6.4.A. SR 11-14-2011REQUEST FOR ACTION
TO ITEM NUMBER
Ma ox and Ci Council 6.4.A.
AGENDA SECTION MEETING DATE PREPARED BY
Worksession November 14, 2011 Lauren Wipper, Human Resource
Re resentative
ITEM DESCRIPTION REVIEWED By
Flexible Benefits Plan Contribution Cal Portner, Ci Administrator
REVIEWED BY
ACTION REQUESTED
Approve the 2012 Flexible Benefits Plan contribution.
• 1.5% increase to the city's contribution to employees' Flexible Benefits Plan
• A $56 per month contribution to the Health Savings Accounts of employees electing the
High Deductible Plan
BACKGROUND/DISCUSSION
The city received a great renewal from Medica for 2012. Initially, our renewal was quoted at a zero rate
change but our brokers, Financial Concepts, felt they could do better. Our revised renewal came back at
negative two percent. Last year's agreement with Principal (dental) and Standard (life) provide us with a
rate lock for 2012 so there are no changes for those plans. This renewal provides us an opportunity to
reduce out-of-pocket premium expenses to employees and further help fund employee's Health Savings
Accounts.
Currently, 68% of employees are enrolled in the High Deductible Health Plan with 91% of those
contributing to a Health Savings Account. This has been the most popular plan since it was added in
2008 with 55% of employees choosing this option the first year it was offered.
Over the past four years, the city has contributed to the funding of employee's Health Savings Accounts
as budget allows and this year, we are proposing to do the same.
Recommendation
Staff is recommending a three percent increase to the insurance budget for the city's contribution to
employee's flexible benefits plans. The three percent would be divided between dollars provided to the
flexible benefits plan contribution and additional contributions to employee's Health Savings Accounts.
Due to the premium reduction from Medica, all employees will have a savings in their out of pocket
expenses for medical insurance. Staff recommends a 1.5% increase to the contribution to each
employee's flexible benefits plan. The remaining 1.5% will be in the form of a bi-monthly contribution to
the Health Savings Account of employees choosing the high deductible plan. This proposal should help
encourage more employees to move to the high deductible plan which will continue to help our claims
f U ~ E~~"E~~ 6[[ 8 f
A ~! V
experience. It is also consistent with our plan design for the past two years. Using this design will reduce
the employee's share of premium costs as well as help to fund employee's Health Savings Accounts.
FINANCIAL IMPACT
A three percent increase to the city's contribution to employee's flexible benefits plans is approximately
$26,800 and will be included in the 2012 budget. This amount will be offset by funds received from the
Early Retiree Reinsurance Program. Per our agreement with the U.S. Department of Health and Human
Services, these funds must be used to reduce costs to employees.
ATTACHMENTS
^ 2012 Health and Dental Insurance Renewal
Action Motion by Second by Vote
Follow Up
2012 Health and Dental Insurance Renewal
Single +Spouse +Child(ren) Family
2012 City Contribution 465.00 680.00 680.00 914.00
Life Ins 4.50 4.50 4.50 4.50
Single Dental 31.93 31.93 31.93 31.93
Remaining for Health Ins 428.57 643.57 643.57 877.57
$25 Co-pay Mthly Premium
Monthly Employee Cost
Annual Employee Cost
Current Enrollment
505.15 1,105.58
76.58 462.01
918.96 5,544.12
9 0
1, 095.97 1,669.68
452.40 792.11
5,428.80 9,505.32
0 0
$500 Ded Mthly Premium 437.38 957.27 948.96 1,445.71
Monthly Employee Cost 8.81 313.70 305.39 568.14
Annual Employee Cost 105.72 3,764.40 3,664.68 6,817.68
Current Enrollment 18 4 2 4
$2,400 HDHP Mthly Premium 354.73 776.37 769.63 1,172.49
Monthly Employee Cost -73.84 132.80 126.06 294.92
Annual Employee Cost -886.08 1,593.60 1,512.72 3,539.04
Current Enrollment 34 8 16 21
Employees electing the High Deductible Health Plan also received a $56 per month contribution to their
Health Savings Account.