HomeMy WebLinkAboutItem 06.iNovember 16, 2011
Proposed Action
Overview
Council Approval of Resolution Authorizing
Employee Health Insurance Rates for 2012
Item No.
Staff recommends adoption of the following motion: Move to approve a resolution
authorizing employee health insurance rates for 2012.
Passage of this motion will result in the selection of Medica as the City's health
insurance provider and setting employee rates for 2012.
The City's health plan provider has been HealthPartners since 2006. For 2012,
HealthPartners proposed a premium increase of 23 %. The City sought proposals from
alternate providers. The Insurance Committee reviewed the proposals and as a result
is recommending that the City change to Medica.
Medica quoted a premium increase of 4% to the existing plans and is recommending
that we add additional plan choices that offer selected networks but provide a 6.4% rate
decrease. Medica is also offering a three -year rate guarantee along with a $50,000
wellness credit as long as the City continues to partner with Medica through 2014.
Staff recommends the Medica proposal because it provides lower cost options and
encourages better health choices. Medica's proposal should hold down healthcare
costs for the short and long term. The attached rates incent employees to select the
most cost effective plan and assist in employee wellness.
Primary Issues to Consider
• What process was used to obtain insurance quotes?
• Are there any new options being offered?
• How is the cost of the premiums determined?
• What is the financial impact by employee group?
Supporting Information
• Resolution Authorizing Employee Health Insurance Rates for 2012
•
urces Manager
Financial Impact: $28,143 Budgeted: YIN _Y Source: Various Funds
Related Documents (CIF, ERP, etc.):
Notes: _The estimated impact is for all employee groups and is subject to negotiation.
ANALYSIS OF PRIMARY ISSUES:
What process was used to obtain insurance quotes?
The City's insurance brokers, Financial Concepts Inc. (FCI), reviewed a utilization
analysis for the City's plan using claims from July 1, 2010 through June 30, 2011.
Based on the information gathered, they advised the city's insurance committee to
solicit bids in an effort to receive a better price.
Blue Cross and Blue Shield, HealthPartners, and Medica all quoted rates. The best
rates as well as the opportunity for healthcare management were offered by Medica.
Medica also offered the best rate cap guarantees including no more than 9% for the
2013 calendar year, and no more than 12% for the 2014 calendar year.
Are there any new options being offered?
More choices using specific networks:
Medica will offer choices that include a co -pay plan, a high deductibleNEBA plan and a
high deductible /HSA plan. Each plan will offer a choice of three networks. The
Passport network is an open network, the Elect and Essential networks use specific
providers.
Wellness:
2012 and 2013: Medica offers a wellness program entitled My Health Rewards. They
will reward employees and family members that are 18 or over for specific healthy
behaviors through cash incentives. Each eligible member can earn up to $135 in gift
cards.
Staff is recommending that we enhance this wellness opportunity by using funds
provided through Medica's wellness credit. We propose matching the gift cards for
employees.
2013: Medica offers an opportunity to reduce the 2014 rate cap by up to 6% by
providing biometric screenings and encouraging employees to get preventive
age/gender cancer screening in 2013. The value of the reduction in rates will depend
on the number of employees who participate in the program. Since preventive
coverage is paid at 100 %, these additional options can be completed at no cost to the
employee.
How is the cost of the premiums determined?
In the past, the City has paid 100% of the single premium and split the cost of the
increase or decrease of dependent coverage with the employee. The exception to this
cost sharing was with the open access co -pay plan. We discontinued providing
additional dollars towards this plan in 2006.
Medica's experience shows an ability to save money through network providers who
have agreed to deliver services to members for less than their usual fees. We are
therefore proposing rates that will incent employees to make better choices.
Group
Cost of Increase
Possible Decrease
Non -Union
$13,396
$(17,386)
LELS Sergeants
1,398
(2,059)
LELS Officers
7,154
(272)
Teamsters Public Works
6,195
(6,8761
TOTAL
$28,143
$(26,593)
We propose:
• Paying 100% of the single premiums and sharing the increase /decrease to those
plans that use specific providers.
• Paying limited dollars towards the high deductible plans that utilize open
networks.
• Paying no additional dollars towards the open network co-pay plan.
What is the financial impact by employee group?
If there is no employee migration to the plans using specific providers, we will see a
cost increase. If we are successful in convincing employees to switch, we could see an
overall decrease.
Since the rates must be negotiated with the union groups, the following is an estimate
based on the proposal. Any changes to this policy will be subject to the City Council's
final approval of the 2012 union contracts.
CITY OF LAKEVILLE
RESOLUTION NO,
RESOLUTION AUTHORIZING EMPLOYEE HEALTH
INSURANCE RATES FOR 2012
WHEREAS, the City Council will establish from time to time the insurance plans that
will be provided; and
WHEREAS, the City Council will establish the costs the City will pay for employee and
dependent coverage under City group hospital, medical and surgical insurance
programs; and
WHEREAS, the City Council chooses to promote employee wellness;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lakeville that
the following monthly cost responsibility be adopted for the Medica health insurance
plans effective January 1, 2012:
The 2012 VEBA and HSA funding will be deposited in two installments. The first six
months of funding will be deposited in January and the second six months of funding
will be deposited in July. Deposits for new employees will be prorated.
DATED this 21 day of November, 2011.
ATTEST:
Charlene Friedges, City Clerk
CITY OF LAKEVILLE
Mark Bellows, Mayor