HomeMy WebLinkAbout3.B. 2004 Health Insurance Cost
3.b.\.
CITY OF SHAKOPEE
Memorandum
TO: Mayor and City Council
FROM: Mark McNeill, City Administrator
SUBJECT: 2004 Health Insurance Cost - 3.B.1.
DATE: November 19, 2003
Attached is a page showing 2003 health insurance costs for City employees, and the
proposed 2004 renewal from Medica. As shown, the increase is approximately 12.9%.
While double digit, it is in line with I am informed is the national average of 13% to 14%.
I am also pleased to report that the City was able to reduce the initial quote from Medica
from 18.8%, to that 12.9%.
As you are aware, health insurance costs continue to present a huge problem for
employers and employees alike. We will continue to look to find ways to reduce the
City's costs. However, I am very pleased to report that, at least while comparing the City
of Shakopee to other mid-sized cities in the metropolitan area (from 10,000 to 50,000
population), in three years Shakopee has gone from the highest premium being paid for
employee health insurance, to a place where it now ranks at number 38 out ofthose 47
cities.
This has been accomplished through a combination of factors: change of health
insurance carriers, cooperation on the part of union and non-contract employees in
agreeing to be treated equally regarding health insurance options, better decisions on the
part of individual uses of health care services, and luck. (Regarding the "luck" part of it,
I refer to the fact that, with a relatively small work force that is covered, a single
catastrophic illness can wreak havoc on premiums.)
RECOMMENDATION:
I recommend that the City renew the existing plans with Medica for 2004.
U1~l;,~
Mark McNeill
City Administrator
CC: Mayor-Elect Schmitt
Council-Elect Menden
Marilyn Remer
Gregg V oxland
EFF 1-1-04 MEDICA ~ EFF 1-1-03 MEDICA
MCS300 87545 SINGLE 2-PARTY FAMIL Y ~ MCS300 87545 SINGLE 2-PARTY FAMILY
MCS300 ($300/$600) $ 287.74 $ 575.49 $ 917.58 ~MCS300 ($300/$600) $ 254.87 $ 509.75 $ 812.77
CITY CONTRIBUTION $ 287.74 100% $ 506.43 88% $ 665.24 72.5% ~ CITY CONTRIBUTION $ 254.87 $ 448.58 $ 589.26
EEMONTHLYCOST $ - $- $ 69.06 12% $ 252.33 27.5%~EEMONTHLYCOST $ - $ 61.17 $ 223.51
PAYROLL $ 34.53 $ 126.17 ~ PAYROLL $ 30.59 $ 111.76
~///////////////////////////////////////////////////////////////////////////////////////////////~////////////////////////////////////////////////////////////h
MCS787543 SINGLE 2-PARTY FAMIL Y ~ MCS7 87543 SINGLE 2-PARTY FAMILY
MCS7 $15copaywhite book $ 337.42 $ 674.85 $1,076.02 ~MCS7$15copaywhitel $ 298.88 $ 597.76 $ 953.11
CITY CONTRIBUTION $ 337.42 100% $ 593.87 88% $ 780.12 72.5% ~ CITY CONTRIBUTION $ 298.88 $ 526.03 $ 691.00
EEMONTHLYCOST $ - $ 80.98 12% $ 295.91 27.5%~EEMONTHLYCOST $ - $ 71.73 $ 262.11
PAYROLL $ 40.49 $ 147.95 ~ PAYROLL $ 35.87 $ 131.05
W$ffff//ff/ff//////ff//////ffffffff/$/$////'@@,.fi0I'/ffff/ffff/ffff/ffff////ff/////ff/~////////////ff///ffff////////////'@////////ff//ff//ff/ffff~
ME787544 SINGLE 2-PARTY FAMILY ~ME7 87544 SINGLE 2-PARTY FAMILY
ME7 $15 copay small network $ 303.68 $ 607.36 $ 968.43 ~ME7 $15 copay small nl $ 268.99 $ 537.98 $ 857.80
CITY CONTRIBUTION $ 303.68 100% $ 534.47 88% $ 702.11 72.5%~CITYCONTRIBUTION $ 268.99 $ 473.42 $ 621.91
EE MONTHLY COST $ - $ 72.88 12% $ 266.32 27 .5% ~ EE MONTHLY COST $ - $ 64.56 $ 235.90
PAYROLL $ 36.44 $ 133.16 ~ PAYROLL $ 32.28 $ 117.95
For Full-time Employees
2004@12.895%
* ~,bi} ~~
CITY OF SHAKOPEE
Memorandum
TO: Mayor and City Council
Mayor-Elect John Schmitt and City Council-Elect Steve Menden
FROM: Mark McNeill, City Administrator
SUBJECT: Health Insurance/Cost of Living Adjustments - FY 2004
DATE: November 17, 2003
INTRODUCTION:
One of the issues which will need to be discussed at the budget workshop meeting of
November 19th is employee benefits in the form of health insurance, and cost ofliving
adjustments.
BACKGROUND:
By practice, the City has provided health insurance coverage for its employees. A couple
of years ago, we were able to negotiate into each of the three union contracts (Public
Works, Police Patrol, and Police Sergeants) a clause in which all employees would be
treated the same on insurance. Recently, the City has provided the following insurance
benefits:
Employer Share Employee Share
Single Coverage 100% 0%
Two Party 88% 12%
Family 72.5% 27.5%
For the most popular plan, the 2003 rates have been as follows:
MCS 7 Plan Single Coverage Two Party Familv
City Contribution $298.88 $526.03 $691.00 (max.)
Employee Monthly Cost $0 $71. 73 $261.11
There are two other plans, which have variables regarding co-pays, but more than half of
the employees take the MCS 7 Plan.
We were recently notified that the 2004 renewal rate was to have increased by 15.2%;
however, through further negotiations, that has been reduced to a 13% increase. The
13% is consistent with the national trend percentage. Prior to 2002, the City's health
provider was Blue Cross. After several years of double digit increases the City changed
to Medica in January, 2002. The 2002 rates reflected no increase over BCBS's 2001
rates. In 2003, the City actually received a decrease of 4.6%. From recent surveys, the
City of Shakopee has gone from the highest premium payment for employee health
insurance three years ago, to one that is, while still high, surpassed by a few other cities
now.
We want to discuss this with the Council as part of its budget meeting.
Cost of Living Adiustments.;
Each percentage increase that the City grants for its non-contract, and union employees,
amounts to approximately $55,000 per percent. Money is provided in the contingency
part ofthe FY 04 budget for both cost ofliving adjustments and insurance contributions.
We want to discuss both of these as part of the budget workshop Wednesday evening.
\lr\~ ~c U~
Mark McNeill
City Administrator
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