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7.1. SR 03-20-2000'ity of iver MEMORANDUM Item/t7.1. TO: FROM: DATE: SUBJECT: Mayor & City Council Lori Johnson, Finance Director March 20, 2000 Benefits Committee Update In December, when the health insurance renewal information was presented, the council asked that a benefits committee be formed to review the city's benefits and, in particular, health insurance. The committee has met four times, and although a lot has been accomplished, the committee needs direction from the council before presenting a proposal. Attached are copies of minutes and backup material from the meetings. Communication is a very important part of developing a benefit program that meets employees' needs. Committee members have made sure employees have received meeting minutes and updates; members have encouraged employees to speak up now so that employee suggestions are in the proposal. Published surveys of employees indicate that employees want flexibility, the ability to choose benefits, and feeling that they have some control over their benefits. Committee members believe this is also representative of what our employees want. Often employees do not want more benefits, they just want to choose which ones are best for their individual situation. Offering this flexibility does not always increase costs; however, in some cases, it does. After reading the minutes you will find the committee has struggled with changing the benefit structure because of the high cost of health insurance, which, to a large degree, is out of the city's control. However, by offering deductible options the committee feels it can help employees. A cafeteria plan is the preferred way to offer some flexibility to all employees, not just a select group. Before developing any type of plan for presentation to the council, the committee would like input from the council as to whether or not this is an option they will accept, knowing that it may increase the city's benefit cost. Action Requested No action is required. The committee just wants comments and input from the council before proceeding. 13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · TDD & Phone: (612) 441-7420 · Fax: (612) 441-7425 MINUTES OF THE JANUARY 14, 2000 ORGANIZATIONAL MEETING OF THE CITY OF ELK RIVER BENEFITS COMMITTEE Members Present: Scott Harlicker, Cheryll Edinger, Marc Nevinski, Joan Frick, Bob Mahutga, Lauren Wipper, Lori Johnson Members Not Present: Steve Tillmann We had a discussion of what benefits are. We listed the following benefits. This list may not be complete and not all of the benefits identified are offered by the City. Insurances Retirement Plans Leave Disability PERA* Vacation Life ICMA* Sick - no limit Health Social Security* Holiday Dental Medicare* Funeral Unemployment* 457 Plans Compensatory Workers Comp* FMLA* - allow paid Other Tuition Reimbursement Seminars/Training Clothing Professional Licenses Paid Car Allowance/Take Home Car Wellness Room/Health Club Wage Incentive Program Safety Reimbursement Flex Benefits - Section 125 Full Cafeteria Plan Flex Time/Telecommute Affinity Plus Credit Union Direct Deposit Causal Day * Mandatory Benefits The committee discussed these benefits and how they affect various employees. It was mentioned that not all employees would view some of the items listed as a benefit. Bob mentioned that the high cost of family coverage is affecting several employees in his department. The committee discussed the value to the employee of the various benefits and the importance of meeting employees' needs; some benefits may be considered luxuries by some employees and necessities to others. There is limited budget for benefits and the committee wants to make sure the money is spent on the benefits the employees want. The Committee identified health, dental, and disability insurance, clothing issues, and establishing a full cafeteria plan to be high priority. Members felt leave benefits met employees' expectations. It was agreed that some benefits are management issues so they would not be addressed by this committee. Lori discussed the cost of benefits and told the committee that in 1999 the benefits paid by the City cost in excess of $1,000,000 for less than 100 fulltime employees. Benefits impact the employee, their family, the Citizens of Elk River (tax payers), and the City as the employer. The Committee established the following goals: Decide options for Cafeteria Plan - what should be included? Determine benefit levels - should they be equal? Look at costs. Present something to the Council that is a benefit to the employees. The next meeting is scheduled for Friday, January 28th at 9:00. We will be reviewing the insurance plan to better understand why we are where we are in regard to benefit level and cost. Respectfully submitted Lauren Wipper g:\benecomm\l-14-00 THE CITY OF ELK RIVER BENEFITS COMMITTEE JANUARY 28; 2000 MINUTES Members Present: Scott Harlicker, Cheryll Edinger, Marc Nevinski, Joan Frick, Bob Mahutga, Lauren Wipper, Lori Johnson Members Not Present: Steve Tillmann Lori Johnson handed out information to help explain the health insurance premium cost that the City is currently paying. "Here's why we straggle," are the words she used when she handed out the Claims and Loss Ratio History. These are the actual numbers that an insurance company looks at when they are calculating premium