5.8. SR 06-05-1995ITEM 5. 8.
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MEMORANDUM
ver
TO: Mayor & City Council
FROM: Lori Johnson, Assistant City Administrator
DATE: June 5, 1995
SUBJECT: Health Insurance Proposal
Last fall, the city went through a rather lengthy and complex bidding process in an effort
to reduce group health insurance costs for both the city and employees. As a result of the
bidding process and the new Minnesota Care Law, the city was split into two employee
groups; one for the police union and the second for all other non-union employees. The
police union qualified for the new Minnesota Care Law allowing them to get much lower
premium rates and better coverage. At that time, the non-union group did not qualify
because the law only allowed for groups with 29 or fewer employees. The law has been
expanded as of July 1, 1995, to cover groups with up to 49 employees.
Since the non-union group now qualifies under the Minnesota Care Law, the city has
• requested bids for health insurance for the contract period beginning July 1, 1995.
Unfortunately, I do not have all of the bid information compiled yet. I have, however,
reviewed the state statutes relating to the Minnesota Care Law. The law states that an
employer that no longer meets the requirements of this law as a small employer (has more
than 49 eligible employees, for example} may continue under the small employer contract
until renewal. This means that the city would need to requalify for renewal on July 1,
1996. The city currently has 48 eligible non-union employees (including the zoning
assistant) so only one additional non-union employee could be added prior to July 1, 1996,
for renewal under the Minnesota Care provisions.
The possibility of not being eligible under the Minnesota Care law in 1996 creates another
issue. Should the city change coverage in July, 1995, in order to get lower premiums for a
one year period knowing that unless no more than one new employee is hired prior to
July 1, 1996, or unless the law expands the number of employees allowed under the small
employer definition, we would not qualify for renewal in 1996? The city would then be
subject to market rates and could be denied coverage on the basis of our claims and health
history information. As you may recall, when insurance was bid in 1994 seven companies
declined to quote based on our claims and health history. We received only one quote
which was a renewal quote from Group Health. If the Council is in agreement that only
one new non-union employee will be added prior to July 1, 1996, so the city qualifies for
1996 renewal, it would be best to change to one of the Medics plans offered under the
•
13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425
Minnesota Care law. If the Council does not think it is realistic to add only one employee
• in the next year, it may be best to stay with the policy we curcently have.
The city is currently contributing $405.00 per month to employees electing family
coverage. The 1995 pay resolution includes a provision that the City Council reevaluate
the contribution based on the July 1, 1995, renewal rates. For comparison purposes, I
have used a city contribution of $295.00 which is the amount the city contributes for
employees covered under the police union contract. If this is the contribution level
approved by the City Council, employees would pay between $117.00 and $122.00 per
pay period for family coverage under the Medica Chamber plan which is a decrease of up
to $27.00 per pay period.
Either Barry Rosenberg or Rick Nelson of Minnesota Insurance and I will be present at
Monday's meeting to discuss the outcome of the health insurance bids and answer any
questions you may have. If necessary, employee meetings to discuss this issue will be held
sometime next week.
Acteon Requested
The City Council will need to decide whether a new contract should be entered into
effective July 1, 1995, and if so, the Council should approve the new contract. The city
contribution amount for coverage effective July 1 should also be approved.
•
•
s:~:~~o~
JULY 1, 1996, HEALTH INSURANCE
Non-Union Employees
Employee Group
Canirect Date
Canier
Health
Dental
Life
Total
City Contribution
Employee Share
Biweekly ~ayrotl.i •.
l7aducbort. ,.
Employees Enrolled
Type of Coverage
Office Co-pay
Prescription Co-pay
Deductible
All Employees
August 1, 1994
Health Partners
Shale Fami
158.89 503.
21.63 21.
17
Police Union
October 1, 1994
Modica
Single Family
81.47 281
21.63 21
8.25 6
8
Police Union
January 1, 1995
Modica
Single Family
61.18 266.
21.63 21.
6.25 6.
109.06 314
109.06
8
Non-Union Employees
October 1, 1994
Health Partners
Single Family
210.37 661
21.83 2'
29
Non-Union Employees
July 1.1995
Medics Chamber
Premier Plan (11
Single Family
156.54 50'
21.63 2'
6.25 I
34 (2)
Non-Union Employees
July 1.1995
Medics Chamber
Choice Plan f11
Single Famil
159.49 510.68
21.63 21.63
187.37
34 (2) 13
hensive
C C
ehensive nsive
Com o-pay Pay
O 1 1 1
~ I I p
I ~
I I I I 9.tH1
I
0 OO 0.~ 0 OO O.OO
N 0. 0.OO 0.00 0.OO 10%; 500tyr m
(1) Tha Medics Chamber plan offers a three year contrail with mawmum rate increases of six percent per year.
The rates stated are worst case; rates will be determined based an heaNh history information.
These are average rates; like the union contract, the rates change each Time a dependent is added cr deleted.
All rates under this plan are age based.
The Premier Plan requires selection of a primary physician within the network. The Choice Plan allows use of any network physician.
(2) Two of the 33 eligible waive coverage. Does not include Zoning Assistant
6/2/96 H~S.XLS • •
JULY 1, 1995, HEALTH INSURANCE BIDS
Non-Union Employees
INSURANCE COMPANY IN E FAMILY IN L FAMILY
•
American Medical Security 181.81 522.84 s 303.62 873.14
35 copay;S100 ded hosp
90/10 lab, xray, surg, anest.
Modica Chamber Premier 93.74 300.27 156.54 501.45
510 copay; must select clinic
max 6.5% renewal increase
Modica Chamber Choice 95.50 305.92 159.49 510.88
S10 copay; 90/10 hospital to
5500 max; any network clinic
max 6.5% renewal increase
Modica Choice Select 100.36 321.48: 167.60 536.87
no copay; no deductible
Blue Cross & Blue Shield 101.07 316.18 168.79 528.02
Group Health 143.33 453.57 .
S10 copay
31.87% rate reduction for 8/1
renewal
• -rates stated are estimates-
Fortis
did not quote; said they are
not competitive in this market
PI EP
would still be subject to 49%
renewal increase with no out
If Group Health rates are as
stated above, employees
with family coverage would
pay S93/pay period; a decrease
of S50/pay period.
•
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6/5/95 HLTHINS.XLS 6.5.95 Bids