4.8. SR 10-21-2019
Request for Action
To Item Number
Mayor and City Council 4.8
Agenda Section Meeting Date Prepared by
Consent October 21, 2019 Lauren Wipper, Human Resources Manager
Item Description Reviewed by
2020 Flexible Benefits Plan Cal Portner, City Administrator
Reviewed by
Action Requested
Approve, by motion, the 2020 Flexible Benefits Plan design and changing short-term disability carriers to
Madison National Life.
Background/Discussion
Renewal/Premium Rates
Our medical insurance renewal with the Public Employee’s Insurance Program (PEIP) was 5.2%. Slightly
up from last year’s 3% but still below marked trend. We feel our relationship with PEIP has been
successful and will remain with them for another two years. Plan design for the Value and Advantage
plans changed to provide more cost sharing; increasing deductibles, co-insurance, co-pays, and the
maximum out-of-pocket expenses. Out-of-pocket costs are dependent on the provider chosen by the
employee so employees have some ability to manage these costs. Selecting a provider in Cost Level 1
provides lower deductibles, co-insurance, co-pays, and maximum out-of-pocket expenses than selecting a
provider in Cost Level 2, 3 or 4. Employees have a lot of choices to accommodate their risk tolerance,
provider choice, and need for medical care.
We have a rate guarantee for dental, long-term disability and life insurance for 2020 so those rates are not
changing. We asked our ancillary plan broker, Ochs, to check on a new provider for short-term disability
as we’ve had some administrative difficulty with our current provider. We learned that we can provide
better coverage at about the same premium rates by changing to Madison National Life which is the same
provider we have for long-term disability. The action above includes a request to make this change
effective January 1, 2020.
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.
The plan is designed to provide a dollar amount to each employee based on the family level of medical
coverage they elect. The 2020 preliminary budget includes a 5% increase to the city’s contribution to
employee insurance benefits. Using a 5% increase across all family levels of coverage results in the
employee cost of premium remaining fairly consistent with 2019. Depending on the plan and family level
of coverage they choose, employees will see their out-of-pocket premium costs change from between an
additional cost of $17.74 per month to a savings of $4.90 per month.
The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional
service, and community engagement that encourages and inspires prosperity
The Value plan is our mid-level plan. Monthly employee premium for this plan ranges from $0.36 for
single coverage to $361.86 for family coverage. Employees may “buy up” to the Advantage plan which
pays higher benefits for a higher premium cost or they can elect the HSA-compatible plan and have
additional funds available to contribute to their HSA or use to “buy” other benefits in the plan.
Employees can also “buy” other benefits in the plan through payroll deductions. There is no additional
city contribution to employee’s HSA plans 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
2020 Flexible Benefits Plan Renewal Rates spreadsheet
N:\\Public Bodies\\Agenda Packets\\10-21-2019\\Final\\x4.8 sr 2020 Insurance Renewal.docx
2020 Flexible Benefits Plan Renewal Rates
Single +Spouse +Child(ren) Family
City Contribution
636.00 1,223.00 1,172.00 1,681.00
Public Employees Insurance Program
Advantage Plan Monthly
Premium 700.30 1,511.24 1,498.78 2,272.82
Monthly Employee Cost 64.30 288.24 326.78 591.82
Annual Employee Cost 771.60 3,458.88 3,921.36 7,101.84
Value Plan Monthly Premium 631.36 1,360.04 1,349.16 2,044.86
Monthly Employee Cost -4.64 137.04 177.16 363.86
Annual Employee Cost -55.68 1,644.48 2,125.92 4,366.32
HSA Compatible Plan Mthly Prem 495.08 1,062.60 1,053.54 1,594.48
Monthly Employee Cost -140.92 -160.40 -118.46 -86.52
Annual Employee Cost -1,691.04 -1,924.80 -1,421.52 -1,038.24
Opt-Out of Medical
300.00
DeltaDental Monthly Premium
40.80 107.98 107.98 107.98