HomeMy WebLinkAbout#10 - 2019 Health InsuranceSTAFF REPORT
DATE: October 16, 2018
ITEM #: 10
TO: Mayor and Council AGENDA ITEM 2019 Insurance Renewals SUBMITTED BY: Jake Foster, Assistant City Administrator
BACKGROUND: At their Oct. 1, 2018 meeting, the Human Resources Committee recommended that Council approve the
insurance renewals for 2019, as proposed by staff. Staff met with the City’s insurance broker Andy
Weitnauer from NFP to discuss these insurance renewals and provide a proposal to the Human Resources
Committee. In addition to the health insurance renewal, staff requested quotes for disability and life
insurances, as well as dental.
The open enrollment meeting for employees is scheduled for October 23.
ISSUE BEFORE COMMITTEE: Should Council approve the insurance renewals as recommended by Human Resources Committee? PROPOSAL: Human Resources Committee recommended that Council approve PEIP’s renewal proposal for health insurance, Delta Dental’s renewal proposal for dental insurance, and move the City’s disability and life insurance policies to Ochs based on their proposal. The renewal rates for the 2019 PEIP health plans average to be a 4.01% decrease from 2018 without any policy changes. Clinic levels will be provided before the open enrollment period for employees this fall.
In addition to the renewal proposal received from Delta Dental, staff received an additional proposal from PEIP. Delta Dental’s provided a proposal that would keep the premiums and policy the same as 2018.
PEIPs proposal provided a slight cost savings on premiums, but also a significant reduction in benefit. Employees’ maximum annual benefit would be cut in half from $2,000 to $1,000 under PEIP’s proposal. The City would only save approximately $9 each month per employee electing family coverage, and
actually pay an additional $.81 per employee electing single coverage. Additionally, the family +1 benefit tier is lost under the PEIP plan. Due to the reduction in benefit, staff does not believe that the cost savings seen in the dental premiums for employees electing family coverage is significant enough to warrant a change. In addition to the renewal proposal from Reliance Standard for life and disability insurance coverage, staff received proposals from PEIP for life insurance, and Ochs for life and disability. PEIP’s proposal for life insurance and accidental death and dismemberment was approximately 10% lower than Reliance’s renewal proposal. PEIP does not offer disability coverage. The proposal for Ochs provided a 45% savings on life insurance premiums and a 35.85% savings on long term disability insurance, but a 12.73% increase on short term disability. Overall, there would still be a cost savings to the City. There are additional benefits that
the City would receive by switching to Ochs. The services the City would have access to are additional legal, financial, and grief resources, as well as plan portability if an employee were to leave, but would like to continue coverage. Ochs would also provide the opportunity to consolidate the supplemental life
insurance policy from a carrier that has been problematic in working with. The policy would be comparable
in both cost and features. As there is a more significant cost savings with Ochs, additional benefits, and provide the opportunity to consolidate the City’s supplemental life insurance policy, staff recommends switch these coverages to Ochs.
The City’s insurance broker also reached out to Reliance Standard to see if they are able to match or provide a more competitive proposal to the proposal received from Ochs. Based on recent claims, Reliance Standard
refused to adjust their proposal. FISCAL IMPACT: The 4.01% average decrease in premiums from PEIP would equate to an approximate annual savings of $5,400 if employee elections remained constant. The City will see no cost change in renewing their dental insurance with Delta Dental. When combining the cost savings for life and long term disability, with the increased premiums for short term disability in the Ochs offering, the City would see an annual cost savings of approximately $1,700 by switching to Ochs for these polices. The City does not anticipate any changes for employees electing the
supplemental life policy. OPTIONS: 1) Approve Resolution No. 2018-117 2) Amend and approve Resolution No. 2018-117 3) Make no approval.
RECOMMENDATION:
“Move to approve Resolution No. 2018-117” ATTACHMENTS: 1) 2019 renewal comparison documents 2) 2019 PEIP renewal letter 3) Resolution No. 2018-117
CITY OF LAKE ELMO WASHINGTON COUNTY
STATE OF MINNESOTA RESOLUTION NO. 2018-117 A RESOLUTION APPROVING THE 2019 BASIC LIFE, ACCIDENTAL DEATH AND
DISMEMBERMENT, DISABILITY, AND SUPPLEMENTAL LIFE INSURANCE PLANS, AND
HEALTH CARE PLAN ESTABLISHING CITY CONTRIBUTION TO EMPLOYEE HEALTH INSURANCE BENEFITS FOR 2019
WHEREAS, the Lake Elmo City Council has determined that it is the best interest of the
City to approve the proposal from Ochs to administer the City’s Basic life, accidental death and dismemberment, disability insurance, and supplemental life insurance plans; and
WHEREAS, the Lake Elmo City Council has determined it is in the best interest of the
City to consolidate these plans and lower the cost of premiums; and 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 1/1/2019 to 12/31/2019;
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 2019 basic life, accidental death and dismemberment, disability, and supplemental life insurance policies as proposed by Ochs, and the PEIP Advantage Plan for the period of 1/1/18 to 12/31/18; and
FURTHER BE IT RESOLVED, that for calendar year 2019, 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 __________, 2018.
_____________________________ Mike Pearson, Mayor ATTEST:
___________________________ Julie Johnson, City Clerk