HomeMy WebLinkAbout4.D.4. 2015 Employee Benefits Res. No. 7502 General Business 4. D. 4.
SHAKOPEE
TO: Mayor and City Council
Mark McNeill, City Administrator
FROM: Kris Wilson, Assistant City Administrator
DATE: 10/21/2014
SUBJECT: 2015 Employee Benefits --Res. No. 7502 (E)
Action Sought
The Council is asked to authorize the appropriate officials to enter into contracts with Delta Dental
for 2015 employee dental insurance and with Madison National Life for 2015-2016 employee life
and long-term disability insurance; to authorize the offering of a voluntary, employee-paid vision
insurance benefit for 2015 and to offer Resolution No. 7502, a resolution establishing the City of
Shakopee's contribution levels for employee insurance benefits for the year 2015, and move its
adoption.
BACKGROUND
In preparation for the annual Open Enrollment period during which all benefits-eligible City
employees make their benefit elections for the 2015 calendar year, Council is asked to provide
final approval of the City's benefit offerings and associated employer contributions.
State law requires public-sector employers to formally advertise for insurance services at least
once every five years. This provides the opportunity for any insurance company to submit a
proposed benefit plan and price quote and helps to ensure that the City, as an employer,
understands how its current benefit costs compare to alternatives in the market place. The City's
insurance broker and employee benefits consultant, Financial Concepts, Inc (FCI), manages the
Request for Proposals (RFP) necessary to comply with this state law. The City was due to go to
market for dental, life and long-term disability benefits this year, and so that process was
completed earlier this fall. The results are discussed below under the appropriate subheadings.
(The City is not due to go to market for health insurance until next year.)
Medical Insurance
Earlier this fall the City received an excellent renewal offer from Medica that will allow us
to provide the same medical insurance options to employees that they currently have but
with lower monthly premiums for 2015. This was outlined in a memo for the September 17
City Council meeting, at which time the Council authorized acceptance of the renewal offer
and continuation of the City's longstanding, percentage-based system of employer
contributions toward monthly health insurance premiums. Therefore the only remaining
action needed relative to employee health insurance for 2015 is to adopt the attached
Resolution, which formalizes the City's contributions toward both medical and dental
insurance in one action.
Dental Insurance
The City currently offers dental insurance through Delta Dental. Delta recently provided a
renewal offer and our RFP resulted in an additional four offers of coverage. The renewal
offer from Delta is for the exact same plans that we currently have and a continuation of our
existing monthly premiums (i.e. no rate increase.) The four alternative offers are compared
in Attachment A. While two of the alternate offers would provide for a rate decrease in
2014, our broker cautions that they would likely mean a significant change in the dentists
available to our employees, which is never popular. Additionally, neither of these two
alternatives are "pooled" products, which means that they could be subject to significant rate
swings in future years. The product we currently have from Delta Dental is a pooled
product, and as a result of pooling our business with that of numerous other employer
groups, the overall group rates have tended to change very modestly from year to year. (As
is evidenced by the fact that we would have no rate increase from 2014 to 2015.)
The longstanding City contribution toward monthly dental premiums has been an amount
equal to the cost of single coverage. Employees electing two-party or family coverage are
responsible for the cost difference.
Recommendation
I recommend that the City accept the renewal offer from Delta Dental and continue to set
the City's contribution rate at an amount equal to the cost of single coverage.
Life Insurance
The City currently provides $25,000 in life and $25,000 in accidental death insurance to all
benefits-eligible employees, with the City paying the full monthly premium. Employees
have the option to purchase additional coverage at their own cost. In addition to the City's
current provider, two alternate offers were received through the RFP process.
The current provider, Madison National Life, has offered to extend the current rates for an
additional two years with no increase in premiums and no change in benefits. The two
alternate offers both came in with higher monthly premiums for the same benefit.
Recommendation
I recommend that the City accept the two-year renewal offer from Madison National Life
for employee life and accidental death insurance.
Long-Term Disability Insurance
The City also provides long-term disability insurance to all benefits-eligible employees, and
covers the full cost of the monthly premium. Employees wishing to have short-term
disability insurance have the option to purchase policies at their own cost through AFLAC.
In addition to our current provider, one viable RFP response was received for long-term
disability insurance, and that price came in identical to the renewal offer received from the
current carrier. The current carrier, which is Madison National Life, has offered to renew
our existing policy for another two years (calendar year 2015 and 2016) with no rate
increase over what we are currently paying.
Recommendation
I recommend that the City accept the two-year renewal offer from Madison National Life
for employee long-term disability insurance.
