6.1. SR 11-15-2010},,
~~ REQUEST FOR ACTION
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TO ITEM NUMBER
Ci Council 6.1.
AGENDA SECTION MEETING DATE PREPARED BY
Administration November 15, 2010 Lauren Wipper, Human Resource
Re resentative
ITEM DESCRIPTION REVIEWED By
Health and Dental Insurance Renewal; Set 2011 Flexible Lori ohnson, Ci Administrator
Benefits Contribution; Reallocate EAP Funds REVIEWED BY
ACTION REQUESTED
• Approve health insurance contract with Medica effective January 1, 2011
• Approve dental insurance contract Principal effective January 1, 2011.
• Approve 2011 Flexible Benefits Plan
o Two percent increase to the City's contribution to employees' Flexible Benefits Plan
o A $28 per month contribution to the Health Savings Accounts of employees electing the
High Deductible Health Plan.
• Approve utilizing funds previously allocated to the Employee Assistance Plan premiums for other
health and wellness initiatives.
BACKGROUND/DISCUSSION
The 2011 insurance renewal with HealthPartners called fora 16 percent increase in medical premiums
and a 3.31percent increase in dental premiums. In an effort to reduce premium costs, both the health and
dental packages were bid. There were three bids for the medical package and eight for dental. After
review and analysis of the bids with the City's insurance brokers, we are recommending the City award
contracts with Medica for health insurance and Principal for dental insurance beginning January 1, 2011.
Medica's bid is 1.7 percent above the 2010 premiums and includes rate caps of 13 percent for 2012 and
15 percent for 2013. Principal's bid is a decrease of 15 percent, and this rate is guaranteed through 2012.
Health Insurance -Medica
The Medica plan design options are the same as the plans offered through HealthPartners - $25 Copay,
$500 Deductible, and $2,400 High Deductible Health Plan. While formulary and provider networks
might differ, we checked to make sure that all of the Elk River Clinics as well as a few others that we are
aware employees use are covered in the Medica Choice Passport network. As well, all of the nearby and
primary metro area hospitals are in the Choice Passport network.
Included in the premium cost of medical coverage is Medica's Optum program which is their Employee
Assistance Plan (EAP). Currently we pay a separate premium for our EAP of $1.50 per employee per
month or currently $2,070 per year. We would like to use this money that we're saving by switching to
Medica to apply toward other health and wellness initiatives consistent with our approved Health
Rewards Program.
Another benefit Medica offers to its fully insured plans is Personal Rewards. At no cost to the City or
employees, employees can take a health assessment and then participate in the Personal Rewards program
by taking classes, reaching goals, and working with health coaches. Employees earn rewards for
completing the program. HealthPartners offers a similar program; however, there is a cost to the City to
participate.
Dental Insurance -Principal
The dental plan design with Principal is the same as the current plan design with a few small differences.
Currently members can receive a full mouth x-ray every three years and this is changing to every five
years. Fluoride treatments, space maintainers, and sealants will be covered until age 14 as opposed to age
19. Composite fillings will now be covered at 80 percent rather than 50 percent. Principal's provider
network covers the dental clinics that the vast majority of our employees use.
Flexible Benefits Contribution
The 2011 budget includes a five percent increase to the flexible benefits plan. I propose a two percent
increase to the contribution to each employee's flexible benefits plan. The remaining three percent will
be in the form of a monthly contribution to the Health Savings Account (HSA) of employees choosing
the high deductible plan. This proposal is consistent with last year's plan. Using this design will reduce
the employee's share of premium costs in all but one case. In that case, the employee's share of premium
will increase less than one dollar per month. This design would allow a $28.00 per month ($336.00
annual) contribution to employee's HSAs.
FINANCIAL IMPACT
These funds are included in the proposed 2011 budget.
ATTACHMENTS
^ 2011 Health and Dental Insurance Renewal
Action Motion by Second by Vote
Follow Up
2011 Health and Dental Insurance Renewal
City Contribution
Life Ins
Single Dental
Remaining for Health Ins
$25 Co-pay Mthly Premium
Monthly Employee Cost
Annual Employee Cost
$500 Ded Mthly Premium
Monthly Employee Cost
Annual Employee Cost
$2,400 HDHP Mthly Premium
Monthly Employee Cost
Annual Employee Cost
Single +Spouse +Child(ren) F_ amity
458.00 670.00 670.00 900.00
4.50 4.50 4.50 4.50
31.93 31.93 31.93 31.93
421.57 633.57 633.57 863.57
515.46 1,128.14 1,118.34 1,703.75
93.89 494.57 484.77 840.18
1,126.68 5,934.84 5,817.24 10,082.16
446.31 976.81 968.33 1,475.21
24.74 343.24 334.76 611.64
296.88 4,118.88 4,017.12 7,339.68
361.97 792.21 785.34 1,196.42
-59.60 158.64 151.77 332.85
-715.20 1,903.68 1,821.24 3,994.20