rates. What the Claims and Loss Ratio History shows is that insurance companies have been consistently losing money when they insure the City's employees. The Loss Ratios listed in the middle of the page show that the closest a company has come to even breaking even was Health Partners during the period of August 1, 1992 to April 30, 1993, and they still lost .52%. Scott remarked that he's "surprised we're even getting coverage." When we consider these facts, we are lucky that we can fmd insurance. We have had companies refuse to give us a quote for coverage. One year seven companies refused to bid and we were fortunate that Health Partners offered to renew the coverage - with a sizable rate increase. We have a history of needing to beg for coverage because we have a history of high claims. The other side of the Claims andLoss Ratio History lists the premium history for the City. In October 1994 the employee's out-of-pocket costs for family coverage were the highest at $431.52 per month. Bob asked if there was a way we could join with another group that has good loss ratios to help to make ours look better. Loft explained that that ~ exactly what we have been doing. In 1995 we joined the Medica Chamber of Commerce Coalition, which is a coalition for small groups. At that time, we qualified as a "small group" under state law but grew out of that classification shortly after we joined. We were able to stay with them as a large group because we had a contract with them until 1997. This was very fortunate for us. With the coalition we were guaranteed rate increase maximums of 6.5% and 6.0%. One year after starting the Chamber Coalition, Medica realized it was a bad business decision that would result in sizable losses. Medica discontinued offering the program but honored the contracts it had in place. In October 1998 we joined the Central Minnesota Service Cooperative and enrolled with Blue Cross and Blue Shield of MN. With the Coop we were part of a 7,000-member group of cities, counties, and other government groups. Currently we are part of a statewide group of Medica members. After these lengthy discussions, we moved on to "what's next". We decided that the first goal we would like to accomplish is to establish a full cafeteria plan that will offer employees more flexibility in their insurance coverage. Loft Johnson will look into what choices we may have in levels of coverage, meaning whether we can offer employees the choice between a copay plan and a deductible plan. Joan and Cheryll will do a survey of "Group 6 Cities" to see what they offer. There was discussion as to when the full cafeteria plan should be implemented. Mid year implementation does not provide flexibility or any benefit to employees who have already made insurance decisions for the year unless they are currently taking employee only coverage. Cheryll would like to see it implemented July 1, 2000. Lori was not sure if that would allow us enough time to implement the program. January 1, 2001 seems like a more workable date but the ultimate decision will be made by the City Council. Next we talked about what should be offered through the full cafeteria plan. There are two types of benefits to be considered - Core Benefits and Voluntary Benefits. The Core Benefits are the insurances that an employee will be required to carry. We decided that single health, single dental, and $25,000 of life and AD&D coverage should be Core. The Voluntary Benefits should include family medical, family dental, Flexible Spending Account (Sect. 125), supplemental life insurance, and long- and short-term disability. Based upon the way a full cafeteria plan works, employees will be able to put the remainder of their monthly amount into deferred comp. or receive it on their paycheck. (The latter of the two would of course be considered taxable income.) The next meeting is scheduled for Friday, February 18th at 9:00. We will be going over the surveys collected by Joan and Cheryll and developing a plan to submit to the City Council. Respectfully submitted Lauren Wipper G ABENECOMMSI-28-00.DOC CITY OF ELK RIVER CLAIMS AND LOSS RATIO HISTORY Company Blue Cross Medica Medica Health Partners Health Partners Medica(PHP) Time Period 8/1/98-3/1/99 4/1/97-3/31-98 4/1/96-3/31/97 4/1/93-3/31/94 8/1/92-4/30/93 4/1/91-3/31/92 Premium Paid by City 140,021 193,080 158,493 173,945 101,921 134,860 Total Claims 254,377 358,180 467,980 325,531 129,092 220,458 Negotiated Savings 91,939 109,079 264,620 85,181 26,644 52,313 Claims paid by Ins. Co. 162,438 249,101 203,360 240,350 102,448 168,145 Loss Ratio 116.01% (claims paid as percent of premiums received) 129.01% 128.31% 138.18% 100.52% 124.68% The insurance company bases its rates heavily on a group's loss ratio. Health insurance "trend" or the average or expected cost increase is also considered. Ongoing claims (those that require frequent and or long term treatment) affect the premium. When requesting bids for the 1994-1995 contract year, seven out of seven companies did not bid because of the City's loss ratio and potential for future losses. CITY OF ELK RIVER HEALTH INSURANCE PREMIUM HISTORY Effective Date Company Single Family Employee & Spouse Employee & Children January. 2000 Medics {elect) Medics (select) $210.85 $234.25 739.50 821.60 442.70 491.90 389.90 433.35 January. 1999 BCBS BCBS (deduct.) $194.32 S 164.95 582.94 346.40 446.95 379.39 408.08 494,85 October. 