5.2. ERMUSR 10-21-2014Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO:
FROM:
Elk River Municipal Utilities Commission
Wage and Benefits Committee:
John Dietz — Chair
John Dietz, Troy Adams, Mark Fuchs, Theresa
Al Nadeau— Vice Chair
Slominski
Daryl Thompson — Trustee
MEETING DATE:
AGENDA ITEM NUMBER:
October 21, 2014
5.2
SUBJECT:
Wage and Benefits Committee Update: Health and Dental Insurance
DISCUSSION:
Health Saving Account Insurance Plan Employer Contributions
At the September 9 Commission meeting, the Commission approved the 2015 renewal of the health
insurance plans. The Wage and Benefits Committee met on September 18 to discuss details of the
insurance renewal and the Health Saving Account (HSA) Insurance Plan employer contribution. In 2013
when the Commission approved the 2014 addition of an alternate health insurance plan, the HSA plan,
they also approved an employer contribution. This contribution was approved for a minimum of two
years at which time the contribution amount would be reviewed by the W &BC and then proposed to the
Commission for approval.
One of the reasons for the HSA employer contribution was to incentivize employees to migrate to the
HSA plan from the more expensive traditional co -pay plan. The amounts for the contribution were
determined such that the cost to ERMU would be the same regardless of which plan the employee chose.
These amounts were: $1,885 for family; $1,230 for single plus one; and $600 for single. The incentive
worked well as ERMU experienced a 53% conversion to the HSA plan. In 2013 when the employer
contribution was approved, the conversion rate was anticipated to be lower. The contributions were based
on company's insurance plan population and a projected savings of $33,000. Because of the high
conversion rate and shift in the insurance plan population, ERMU realized a $43,000 savings from which
the employer contribution was funded.
The HSA renewal included a change to the deductible amounts for the plan. The family and single plus
one deductibles increase by $100, and the single deductible increases by $50. In the HSA plan, the family
and single plus one are actually the same plan with the deductible where as in the traditional co -pay plan
these were separate. In evaluation of the migration statistics, the lowest migration group was found to be
from the co -pay single plus one group. This is likely because the employer contribution was less than that
of family yet the deductible was the same as family. The difference for the employer contribution was
directly related to premium savings.
The W &BC reviewed the higher savings resulting from higher conversion and reviewed calculations
provided by staff that would increase the employer contributions to more closely match the premium
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savings. This would also allow for the change in deductible to be mitigated. The break down for annual
HSA employer contributions recommended by the W &BC were: $1,985 for family and single plus one;
and $650 for single.
The W &BC felt that after this second year of the HSA employer contribution incentive, a full evaluation
of the premiums should be conducted and the level of the employer contribution going forward should be
evaluated.
Dental, Life, and Long Term Disability Insurance Renewal
The renewal information for dental, life, and long term disability were not received by ERMU until after
the W &BC meeting. Due to scheduling, it was not possible to review this information with the
Committee prior to the Commission meeting. But because this would be information typically evaluated
by the Committee it is being included with this update.
The renewal costs are minimal for 2015, a total of $5,007.88. Life and AD &D increased 4.24% or
$271.32; Long Term Disability increased 11.94% or $1,886.04; and Dental increased 5.9% or $2,850.48.
Because of renewal deadlines management recommends Commission approval of the renewal; however,
management recommends going out for bids in 2015.
Direct Deposit
Also not discussed with the W &BC due to a scheduling conflict was proposed payroll direct deposit
mandatory migration. With the software conversion complete for the Accounting and Business Solutions
(ABS) module of our software conversion process, staff has found that there is a significant
administrative burden to process physical checks for payroll. There are currently three individuals
receiving physical payroll checks including one Commissioner.
A few years ago the City migrated to direct deposit eliminating physical payroll checks. Management
believes with the changed processes of the new ABS system that create administrable burden to
processing physical payroll checks, now is the time for ERMU to also eliminate a physical payroll check
option. This has been done by the military, social security, and other governmental entities.
ACTION REQUESTED:
The W &BC recommends the Commission approve an increase in 2015 HSA insurance plan employer
contributions to $1,985 for family and single plus one, and increase to $650 for single, and to conduct a
full evaluation of premium savings and employer contributions for the future.
Management recommends the Commission approve the 2015 dental, life, and long term disability
Insurance renewal.
Management recommends the Commission approve the elimination of physical payroll checks effective
January 1, 2015.
ATTACHMENT:
2015 Dental, Life, and Long Term Disability Insurance Renewal Rates
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Elk River Municipal Utilities
Ancillary Renewal
January 1, 2015
Privileged and confidential. Information provided by Ahmann - Martin
Renewal 1 -1 -2015 \ Renewal AHMANNMARTIN
10/17/2014 63
RISK r: RF NFFtTS l'(1N 5111 TINE:
Lives /
Current
Renewal
Volume
Rate
Rate
Life
Life
38
$0.141
$0.148
$3,230,000
Monthly
$455.43
$478.04
Annual
$5,465.16
$5,736.48
AD &D
38
$0.024
$0.024
$3,230,000
Monthly
$77.52
$77.52
Annual
$930.24
$930.24
Combined Monthly
$532.95
$555.56
Combined Annual
$6,395.40
$6,666.72
Percentage Change
4.24%
Monthly Dollar Change
$22.61
Dependent Life
29
$0.98
$0.98
Monthly
$28.42
$28.42
Annual
$341.04
$341.04
Percentage Change
0.0%
Monthly Dollar Change
$0.00
Long Term Disability
39
$0.67
$0.75
$196,467
Monthly
$1,316.33
$1,473.50
Annual
$15,795.95
$17,682.03
Percentage Change
11.94%
Monthly Dollar Change
$157.17
Dental
Employee
7
$41.71
$44.17
Employee & Spouse
7
$87.48
$92.67
Employee & Child(ren)
6
$97.65
$103.41
Family
17
$148.99
$157.78
Monthly
$4,023.06
$4,260.60
Annual
$48,276.72
$51,127.20
Percentage Change
5.90%
Monthly Dollar Change
$237.54
Total Annual
$70,809.11
$75,816.99
Monthly Dollar Change
$417.32
Annual Dollar Change
$5,007.88
Percentage Change
7.07%
Privileged and confidential. Information provided by Ahmann - Martin
Renewal 1 -1 -2015 \ Renewal AHMANNMARTIN
10/17/2014 63
RISK r: RF NFFtTS l'(1N 5111 TINE: