5.7. SR 06-19-1995ITEM 5.7.
MEMORANDUM
er TO: Mayor & City Council
FROM: Lori Johnson, Assistant City Administrator
DATE: June 19,1995
SUBJECT: Discuss Health Insurance Renewal Bids
At the Tune 5, 1995, Council meeting, some preliminary non-union group health quotes
and information were presented. Action on the renewal was delayed until HealthPartners
submitted its renewal rates. All of the rates have now been received. The two plans being
considered aze renewal of the current HealthPartners plan and the Medica Premier
Chamber plan.
Because of the new law for small groups, our rates are now based on age. We no longer
receive set single and family rates. Each time an employee or dependent is added or
deleted and each time an employee changes from one age group to another, the premium
charged will change. Under the new method of calculating premiums, each employee's
premium is based on his or her age and dependent coverage is based on the spouse's age
and the number of dependents. There are two rates for children depending upon whether
• only one child is being covered or if two or more children are being covered. Based on
the current census information the average rates are as follows:
single family
HealthPartners $158.23 $555.21
Medica Premier $150.88 $502.33
Both plans aze basically the same except that Medica's prescription co-pay is $2.00
higher. Of course, most of the clinics and hospitals that are part of the Medica network
are different than the ones used by HealthPartners; Mork and Fairview are members of
both networks. The risk pool for HealthPartners is much larger than the one for the
Medica plan. However, the Medica plan is new, and it is anticipated that the number of
enrollees will increase substantially. The major benefit of the Medica plan is the three
year contract which guazantees no more than a six and one half percent increase for
renewal in 1996 and no more than a six percent increase for renewal in 1997.
Another issue that needs to be addressed is how premiums will be paid given the fact that
the average rates could change monthly based on the individual premiums charged. If
each employee is responsible for paying his or her premium, some employees will see a
substantial decrease in the cost of their family coverage. There is also the possibility that
an employee with single coverage would have a premium cost above the City
•
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contribution resulting in an employee contribution for single coverage. If the premiums
are averaged, all employees with family coverage will pay more each paycheck if another
• employee's family coverage premium increases. The uncertainty in the amount of the
employee's cost of the family premium and changing the average premium are potential
problems. In speaking with our labor relations consultant, she has informed me that it is
not discriminatory to charge premiums to employees based on age. In other words, it is
OK to charge each employee the same premium that the insurance company is charging
the City for that employee. Administratively it would be much less complicated to
chazge each employee an individual premium.
The third issue to be resolved is the amount of the City's contribution. The contribution
level for the union is $295.00 per month. In previous years, the contribution has been
the same for the union and non-union employees.
In addition to health insurance renewals, both dental and life rates have been reviewed.
The life insurance premium will decrease $1.00 to $5.25 per month per employee. The
coverage will remain with the current carrier and will remain at $25,000. HealthPartners
has submitted dental renewal rates with no increase. The rates would remain at $21.63
for single and $54.05 for family.
ACTIONREQUESTED
The Council is asked to act on the following items:
• Selection of a plan for the contract yeaz beginning July 1, 1995.
HealthPartners
Medica Premier Chamber
Determination of how rates will be charged to employees.
Averaged
Based on actual employee premium
Setting the City contribution for non-union employees
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