1998 Oct. 95- Oct. 99 October 1994 BCBS BCBS {deduct.) Medics Coalition Group Health $194.32 $164.95 $210.37 582.94 346.40 666.04 446.95 379.39 408.08 494.85 January 1994 Group Health $158.89 503.05 August 1993 Group Health $167.25 529.53 January 1993 Group Health $144.16 446,31 Ju~ 1992 Medica(PHP} $148.75 453.75 City Contribution Employee co~t for famay Max out of pocket Employee contribution in 1999 dollars City Contribution 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 430.00 430.00 334.37 416.48 $15 copay ~$15 copay $430.00 355.00 340.00 $310.00 JuN 1 to $325.00 $295.00 July' 1 to $310.00 $405.00 July 1 to $295.00 $280.00 October to $405.00 265.00 250.00 235.00 215.00 200.00 355.00 252.10 copay 2.68% 1.55% 1.83% 3.26% 2.61% 2.67% 2.68% 3.05% 2.38% 355.00 340.00 163.98 266.17 1,200.00 $10 copay 125.13 121.86 120.00 117.85 114.13 111.22 108.33 105.50 102.38 100.00 340.00 280.00 178.05 Va~es 0 - $410 431.52 1,200.00 New $10 copay based on age 405 and # kids 485.49 280.00 250.93 0 265.00 293.53 0 339.05 265.00 211.06 0 250.00 228.98 0 271.56 THE CITY OF ELK RIVER BENEFITS COMMITTEE FEBRUARY 18, 2000 MINUTES Members Present: Scott Harlicker, Cheryll Edinger, Marc Nevinski, Joan Frick, Bob Mahutga, Lauren Wipper, Loft Johnson, Steve Tillman The minutes from our January 28t~ meeting were distributed along with the survey results from Joan and Cheryll and two articles from Medica titled Understanding the True Cost of Illness and Employers, Employees Benefit from Work-site Health Improvement. The survey results are included with these minutes and the articles were distributed to employees with the January 28 minutes. Lori went 2) 3) 4) s) 6) over the things we wanted to cover today which include: Input from employees Minutes from last meeting Survey results (Joan & Cheryll) Dual Option Coverage Next Step/Time Line Other Benefits Loft asked what kind of suggestions and concerns we've received from our departments. Cheryll said she's heard a lot of requests for long-term disability. Bob's staff'is concerned that the plan we propose will benefit us for more than just one year. They suggested using a percent method rather than a flat dollar amount for the City's contribution. It was felt that the Council wouldn't go for this method, as they prefer to review this annually. It was mentioned that Riverway Clinic (Mork) is now down to two doctors. It can take a week to get in for an appointment. Lori suggested an employee could call Medica to see about changing clinics if this is an issue for them. Riverway is the only clinic in Elk River that is an Elect provider. Lori said that a member could go to any clinic they choose even if it's not in the Elect provider network, but the member would receive decreased benefits. You will pay a deductible and 20% of the expenses after that for most services. Employees should call Medica Member Services or consult their benefit packet from Medica for further details before going outside the network. Joan and Cheryll went over the survey results. (See attached) Of the Cities surveyed, they listed those that have some sort of a Cafeteria Plan. What we felt the results showed is that we have quite a bit of flexibility in how we design our plan. Information on the number of cities that offer a cafeteria plan and those that do not was not available. The goal of this meeting based on previous decisions made by the committee was to develop a Cafeteria Plan to submit to the City Council. We had much discussion about how this plan should be designed. After all was said and done, we decided to think on it a couple more weeks and bring suggestions to our next meeting. Some of the points brought up during the discussion were: 1) Offering dual options for health coverage. This would give the employee the choice between a deductible plan and a copay plan - possibly more levels. We are at the mercy of the insurance companies when it comes to this, and if you read the minutes fi.om our last meeting, we feel lucky to get whatever we can get. Lori has spoken with our insurance representative about this and he feels that if we stick with Medica we would be able to offer dual options for 2001. Unfortunately, insurance companies usually don't make any decisions as to premium rates and such until November or December. This makes the inclusion of this option difficult to plan. 2) There was discussion about whether a cafeteria plan was the best option to benefit all employees. Will a cafeteria plan help the very few employees who are paying the high family premium? Most of the employees do not take family coverage. 3) It was agreed that the committee has to propose a plan that will be acceptable to the City Council. There was discussion on what may or may not be acceptable to the Council. 