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Home My WebLink About11-14-17 City Council Special Meeting NOTICE OF MEETING City Council Special Meeting 3800 Laverne Avenue North Tuesday, November 14, 2017 6:00 p.m. I. Call to Order 6:00 p.m. II. 2018 Health Insurance Plan and Rates III. Adjourn 6:25 p.m. Our Mission is to Provide Quality Public Services in a Fiscally Responsible Manner While Preserving the City’s Open Space Character STAFF REPORT DATE: November 14, 2017 REGULAR ITEM #: TO: Mayor and City Council FROM: Jake Foster, Assistant City Administrator AGENDA ITEM: 2018 Health Insurance Plan and Rates BACKGROUND: Staff was presented with a renewal rate from the Southwest West Central Service Cooperative corresponding with a 20.9% increase in health insurance premiums. This increase prompted staff to have the City’s insurance broker (NFP) gather quotes for 2018 employer/employee health insurance coverage from outside cooperatives, directly from providers, and through other benefits administration organizations. The quotes provided by Minnesota Public Employees Insurance Program (PEIP)/Innovo Benefits Administration presented the greatest cost reduction to the City as well as staff. For additional flexibility to staff, PEIP also offered three different plans with varying costs. ISSUE FOR DISCUSSION: Should the City switch to Minnesota Public Employees Insurance Program’s (PEIP) Advantage Plan, and what percentage of the health insurance premium should be covered by the employer for each plan in 2018? PROPOSAL DETAILS/ANALYSIS: The PEIP Advantage Health Plan bases their coverage on four tiers or cost levels. Employees must select an insurance provider, and their primary care clinic. The cost level is then determined based on the provider and primary care clinics they select. Most clinics fall into the cost level two category, and analysis was done based on that assumption. A cost level two clinic in the PEIP Advantage Plan has a $250 deductable for single coverage, and a $500 deductable for family coverage, compared to the $0 deductable with the City’s current plan. The copay at the cost level two clinic in the PEIP Advantage Plan is $30 compared to the $25 copay. The out-of- pocket maximums for medical the PEIP Advantage Plan is $1,200 for single and $2,400 at a level two clinic, and $800/$1,600 for prescriptions respectively. The out-of-pocket medical maxes for the City’s current plan, and proposed renewal, are $1,500 per person, $750 for single prescription and $1,500 for family. Last year, the HR Committee recommended that the City cover 90% of the premium for single coverage and 80% for family coverage. As the PEIP Advantage Plan is most similar to the current offering for employee health insurance, staff recommends these percentages are also used for the PEIP Advantage Plan. Under the PEIP Advantage Health Plan, employees will see annual savings of approximately $190 for single coverage, and $300 for family coverage. The PEIP Value Plan Option is also a traditional health insurance plan, but the cost structure is slightly different than the PEIP Advantage Health Plan. The cost level clinic formula remains the same. The premiums for the Value Plan Option are lower than that of the Advantage Health Plan, but the single/family deductibles for the Value Plan are $700/$1,400 with a $35 copay per clinic visit with annual deductibles applying, at cost level 2 clinics. The out-of-pocket maxes for single and family coverage are $2,200/$4,400 for medical and $1,000/$2,000 for prescriptions. The PEIP HSA Compatible Option also follows the clinic cost level formula as the other two plans. For cost level 2 clinics, the deductibles are $2,000 for single coverage or $3,200 per family member/$4,000 per family. The copay per clinic visit is $50 with the annual deductible applying at a cost level 2 clinic. The out-of-pocket maximums are $3,000 for single coverage and $5,000 per family member/$6,000 per family. There are no maximums for prescriptions in this plan. As the coverage costs are higher than those with the Advantage Health Plan and the Value Plan Option, premiums under the HSA Compatible Option are lower than both of the aforementioned health plans. Staff recommends that Council adopt Resolution 2017-122 approving the PEIP insurance offering, and a 90% City premium contribution for single/employee coverage and an 80% City premium contribution for family coverage for the PEIP Advantage Health Plan, 100%/90% contribution levels for the PEIP Value Plan Option for single/family coverage respectively, and 100%/95% contributions for premiums plus $100/$200 contributions to HSAs for single and family coverage under the PEIP HSA Compatible Plan Option. These contribution levels were determined as such to keep the City’s cost levels most consistent throughout the plan options. FISCAL IMPACT: The City will save approximately $33,000 across all funds by opting to approve the PEIP health insurance offering in place of the SWCSC renewal, and choosing to adopt the 90% City contribution for employee coverage, and 80% City contribution for employee family coverage policy as proposed by the HR Committee for the PEIP Advantage Health Plan, 100%/90% contribution levels for the PEIP Value Plan Option for single/family coverage respectively, and 100%/95% contributions for premiums plus $100/$200 contributions to HSAs for single and family coverage under the PEIP HSA Compatible Plan Option. Of this amount about $30,000 will be reduced in the general fund budget and the remainder from the utility funds in 2018. If approved, staff will update the 2018 budget documents before final adoption. This would result in the proposed tax levy increase declining from approximately 22.911% to 21.870% and the tax rate declining from 22.602% to 22.411%. This change saves the median value home roughly $7.00. OPTIONS: 1) Adopt Resolution 2017-122 to approve the PEIP health insurance offering and the HRCommittee’s recommendation for City contributions to the PEIP Advantage Health Plan, 100%/90% contribution levels for the PEIP Value Plan Option for single/family coveragerespectively, and 100%/95% contributions for premiums plus $100/$200 contributions to HSAsfor single and family coverage under the PEIP HAS Compatible Plan Option. 2) Amend and then Adopt Resolution 2016-108 RECOMMENDATION: “Motion to adopt Resolution 2017-122 Attachments: 1) Resolution 2017-222) Step by Step Instructions for Enrollment in the Public Employees Insurance Program AdvantagePlan3)PEIP Benefit Summaries CITY OF LAKE ELMO WASHINGTON COUNTY STATE OF MINNESOTA RESOLUTION NO. 2017-122 A RESOLUTION APPROVING HEALTH CARE PLAN AND ESTABLISHING CITY CONTRIBUTION TO EMPLOYEE HEALTH INSURANCE BENEFITS FOR 2018 WHEREAS, the Lake Elmo City Council has determined that it is the best interest of the City to provide a health insurance plan to help maintain the health of its current employees and to enable the city to attract and retain a quality workforce; and WHEREAS, it is now necessary to determine the insurance plan and contributions to premium costs for the period from 1/1/2018 to 12/31/2018; NOW, THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF THE CITY OF LAKE ELMO, WASHINGTON COUNTY, MINNESOTA, that it should and hereby does approve the PEIP Advantage Plan for the period of 1/1/18 to 12/31/18; and FURTHER BE IT RESOLVED, that for calendar year 2018, the City of Lake Elmo’s contribution to the total cost of providing health insurance benefits shall be as follows: Advantage Plan: 90% of premium for single coverage and 80% of premium for family coverage. Value Option: 100% of premium for single coverage and 90% of premium for family coverage HSA Compatible: 100% of premium for single coverage and $100/month to HSA; 95% of premium for family coverage and $200/month to HSA. This resolution was adopted by the City Council of the City of Lake Elmo on this ____ day of __________, 2017. _____________________________ Mike Pearson, Mayor ATTEST: ___________________________ Julie Johnson, City Clerk