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4. Staff Report-2016 Health Insurance Staff Report Date of Meeting: August 11, 2015 To: City Council From: Kristina Handt, City Administrator Re: 2016 Health Insurance Background: Two years ago, the Council approved switching health insurance carriers from Blue Cross Blue Shield to Health Partners. The plan description was similar- $1500 individual/ $3000 family deductible. The City covers 100% of single coverage and 80% of family coverage. The Council also continued to contribute to an HSA since this was a high deductible plan. The contributions are $105/month for individual coverage and $140/month for family coverage. The change resulted in a $16,000 savings to the City. Last year premiums went up about 40%. This result in an approximately $10,000 increase to the City. Issue: What health insurance plan should the City approve for non-union employees for 2016? Proposal Details: Health Partners has provided us with renewal rates effective 12/1/15. The increase in rates range from 4-8% depending on employee age category. We must let Health Partners know by 11/1/15 if any changes are planned or if we’d like to renew our current plan. Despite the increases these past two years, cost still r emain lower than under the previous plan when controlling for changes in employee turnover. For example, the City share of the premium in the administration department (which has not yet seen turnover so is a good comparison) was $1,041/month in 2013 but will be $891/month in 2016 for the current two employees. Once the collective bargaining agreement is approved, union represented employees will go with the union offered insurance which has premiums considerably lower for families, but higher for singles. The draft budget assumes this switch takes place this year. Options: 1) Provide staff direction on plan changes and/or contribution levels 2) Direct staff to prepare resolution to stay with current plan and contributions Recommendation: Option 2. I would further recommend that health insurance plans be re-evaluated once the new administrator is on board. Change in age or family status/size of employees greatly impacts premium levels under our current plan. A co-op plan similar to BCBS or that offered by Local 49 may be less costly depending on employee characteristics.