4) Committee members discussed what "fair" benefits means to different groups of employees. What seems fair to one may not seem fair to another. Lori asked that each committee member rethink his or her position on what type of benefit changes the committee should present to the Council for consideration keeping in mind the reason(s) the benefit package is being reviewed and that the proposal needs Council approval. At the next meeting, each member will be asked to present and e.xplain his or her proposed benefit plan. The next meeting is scheduled for Friday, March 3a at 11:30. Respectfully submitted, Lauren Wipper S:k2-18-O0.DOC CAFETERIA PLAN SURVEY RESULTS FEBRUARY 2000 City Employer Contribution/month Blaine Savage Robbinsdale Hopkins Golden Valley Mendota Heights Shakopee Ramsey Dayton Anoka $370 (require single health, single dental, LTD, & $50,000 life ins.) Balance can be used on flex plan. $425 + $25 customized internet benefit service fee. $417.50 per employee $580-family If you don't use all for health insurance, $400-single employee gets 70% of unused for flex spending. $431 $421 -for health, dental, disability & term life insurance $382.16-health insurance deducted first Those taking single health insurance get $100/mo for flex spending. $290/single unused can be spent on $361/family flex plan. $290 if waive health insurance, to spend of flex plan. $366 must have single health insurance & $5,000 life insurance-balance can be used on flex plan. Modified flex plan-If you have proof of insurance coverage through spouse's employment, can get half the average single premiums ($124) to spend on flex plan. City provides every employee with long term disability insurance. THE CITY OF ELK RIVER BENEFITS COMMITTEE MARCH 3, 2000 MINUTES Members Present: Scott Harlicker, Cheryll Edinger, Marc Nevinski, Joan Frick, Bob Mahutga, Lauren Wipper, Lori Johnson, Steve Tillmann Lori went over the things we wanted to cover today which include: 1) 2) 3) 4) 5) Input from employees - Department comments Minutes from last meeting Background Member proposals Next meeting Bob brought some concerns from his department. They are: 1) 2) 3) 4) What about future increases? Could family coverage be covered under same cap as single? Is it right that employees are forced to do something else to cover their families? It's not a fairness issue but a needs issue. Lauren had someone suggest to her that we drop dental from the Core benefits. The minutes from last meeting were approved and should be distributed to employees. Lori went over a brief background about the formation of the committee and current insurance coverage demographics. The committee was formed to try to create a benefit package that will help the City to: 1) Retain and recruit employees a. Flexibility b. Other types of insurance and benefits 2) Address the high cost of insurance In considering both of these goals we need remember to be reasonable so we don't propose a plan that is unacceptable to the Council. Current Health Insurance Elections: Employee Employee Employee &Spouse &Child(ren) Family Total Elect 10 4 9 6 29 Choice 31 2 4 1 38 Total 41 6 13 7 67 Percent 62% 9% 19% 10% 100% This equates to: 50 paying 4 paying 4 paying 2 paying 6 paying 1 paying $0.00 $37.58 $28.23 $86.78 $334.38 $416.48 There was discussion that some of the City's employees that need family coverage have elected to cover their spouse elsewhere or not at all. It is also important to keep in mind that this year some employees were able to add their children to health insurance without any out-of-pocket expense. We went on to present the proposals that we had been thinking about. Marc's proposal increases both the money the City contributes and the options it offers. This will help us to compete with private sector employers. He suggested that all employees receive the same dollar amount of benefit. Joan doesn't think the council would go for equal dollar amounts but agrees that we need to offer more choices and flexibility. Lauren suggested that the City cover the highest deductible Core benefits at each coverage level - employee, employee & spouse, employee & child(ren), and family - and then give each employee the same dollar amount to "buy up" to lower deductible coverage, elect other optional benefits, contribute to their 457, or whatever the plan will allow. Scott thought Lauren's idea has potential. Loft suggested a possible backup plan incase the Council does not accept a Cafeteria Plan. We could go with a plan that has a high deductible and set aside money to offset the deductible expenses for those who otherwise would pay nothing but co-pays - typically those with employee only coverage. At this point we discussed what we should do next. It was decided that the Committee would like direction from the Council so we have an idea about what kind of plan they would accept. We want to avoid spending many hours working on a plan that has little chance of being accepted by the Council. Lori will address the Council on March 20th to let them know that we would like to give the employees flexibility and choice when selecting an insurance plan. We would like to offer a Cafeteria Plan with multiple choices for health insurance. She will let them know that this will cost the City more money and there is no way that we will make everyone happy. The Committee is hoping for some good direction from the Council. Respectfully submitted, Lauren Wipper G:kBENECOMMX3-3-00.DOC Public Sector Benefit Trends By Tracie Chamberlin roviding a good employee benefits package has long been touted as an attractive feature of public employment. While a comprehensive benefits package is a selling point for public sector jobs, it no longer has the impact that it once did. Today's work- force is making it clear that basic bene- fits are still needed, but flexible benefits are what is really desired. As the employment market becomes tighter, cities are looking for new ways to attract and retain qualified employ- ees. Current public sector employees