5.e) 2010 Employee Health Insurance Plan Meeting Date: 10/6/2009
Agenda Item: ��' � 1
�
City Council Agenda Report
City of Scandia
14727 209`h St. North
Scandia, MN 55073 (651)433-2274
Action Requested: Approve employee health insurance plan for 2010 (Resolution 10-06-09-
02)
Deadline/ New policy year begins January l, 2010. Blue Cross Blue Shield has
Timeline: requested city action as soon as possible.
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
governmental units insuring over 6,000 members. The current plan is
a major medical plan with an annual deductible($1,450/yr for
individuals, $2,900 for family in 2009), paired with a health savings
account(HSA) to help pay the deductible. Five employees are
currently covered by the plan(4 full time& 1 part-time; 2 family
coverage & 3 single coverage.)
• Rates for 2010 will increase by 18.5%. This is the maximum rate
increase for members of the pool. Because the city's experience
rating for the covered time period was poor,the pool protected the
city from a much larger increase.
• Deductibles and maximum out of pocket costs, and the prescription
drug coverage portion of the plan,would stay the same as in 2010. .
• Rates for this plan for the last three years, proposed rates for 2010
and city contributions for each year are show on an attachment to this
report.
• Rate quotes were received for a number of alternatives to the current
plan. Any change in the plan would increase deductibles and change
the prescription drug benefit to a more restrictive formulary. The
alternative plans were reviewed with the Human Resources
Committee(Council members Crum, Peterson and Administrator
Hurlburt) and with the affected employees. The consensus was that
the alternatives did not offer enough savings in premiums to justify
the decrease in benefits.
� The City currently contributes 100% of the premium cost for
employees taking single coverage, and 80%of the premium for
employees taking family coverage. In 2009 the City also contributed
$1 OS per month to a health savings account (HSA) for each eligible
employee.
• For 2010, it is recommended that city contributions remain at the
Page 1 of 3
09/29/09
same percentage level as in 2009. An increase of$35.00 per month
(from $105 to $140) to the city HSA contribution is recommended,
for employees taking family coverage only. Because the city will not
be increasing pay rates in 2010, the increased premium will mean
that employees taking family coverage will see a decrease in their
take-home pay in 2010. The additional contribution to the HSA
would offset most of that decrease. Because out-of-pocket costs
would not increase for employees opting single coverage, no increase
in the HSA contribution is recommended for those employees in
2010.
• In 2009, the city contributions for insurance and the HSA were set at
75%of the amount paid for a full-time employee. Therefore, the
HSA contribution for a part-time employee was $4.75 per month in
2009. For 2010, the premium alone is 76.9%of the total amount paid
for a full time employee. Because the city's policies do not allow an
employee to opt out of the insurance plan, I recommended that the
city cover the full cost of single coverage, and reduce the HSA
contribution to zero. (Allowing employees to opt out would
negatively affect the rates for the group, which assume coverage of
100%of eligible employees.) If a part-time employee wishes to
purchase family insurance coverage, the city would contribute the
equivalent amount per month toward the family coverage premium.
Only one part-time employee is currently eligible for the insurance
plan.
• The draft 2010 General Fund budgets included an assumption that
health care costs would increase 20% from 2009. The draft budgets
include a total of$39,680.64 for the city's share of health insurance
premiums and HSA contributions. The recommended contributions
would total $40,096.80, if the city continues to cover 2 families and 3
singles. However, we recently learned that one employee currently
opting for family coverage expects to change to single coverage.
This would reduce the total expense to $33,098.40 (1.38%more than
the 2009 budget of$32,647.20 for these costs.)
Recommendation: I recommend that the Council adopt the resolution approving the health
care plan and establishing city contributions for 2010.
Attachments/ • Draft resolution 10-06-09-02, Establishing City Contributions to
Materials Employee Health Insurance Benefits for 2010
provided:
Contact(s):
Prepared by: Anne Hurlburt, Administrator
(health insurance 2010)
Page 2 of 3
09/29/09
t
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%) $148.30(20%)
HSA Contribution $91.70 $100.00
Total $323.20 $693.20 $148.30
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 Proposed 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
Page 3 of 3
09/29/09
>
CITY OF SCANDIA
RESOLUTION NO.: 10-06-09-02
RESOLUTION ESTABLISHING CITY CONTRIBUTION TO EMPLOYEE
HEALTH INSURANCE BENEFITS FOR 2010
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, on March 6, 2007 the Council adopted Resolution No. 03-06-07-02,
establishing policies for employee health insurance benefits, including employee and city
contributions to the cost of premiums; and
WHEREAS, it is now necessary to determine the insurance plan and contributions to
premium costs for 2010;
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 1/1/10 to 12/31/10; and
FURTHER BE IT RESOLVED, that for calendar year 2010, 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 ): (Monthl :
Full-time Employee(40 hours/week), $g99.20 (80%) $140.00
Famil Covera e:
Full-time Employee(40 hours/week), $351.00 (100%) $105.00
Sin le Covera e:
Part-Time Employee(30 to 40 $351.00 (100%) $0.00
hours/week , Sin e Covera e
Part-Time Employee(30 to 40 $351.00 $0.00
hours/week), Famil Covera e
Adopted by the Scandia City Council this 6th day of October, 2009.
Dennis D. Seefeldt, Mayor
ATTEST:
Administrator/City Clerk