 Ded. w/GenRx) $490.50 $1,571.00
Plan#123 (CMM $2000 Ded. -w/GenRx) $465.00 $1,490.00
Plan#170 ($1600 Ded. 80% HSA with Non-embedded ded. -w/GenRx) $456.00 $1,460.00
Plan#172 ($2300 Ded. 80% HSA with Non-embedded ded. -w/GenRx) $420.00 $1,345.50
Plan#174 ($3200 Ded. 80% HSA with Non-embedded ded. -w/GenRx) $386.50 $1,238.50
Plan#175 ($3200 Ded. HSA 80%with embedded ded. -w/GenRx) $392.50 $1,258.00
Plan#176 ($1600 Ded. HSA 100%with Non-embedded ded. -w/GenRx) $500.50 $1,603.00
Plan#178 ($2300 Ded. HSA 100%with Non-embedded ded. -w/GenRx) $464.50 $1,488.00
Plan#180 ($3200 Ded. HSA 100%with Non-embedded ded. -w/GenRx) $426.50 $1,367.00
Plan#181 ($3200 Ded. HSA 100%with embedded ded. -w/GenRx) $435.00 $1,393.00
Plan#182 ($6000 Ded. HSA 100%with Non-embedded ded. -w/GenRx) $347.00 $1,111.50
Plan#183 ($6000 Ded. HSA 100%with embedded ded. -w/GenRx) $366.00 $1,173.00
Plan#184 ($3200 Ded. HSA 90%with Non-embedded ded. -w/GenRx) $399.00 $1,278.00
Plan#185($3200 Ded. HSA 90°/a with embedded ded. -w/GenRx) $405.50 $1,299.50
2013 Southwest West Central Common Plans Alternate Rates
Plan Name Single Famil
SVWVC Common Plan#16 $554.50 $1,777.00
SVWVC Common Plan#17 $543.00 $1,739.50
SVWVC Common Plan#18 $514.50 $1,649.00
S1NWC Common Plan#19 $484.50 $1,552.00