01-09-2019 Council Packet - Laserfiche WebLink

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STAFF REPORT TO: Mayor Keis and Members of City Council FROM: Chris Heineman, City Administrator Heidi Heller, City Clerk DATE: January 9, 2018 RE: 2019 Employee Health Insurance Policy & Benefits BACKGROUND: Staff provided a summary of employee health insurance options at the City Council workshop on November 28th, 2018. Council members were informed of the City’s current insurance provider (Health Partners) proposed 10.68% increase for 2019, which was under the estimated increase of 15% included in the preliminary budget. Council members were also informed that staff had been exploring another health insurance option that would be a decrease of 32.92% from 2018 through the Minnesota Public Employees Insurance Program (PEIP). PEIP is a self-funded trust plan administered by the State of Minnesota that leverages the state’s public employees to create a unique plan that offers reduced cost and flexibility. The PEIP plan is available to employees of Minnesota's cities, townships, counties, school districts and other units of local government and the insurance pool currently includes over 150 cities and counties as well as 130 schools. Over the last nine annual renewals, PEIP has averaged a 2.4% annual increase in premiums which is substantially lower than the private insurance market. Due to how late in the year this information was provided, staff recommended acceptance of the Health Partners renewal for employee health insurance in January and February until additional information could be provided to employees. An all-employee informational meeting was held on Tuesday, December 18th where representatives from PEIP/Innovo Benefits Administration provided details of the PEIP insurance plan. The representatives were able to answer several questions, and no major concerns have been raised by employees since this meeting. Staff is recommending that the City transition to the Minnesota Public Employees Insurance Program (PEIP) starting on March 1, 2019 with a two-year commitment. As previously stated, the PEIP plan would be a 32.92% decrease from our 2018 Health Partners plan rate. This will result in a total premium savings for the City of approximately $40,000 for 2019. This annual savings of $40,000 already incorporates an increase in the HSA contribution for employees. The City currently provides an HSA contribution of $2,000 per full-time employee that is enrolled in the City’s health insurance plan. These funds are deposited into an HSA account and can be used for medical costs towards a deductible. Staff is recommending that this contribution be increased to $3,000 per year due to the higher employee total out-of-pocket costs.