Vision Insurance
The City does not currently offer vision insurance, however it is a somewhat common
benefit offering among employers our size and larger. The City's insurance broker obtained
three proposals for vision insurance plans that would be completely voluntary and at the
employee's own cost. The plans require that a minimum of ten employees sign-up for the
insurance in order for the City to offer it, so it would be outlined to employees during Open
Enrollment as an option that is conditional upon reaching the required minimum enrollment.
There would be no cost to the City other than the modest administrative cost of setting up
payroll withholdings and then transmitting those withholdings to the insurance company on
a monthly basis. It would, however, be a benefit to our employees as they may save money
on vision-related expenses for themselves and their family members by having the
insurance. And by having it through the City, they enjoy the shared risk of being part of a
group plan and the ability to pay the premiums with pre-tax dollars.
Recommendation
I recommend that the City offer vision insurance from EyeMed as an optional,
employee-funded benefit for 2015, contingent upon there being enough interest to meet the
required minimum enrollment. Of the three proposals obtained by our broker, EyeMed is
recommended because it has competitive benefits, the lowest monthly premiums and the
most diverse mix of in-network providers. Assuming we reach the required minimum
enrollment to offer the plan, EyeMed will provide a rate guarantee through 2018.
Budget Impact
With the City's health insurance rates going down, and the cost of dental, life and long-term
disability remaining steady; the City and its employees will experience a savings in employee
insurance costs for 2015.
Relationship to Vision
Providing a competitive package of employee benefits helps attract and retain well-qualified
employees, thereby contributing to Goal E: Deliver effective and efficient public services by a
staff of well-trained, caring and professional employees.
Requested Action
The Council is asked to authorize the appropriate officials to enter into contracts with Delta Dental
for 2015 employee dental insurance and with Madison National Life for 2015-2016 employee life
and long-term disability insurance; to authorize the offering of a voluntary, employee-paid vision
insurance benefit from EyeMed and to offer Resolution No. 7502, a resolution establishing the
City of Shakopee's contribution levels for employee insurance benefits for the year 2015, and
move its adoption.
Attachments: Attachment A: Comparison of Dental Options
Resolution No. 7502
ATTACHMENT A
Summary Comparison of 2015 Dental Insurance Options
Delta Dental Assurant MetLife HealthPartners Principal
(current provider)
$40.40 $35.39 $34.12 $42.50 $40.99
Monthly Premiums
(Single/2-Party/Family) $86.00 $68.98 $69.44 $90.47 $79.01
$122.75 $115.89 $118.57 $129.13 $129.09
Annual Deductible for In-
No Yes Yes No No
Network Services?
Maximum Benefit the
Insurance Will Pay in a $2,000 $1,500 $2,000 $2,000 $2,000
Calendar Year
Pooled Product? Yes No No No No
Recommendation: Accept renewal offer from current provider, Delta Dental
Dental Rates & Contributions for 2015
Total Monthly City Employee
Premium Contribution Responsibility
Single $40.40 $40.40 $0.00
Two-Party $86.00 $40.40 $45.60
Family $122.75 $40.40 $82.35
RESOLUTION NO. 7502
A RESOLUTION ESTABLISHING THE CITY OF SHAKOPEE'S CONTRIBUTION
LEVELS FOR EMPLOYEE INSURANCE BENEFITS FOR THE YEAR 2015
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE,MINNESOTA
that the City's contribution toward group medical and dental insurance for qualified, full-time
employees shall be:
Single Coverage 2-Party Coverage Family Coverage
Traditional Plan $520.54 per mo. $916.15 per mo. $1203.47 per mo.
High Deductible Plan $460.91 per mo. $811.19 per mo. $1065.60 per mo.
HSA Contribution $750.00 per year $1500.00 per year $1500.00 per year
Dental $40.40 per month $40.40 per month $40.40 per month
For individuals actively employed by the City on January 1,2015 and subscribing to the High
Deductible Insurance Plan offered by the City,the City's Health Savings Account(HSA)
contribution shall be made in one lump sum on or about January 15, 2015. For employees hired
after January 1, as well as those that change their insurance selections mid-year due to a
qualifying event,the City contribution shall be pro-rated by month and deposited at the time the
employee becomes eligible for insurance or upon the effective date of the change.
The City's contribution for eligible part-time employees shall be pro-rated based on the above
contribution levels and the number of hours per week worked.
BE IT FURTHER RESOLVED that all Resolutions in conflict with this resolution are
hereby repealed and terminated effective January 1,2015.
Adopted in adjourned regular session of the City of Shakopee,Minnesota held this 21st
day of October,2014.
Mayor of the City of Shakopee
ATTEST:
City Clerk