are interested in those programs and policies that allow employees to deter- mine for themselves what is best for ~em. The following are some of the programs enabling greater flexibility in today's public sector workplace: Paid time off In the past, a typical paid time off package consisted of va- cation time, sick leave, and perhaps some paid leave to be taken in specific situations (funeral leave, military leave, maternity leave, etc.). Actions taken in recent years by both federal and state government including the Americans with Disabilities Act, the Family and Medical Leave Act, and the Minnesota Parental Leave Act, have caused many cities to revise and rethink their leave plans. In addition, employers are being challenged by employees wanting increased flexibility in the use of their paid time off. As a result, a common trend is for the employer to combine different kinds of paid time off and provide one kind of leave called "flex leave" to be used for any reason that an employee would need to be out of the office. Telecommuting. Telecommuting has become an accepted way of work- ing for many public and private sector ,rganizations. The most conm~on form of telecommuting consists of an office employee working a couple of days each week at home and reporting to the office the remainder of the week. Most telecommuters use the telephone to keep in touch with the office and other external contacts. The popular theory in support of telecommuting is that it eliminates wasteful commuting time and permits a better, more flexible balance of work and personal time. Telecommuting is also a tool used to retain the expertise of employees who are in need of a more flexible schedule. The consensus among those who have participated in a telecom- muting program is that it makes life a little easier for workers and a little harder for supervisors. Flexible work schedules. Flexible work schedule programs vary greatly among those cities that have chosen to implement them. Such schedules range from longer work days, which result in shorter work weeks, to flexible arrival and departure times, as well as many other options developed to meet the specific needs of employee and employer. A flexible work schedule is sometimes used to meet needs that may arise in conjunction with the Americans with Disabilities Act and the Fanfily and Medical Leave Act, etc. Similar to telecommuting, flexible work schedules provide employees with a greater opportunity to balance work and personal time. Cafeteria Idans. Cafeteria plans are popular because they allow employees to design individualized benefit pro- grams that suit their own needs. The), allow employees to choose between cash and a variety of employer-pro- vided benefits without having to include the value of their chosen ben- efits as taxable income. For example, an employee with a working spouse may opt out of the health insurance plan if his or her spouse has a better health plan. The extra cash, which then becomes available, could be used to establish a reimbursement account for uninsured health expenses or for child care costs, etc. Cafeteria plans can also be used to close the gap between the employer contribution for single coverage versus family cover- age. Each employee receives the same dollar amount to use in designing his or her benefits program. While cafete- ria plans are increasing in popularity, employers need to be aware that the mere fact that a benefit is offered under a cafeteria plan does not make the ben- efit exempt from taxation. To quali~ for tax exempt status, a benefit program must comply with the rules of IRS Code Section 125. The trends discussed in this article provide a mere glimpse of the benefit programs being implemented in an effort to meet employees' increased desire for flexibility in the workplace. The issue of achieving an acceptable balance between work and personal time has become big enough to cause some employees to decide not to work at all if they can't achieve a balance with their employer. Of course, not all cities can feasibly offer these kinds of benefit programs. However, being aware that increased flexibility in the workplace is the way of the future will better enable you to discuss the issue with employees when it does come up in your city. ~' Tracie Chamberlin is human resources representative u,ith thc League qf Minnesota Cities. SEPTEMBER 1999 MINNESOTA CITIES 45 MEMORANDUM TO: Mayor and City Council FROM: Gary Leirmoe, WWTS Chief Operator DATE: March 20, 2000 SUBJECT: Hiring of WWTS Operator The Wastewater Department recently advertised for a WWTS Operator. The department has not been fully staffed since September of 1999. I had hoped to find a Class "C" Operator, but had no experience Class "C" Operators apply. The major need at this time is someone with sewer jetting experience. I would like to recommend the hiring of Wade Pauloski. Wade has eight years of jetting experience with the City of St. Louis Park. He has a Class "B" C.D.L., but limited plant experience. I would plan on having him out jetting for the summer and then train him at the plant, starting next fall. I have discussed this with him. We would require him to obtain a Class "D" certification within one year. Wade's starting salary would be $12.71 per hour, contingent upon driver's license check and drug and alcohol screening. I would like to have April 10, 2000 as his starting date.