HomeMy WebLinkAboutItem 08November 4 2013 0 Item No.
Council Approval of Resolution Authorizing
Employee Health Insurance Rates for 2014
Proposed Action
Staff recommends adoption of the following motion: Move to 9P12rove a resolution authorizm
employee health insurance rates for 2014.
Passage of this motion will provide health insurance to employees through Medica with new
employer and employee contribution rates.
Overview
The City has contracted with Medica for health insurance since 2012. The contract includes a
rate cap of 12% for 2014 assuming completion of certain wellness benchmarks and no plan
modifications. The City was successful in achieving the 12% cap. An additional 3.7% is added to
the rates due to taxes and fees required by the Affordable Care Act making the total premium
increase 15.7%.
The Employee Insurance Committee has proposed an alternative plan design which results in a
lower premium increase. The proposed plan design achieves an average increase of 9%, including
the ACA taxes and fees. The City's Personnel Committee is recommending approval of the
proposed plan.
Primary Issues to Consider
• What are the plan changes?
• How is the cost share determined?
• What is the employee wellness program?
• What is the estimated financial impact?
Sugporting Information
• Resolution Authorizing Employee Health Insurance Rates for 2014
Cindi joosten, uman Resources Manager
Financial Impact: $109,962 Budgeted: Y/N Y_ Source: Various Funds_
Related Documents (CIP, ERP, etc.):
ANALYSIS OF PRIMARY ISSUES:
What are the plan changes?
The Employee Insurance Committee reviewed reports that indicate how City employees and
their families are spending their health care dollars. Financial Concepts Inc. (FCI) provided
options that included higher co -pays, higher deductibles, and a co- insurance that will apply after
the initial deductible is met. Based on the options provided and the impact of associated costs,
plan modifications were considered. The following chart indicates the recommended plan design
changes:
•'• Prescription Drugs
➢ Increase from $12G (generic), $12F (formulary), and $27NF (non- formulary) to
$15Gf $30F1$60NF.
❖ Annual Deductibles
➢ HRAlVEBA deductibles will increase from $2,000 per person and $3,000 per family to
$2,500 per person and $5,000 per family.
➢ H.S.A. deductibles will remain at $2,500 per person but will increase from $3,750 per
family to $5,000 per family.
•'• Co- insurance
➢ Expenses for non - routine care for both the HRAIVEBA and H.S.A. plans will now
require an 80120 co- insurance once the deductible has been met. The plan will pay 80%
of the cost; the employee will pay 20% until the out -of- pocket maximum is met.
:• Annual Out-of-pocket Max
HRAIVEBA maximums will increase from $2,000 per person and $3,000 per family to
$3,500 per person and $6,000 per family.
H.S.A. maximums will increase from $2,500 per person and $3,750 per family to $3,500
per person and $6,000 per family.
How is the cost share deterred ned?
The proposed rates and cost share are proposed to:
1. Encourage employees to choose the high- deductible plans.
2. Encourage employees to choose the defined network plans rather than the open network
plans.
3. Provide a method to simplify the employees' choices.
To do this, we have proposed that the employer pays the same dollars, depending on coverage
tier, to all of the plans, with the exception of the open network co -pay plan for which we
discontinued providing additional dollars to in 2009. We also continue our previous philosophy
of paying up to 100% of the single coverage for the corresponding defined network plan.
What is the employee wellness program?
Medica offers a wellness program entitled My Health Rewards. The goal of the program is to
reward employees and family members to continue healthy behaviors by providing cash
incentives to eligible members 18 years or older. To assist the City in promoting this program,
Medica provided us with $50,000 to be used towards wellness.
For 2013, employees were able to receive a matching gift card of up to $135.00 for the completion
of the following activities:
o Health assessment
• Reviewing on -line health topics
• Completing appropriate coaching as recommended by Medica
In addition to the above activities, employees were encouraged to complete a Medica scorecard.
Factors for completing the scorecard included biometric screenings and completion of the
appropriate cancer screenings based on age and gender. Over 33% of our employees completed
their scorecards as of September 30.
For 2014, we will continue this program and additionally work towards enhancing the wellness
program to encourage greater participation.
What is the estimated financial impact?
The City has not yet achieved agreement with our unions. The following estimate assumes the
proposed rates for all employees and does not take into consideration migration between the
plans.
Source
Financial Impact
General Fund
$109,962.00
Storm Water Fund
973.00
Utilities Fund
15,291.00
Liquor Fund
I 8,736.0
TOTAL Est. Increase 1 $134,962.00
Staff had estimated a General Fund increase of $149,705 and included this amount in the
preliminary 2014 budget. Based on the current employee census, this General Fund expense is
proposed to be $109,962; or a decrease of $39,743.00.
CITY OF LAKEVILLE
RESOLUTION NO.
RESOLUTION AUTHORIZING EMPLOYEE HEALTH
INSURANCE RATES FOR 2014
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, 2014:
High deductible /VEBA - Passport network
MONTHLY PREMIUM COSTS
Employee
Employee
Employer
Total Prcmium VEBA /HSA Funds
Co -pay -Passport network
EE + Child(ren)
446.05
594.80
1040.85
Employee
EE + Spouse
336.31
371.51
707.82
EE + Child(ren)
Family
895.29
532.80
1428.09
EE + Spouse
948.03
563.66
1511.69
Family
1169.52
696.01
1865.53
Co -pay - Elect or Essential network
Employee
12.74
624.30
637.04
EE + Child(ren)
505.48
779.80
1285.28
EE + Spouse
540.05
820.47
1360.52
Family
666.32
1012.66
1678.98
High deductible /VEBA - Passport network
Employee
51.59
464.30
515.89
160.00
EE + Child(ren)
446.05
594.80
1040.85
185.00
EE + Spouse
466.31
635.47
1101.78
185.00
Family
552.01
807.66
1359.67
205.00
High Derlucti&le/HSA - Passport network
MONTHLY PREMIUM COSTS
Employee
Employee 45.58
Employee
Employer
Total Premium
VEBAIHSA Funds
High Deductible /VEBA - Elect or Essential network
919.69
185.00
Employee
.00
464.30
464.30
160.00
EE + Child(ren)
341.97
594.80
936.77
185.00
EE + Spouse
356.13
635.47
991.60
185.00
Family
416.04
807.66
1223.70
205.00
High Derlucti&le/HSA - Passport network
Employee
Employee 45.58
410.25
455.83
160.00
EE + Child(ren) 324.89
594.80
919.69
185.00
EE + Spouse 338.05
635.47
973.52
185.00
Family 393.74
807.66
1201.40
205.00
High Deductible /HSA - Elect or Essential network
Employee
.00
410.25
410.25
160.00
EE + Child(ren)
232.92
594.80
827.72
185.00
EE + Spouse
240.70
635.47
876.17
185.00
Family
273.60
807.66
1081.26
205.00
Wellness
Employee only Employer match of Medica wellness gift cards up to $135.
The 2014 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 4th day of November, 2013.
CITY OF LAKEVILLE
Matt Little, Mayor
ATTEST:
Charlene Friedges, City Clerk