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9.a) 2012 Empolyee Health Insurance Meeting Date: 9/2/2011 Agenda Item: ~ � �., � City Council Agenda Report City of Scandia 14727 209�' St. North Scandia, MN 55073 (651) 433-2274 Action Requested: Approve employee health insurance plan for 2012 (Resolution 09-20-11-04) Deadline/ Timeline: New policy year begins January 1, 2012. Blue Cross Blue Shield has requested city action by October 15, 2011. Background: • The city provides an employee health insurance plan through Blue Cross Blue Shield(BCBSIV�,as a member of the Southwest/West Central Service Cooperative,a pool of 124 cities,counties and other governmental 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 employees are currently eligible for the plan(4 full time& 1 part-time, 2 currently taking family coverage.) • Rates for 2012 will increase by 7.5%. 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 342.1% increase was needed based on our experience. • Prior to receiving this quote,the city's insurance agent had suggested that the city could avoid increases similar to those experienced the last two years by seeking quotes outside the SW/WC Service Cooperative pool if rates were too high. (The premium increases from 2009 to 2010, and from 2010 to 201 l, were 18.5% and 20%, respectively.) • After receiving the quote,this was discussed with the agent again. He advised that the city could make application for coverage to the other 2 major carriers(HealthPartners and Medica.) We cannot apply to Blue Cross, as they are obligated by their agreement with the Coop that they will not offer us a rate less than 4% greater than the pool's rate. The city might find a less expensive plan by obtaining quotes from other carriers, but it is not a certainty. And it appears unlikely that we would to find coverage within a pool, which has protected the city from very large increases in the past. Applying for coverage outside of the pool will require a certain amount of effort(from all affected employees)that might not result in any return. • The Cou.ncil discussed the rate quote at the August 30 budget wark session. The direction to staff was to accept the quote for the current plan and to continue the city's contributions to premiums and health Page 1 of 4 09/09/11 ; savings accounts in 2012 at the same level as in 2011. • The City currently contributes 100% of the premium cost for employees taking single coverage, and 80% of the premium 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. Recommendation: I recommend that the Council adopt the resolution approving the health care plan and establishing city contributions for 2012. Attachments/ • History of Health Insurance Premiums and City Contributions, 2007 Materials provided: through Proposed 2012 � Draft Resolution 09-20-11-04, Establishing City Contributions to Employee Health Insurance Benefits for 2012 Contact(s): Prepared by: Anne Hurlburt, Administrator (health insurance for 2012) Page 2 of 4 09/09/11 City of Scandia Blue Cross/Blue Shield Health Insurance Plan Southwest Service Cooperative 2007 Monthly Rates Single Family($741.40) City Share City Share Employee Monthly Premium $231.50(100%) $593.20(80%) $14830(20%) HSA Contribution $91.70 $100.00 Total $323.20 $693.20 $14830 Annual Deductible: $1,375 $2,750 2008 Monthly Rates Single Family($872.00) City Share City Share Employee Monthly Premium $272.00(100%) $697.60(80%) $174.40(20%) HSA Contribution $100.00 $100.00 Total $372.00 $797.60 $174.40 Annual Deductible: $1,450 $2,825 2009 Monthly Rates Single Family($948.50) City Share City Share Employee Monthly Premium $296.00(100%) $758.80(80%) $189.70(20%) HSA Contribution $105.00 $105.00 Total $401.00 $863.80 $189.70 Annual Deductible: $1,450 $2,900 2010 Monthly Rates Single Family($1,124.00) City Share City Share Employee Monthly Premium $351.00(100%) $899.20(80%) $224.80(20%) HSA Contribution $105.00 $140.00 Total $456.00 $1,039.20 $224.80 Annual Deductible: $1,450 $2,900 2011 Monthly Rates Single Family($1,349.00) City Share City Share Employee Monthly Premium $421.00(100%) $1,079.20(80%) $269.80(20%) HSA Contribution $105.00 $140.00 Total $526.00 $1,219.20 $269.80 Annual Deductible: $1,600 $3,200 Page 3 of 4 09/09/11 2012 Proposed Monthly Rates Single Family($1,450.00) City Share City Share Employee Monthly Premium $452.50(100%) $1,160.00(80%) $290.00(20%) HSA Contribution $105.00 $140.00 Total $557.50 $l,300.00 $290.00 Annual Deductible: $1,600 $3,200 Page 4 of 4 09/09/11 CITY OF SCANDIA RESOLUTION NO.: 09-20-11-04 RESOLUTION ESTABLISHING CITY CONTRIBUTION TO EMPLOYEE HEALTH INSURANCE BENEFITS FOR 2012 WHEREAS, the Scandia City Council has determined that it is the best interest of the City to provide a health insurance plan to help maintain the health of its current employees and to enable the city to attract and retain a quality workforce; and WHEREAS, it is now necessary to determine the insurance plan and contributions to premium costs for 2012; NOW, THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCANDIA, WASHINGTON COUNTY, MINNESOTA, that it should and hereby does approve the renewal of the health insurance plan with Blue Cross Blue Shield (BCBSM) (Service Cooperative Health Plan#176) for the period of 1/1/12 to 12/31/12; and FURTHER BE IT RESOLVED, that for calendar year 2012, the City of Scandia's contribution to the total cost of providing health insurance benefits shall be as follows: City Contribution to City Contribution to Health Insurance Health Savings Account Premiums (Monthl ): Monthly): Full-time Employee (40 hours/week), $1,160.00 (80%) Family Covera e: $140.00 Full-time Employee (40 hours/week), $452.50 (100%) Sin le Covera e: $105.00 Part-Time Employee (30 to 40 $452.50 (100%) hours/week), Sin le Covera e $0.00 Part-Time Employee (30 to 40 $452.50 $0.00 hours/week), Family Coverage Adopted by the Scandia City Council this 20�' day of September, 2011. Randall Simonson, Mayor ATTEST: Administrator/City Clerk