7.1. SR 11-20-2006
City of Elk River
REQUEST FOR COUNCIL ACTION
Agenda Section Meeting Date
Administration November 20,2006
Item Description
Consider Ci Contribution to Flexible Benefits Plan
Administrator
Introduction
At the November 13 worksession, the Council approved a motion increasing the City's contribution to
the employee flexible benefits plan by $50,000 and directed staff to present a recommendation for the
contribution rates for the four tiers in the plan. Further the Council requested that a $1,000 deductible
health insurance plan be researched to see if it could be offered as an option to employees. Finally, the
Fire Chief has requested that firefighters be covered by $10,000 of life insurance to assist in recruiting and
retaining employees.
Discussion
Flexible Benefits Plan Contribution:
Staff has reviewed several options to distributing the additional funds allocated by the Council. The
proposed distribution increases the monthly contribution to family coverage by $125, employee and
children and employee and spouse coverage by $65, and single coverage by $32. This allocation was
selected because it brings the amounts paid by employees for dependent coverage closer by percentage.
Single coverage is still paid entirely by the city for $25 co-pay, $250 deductible coverage. Single
employees will pay for part of the coverage to buy the $25 co-pay plan. Based on the current
demographics, this option will cost $48,660 per year. This leaves a slight cushion for employees who
change plans and still remain under the $50,000 allocated by the Council.
$1,000 Deductible Option:
The rates for a $1,000 deductible are favorable for families willing to take on the additional risk of out of
pocket expenses, but not for the other three tiers. There is also concern that employees who would be
willing to take the risk of the $500 deductible may not be willing to take on the higher deductible. For
these reasons, we are recommending that a $500 deductible be offered in 2007 and that a higher
deductible be considered for 2008.
Life Insurance:
Life insurance rates were requested this year after getting notification from our current company that the
rates would increase on January 1, 2007. The best rates available are from the Standard Insurance
Company. These rates are $.63 per employee per month less for a $25,000 life and AD&D policy with
better benefits.
Fire Chief Bruce West included funds in his 2007 budget to provide $10,000 of life and AD&D coverage
to firefighters not already covered by the city's life insurance plan. He feels that his will help him recruit
and retain officers. The cost to provide this benefit is $1,200 per year based on the rates from the
Standard Insurance Company.
c: \Documents and Settings \ tallard\Local Settings \ Temporary Internet Files \ OLKF\Flex ben contribution. doc
Financial Impact
. Costs for the increase in the flexible benefit contribution and firefighter life insurance are
included in the proposed 2007 budget.
Attachments
. Contribution Information spreadsheet
Action Requested
. Approve the flexible benefit contribution for 2007.
. Approve the health insurance options for 2007.
. Approve a change in life insurance contracts to the Standard Insurance Company effective
January 1, 2007.
. Approve life insurance of $10,000 for paid-on-call firefighters who are not already covered by
the city's life insurance policy.
Council Action
Motion by _
Second by _
Vote
Follow Up
C: \Documents and Settings \ tallard\Local Settings \ Temporary Internet Files \ OLKF\Flex ben contribution. doc
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