4.12. SR 11-06-2017Request for Action
To Item Number
Mayor and City Council 4.12
Agenda Section Meeting Date Prepared by
Consent November 6, 2017 Lauren Wipper, Human Resource Representative
Item Description Reviewed by
2018 Flexible Benefits Plan Cal Portner, City Administrator
Reviewed by
Action Requested
Approve, by motion, medical insurance carrier change to Public Employees Insurance Program.
Approve, by motion, the 2018 Flexible Benefits Plan Design.
Background/Discussion
Health Insurance Renewal/Premium Rates
Because we had a number of large claims this year, we anticipated a high renewal with Medica. Our
renewal called for a 44.2% increase however, Medica reduced that to 29%. Once the actual rates were
assigned, the renewal ended up being 28%. We worked with Medica on plan design and network changes
to try to reduce the increase. With higher employee shared costs and more narrow networks, the result
was still expected to be increases ranging from 11.8% to 25%.
Our broker, NFP, suggested we test the market to see what other health insurers would provide.
BlueCross BlueShield came back with rates that were 58% higher than our 2017 Medica rates.
HealthPartners, Preferred One, and the NJPA Consortium all declined to provide a quote. The Public
Employees Insurance Program (PEIP) provided a quote with premium increases ranging from (-)12.1%
for their HSA Compatible Plan to 27.7% for their Advantage Plan. They also offer a Value Plan which
offers lower premium rates and higher out-of-pocket costs than their Advantage Plan. The rate increase
for the Value Plan was 14.6%.
In evaluating these plans we added the total cost of premium and the total maximum out-of-pocket
expenses and compared overall potential costs. In general, the PEIP plans proved to be least expensive
in the worst case scenario.
The State of Minnesota developed PEIP to help combat the rising cost of health care for state employees.
In 2007, they began offering PEIP to all public employers. Over the last 14 years, premium increases
have ranged from 8% to (-)6.6%, averaging 2.3%. They have accomplished this by plan design and by
pooling claims experience of the 26,000 members from the 175 public employers they insure.
There are no changes to any of the other plans in our Flexible Benefits Plan. In this Plan we offer dental,
additional life insurance, long-term and short-term disability, health care savings plans (HSA), and health
and dependent care flexible benefits accounts.
The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional
service, and community engagement that encourages and inspires prosperity
City Contribution
The city maintains a Cafeteria-style plan with a predetermined contribution for all insurance benefits.
The annual budget is based on the last known enrollment, which is subject to change throughout the year.
In anticipation of a high renewal, this year’s total city contribution is a 7.5% increase over last year.
The plan is designed to provide a dollar amount to each employee based on the family level of medical
coverage they elect. We take the total budget available and determine the best way to allocate that among
enrolled employees. When designing the plan this year, we based our city contribution amounts off of
what most employees are currently paying at each family level of coverage. We applied those numbers to
PEIP’s Value Plan which is their mid-level premium and benefit plan. In general, employees electing the
Value Plan will pay premium amount approximately equivalent to what they are paying this year for the
High Deductible Health Plan 100% Plan. Employees may also “buy up” to the Advantage Plan or they
can elect the HSA Compatible Plan and have funds available to contribute to their Health Savings
Account or “buy” other benefits in the plan. Employees can also “buy” other benefits through payroll
deductions. There is no additional city contribution to employee’s HSA plans for 2018 although
employees at each family level have additional funds available from their city contribution that they can
contribute to their HSA.
Financial Impact
The projected benefit renewal is accounted for in the preliminary budget.
Attachments
2018 Flexible Benefits Plan Renewal spreadsheet
2018 Health and Dental Renewal Rates
Single +Spouse +Child(ren) Family
City Contribution 590.00 1,128.00 1,080.00 1,545.00
Public Employees Insurance Program
Advantage Plan Monthly Premium 654.76 1,409.82 1,397.74 2,119.16
Monthly Employee Cost 64.76 281.82 317.74 574.16
Annual Employee Cost 777.12 3,381.84 3,812.88 6,889.92
Value Plan Monthly Premium 590.00 1,268.04 1,237.66 1,905.04
Monthly Employee Cost 0.00 140.04 157.66 360.04
Annual Employee Cost 0.00 1,680.48 1,891.92 4,320.48
HSA Compatible Plan Mthly Prem 453.52 969.38 961.12 1,454.00
Monthly Employee Cost -136.48 -158.62 -118.88 -91.00
Annual Employee Cost -1,637.76 -1,903.44 -1,426.56 -1,092.00
Opt-Out of Medical
300.00
DeltaDental Monthly Premium
35.48 93.90 93.90 93.90