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Home My WebLink About13.E.1. 2010 Employee Medical and Dental Insurance-Res. No. 6953 /3. E.I, City of Shakopee Memorandum TO: Mayor and City Council Mark McNeill, City Administrator FROM: Kris Wilson, Assistant City Administrato~ SUBJECT: 2010 Employee Medical and Dental Insurance DATE: October 15,2009 Introduction The City Council is asked to consider renewal offers received from both Medica and Delta Dental for the City's 2010 medical and dental insurance and to adopt the City's contribution rates for 2010. Background Medical Insurance Facing a very large increase in monthly premiums last fall, the City sought proposals from other insurers with disappointing results - few even bid on our business and the one that did was unwilling to offer us the same policy that we currently had. Entering this year's renewal process, with the advice of our new broker - Financial Concepts Inc. (FCI), we decided to see what Medica would offer us before going out for bid. The result was significantly better than last year. Medica is offering to renew our existing plans for an average premium increase of 7%. Interestingly, for the first time this year, Medica is applying different percentage increases to our different plans - based on the claims experience in each. The traditional plan with the small network is receiving the smallest increase - 5.3%, while the traditional plan with the large network is receiving the largest increase - 10.0%. In the middle are the high deductible plan with the small network at 6.2% and the high deductible plan with the large network at 8.5%. The only change in the plan design or benefits is that the annual out-of-pocket maximum on the traditional plan is increasing from $2,500 to $2,750 per person and from $5,000 to $5,500 per family. This is a change being mandated by Medica - not something sought by the City. Additionally, Medica is making some minor tweaks to both plans to bring them into compliance with the federal mental health parity act. The attached table lists our current premium amounts and the new premium amounts for all 4 plans offered. Dental Insurance After many years with no changes to our supplemental insurance, the City did seek bids from competing insurance providers for dental, life and long-term disability insurance. In addition to a renewal offer from Delta Dental, we received five proposals for dental insurance. The renewal offer from Delta was a 2% increase in the monthly premium. This equals 70 cents per month more for single, $1.50 for 2-Party and $2.15 for family coverage. Several ofthe competing proposals would offer monthly premiums that are lower than what we are currently paying, but they do not offer comparable benefits. For example, while medical insurance typically has an out-of-pocket maximum that a subscriber will have to spend in a year, dental insurance has a maximum annual benefit - which caps the amount the insurance company will payout for the year. Our current plans have a maximum annual benefit of $2,000, whereas several of the competing proposals have a maximum of only $1,000. Others cover a smaller percentage of the cost for certain services, one would eliminate all coverage for orthodontics and many have notably smaller networks of dentists. Lastly, our current dental insurance with Delta Dental is purchased through a pool. which moderates any swings in claims history from year to year and protects us from large or unexpected changes in our premiums. Switching to one of the competing proposals would require us to purchase as a single employer rather than as part of a pool. As a result of all of these factors, staff recommends that the City accept the renewal offer from Delta Dental and continue to offer our existing two dental plans. City Contribution Levels For many years, the City has paid 100 percent of the monthly premium for employees selecting single medical coverage, 88 percent for 2-party coverage and 72.5 percent for family coverage. For dental insurance, the City has traditionally paid 100 percent of the monthly premium for employees selecting single coverage and contributed an equal dollar amount toward the cost of 2-Party and Family coverage. Staff is recommending that the Council approve the same level of City contributions for both medical and dental insurance in 2010. (Please see the attached table for the dollar amounts associated with these percentages.) Lastly, there is the issue of the City's contribution to Health Savings Accounts (HSA) for those employees selecting the high-deductible medical plan. Under this plan, the out-of-pocket deductible that must be met before the insurance company pays any charges is $1500 for single coverage and $3000 for 2-party and family coverage. In 2009, the City made lump sum contributions equal to 50% of the deductible ($750 for single and $1500 for 2-PartyIFamily) at the beginning of the year. Staff recommends that the Council approve the same contribution level for 2010. Budget Impact Until we have conducted Open Enrollment and know which plan options and coverage levels (single, 2-party or family) each employee has selected, it is impossible to determine the exact cost of the City's contributions for medical insurance. However, we budgeted for a larger increase in medical insurance than what Medica is offering us, so I am confident the preliminary budget for 2010 will accommodate these costs. For dental insurance, where all employees receive the same amount from the City, the cost will be $55,692, which is $1,092 more than this year, and, again, can be accommodated within the preliminary budget for 2010. Recommendation It is staff's recommendation that the City take the following actions related to group medical and dental insurance for 2010: 1. Authorize the appropriate staff to enter into a contract with Medica for continuation of the City's current health insurance plans, at the quoted prices for 2010. 2. Authorize the appropriate staff to enter into a contract with Delta Dental to continue the City's existing dental offerings at the quoted prices for 2010. 3. Set the City's contributions at the levels described, by adopting Resolution #6953. Relationship to Vision Providing City employees with competitive medical and dental insurance helps the City attract and retain well-qualified staff. It also allows staff to more easily meet their own medical needs and those of their families; which allows employees to focus on their work. This contributes to a high quality of life (Goal B) and a vibrant. resilient and stable City (Goal D). Requested Action If it concurs, the Council should offer a motion to authorize appropriate staff to enter into contracts with Medica and Delta Dental for the renewal of group insurance plans for 2010, at the quoted prices, and offer Resolution 6953, A RESOLUTION ADOPTING THE CITY OF SHAKOPEE'S CONTRIBUTION LEVELS FOR EMPLOYEE BENEFITS FOR THE YEAR 2010, and move its adoption. 'U dl(/L----- s Wilson ssistant City Administrator r31~..L ( to Vv.e ck 01 ') RESOLUTION NO. 6953 A RESOLUTION ADOPTING THE CITY OF SHAKOPEE'S CONTRIBUTION LEVELS FOR EMPLOYEE INSURANCE BENEFITS FOR THE YEAR 2010 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-Partv Coverage Familv Coverage Traditional Plan $432.18 per mo. $760.65 per mo. $999.20 per mo. High Deductible Plan $408.48 per mo. $718.92 permo. $9~~.30permo. ~ O)~ $944.39 per mo. 0- I/t-vu\ D C/ 10 .~ HSA Contribution $750.00 per year $1500.00 per year $1500.00 per year O~pO $35.70 per month $35.70 per month $35.70 per month Dental For individuals actively employed by the City on January 1, 201 0 and subscribing to the High Deductible Insurance Plan offered by the City, the City's contribution shall be made in one lump sum on or about January 15, 2009. 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 1,2010. Adopted in adjourned regular session of the City of Shakopee, Minnesota, held this 20th day of October, 2009. Mayor of the City of Shako pee ATTEST: City Clerk High Deductible Health Ins. Plan ($1500 single / $3000 2-Party & Family) Elect Network Choice Network Monthly Premium up 6.2% Monthly Premium up 8.5% Employee Employee 2009 2010 City Employee Increase 2009 2010 City Employee Increase Single $ 384.72 $ 408.48 $ 408.48 $ - $ - $ 409.28 $ 444.22 $ 408.48 $ 35.74 $11.18 (46%) 2-party $ 769.44 $ 816.96 $ 718.92 $ 98.04 $5.71 (6.2%) $ 818.56 $ 888.43 $ 718.92 $ 169.51 $28.05 (20%) Family $ 1,226.84 $ 1,302.61 $ 944.39 $ 358.22 $20.84 (6.2%) $ 1,305.14 $ 1,416.55 $ 944.39 $ 472.16 $56.48 (14%) Traditional Health Ins. Plan ($25 co-pay, $500 deductible;r$10/$25/$50 prescriptions) Elect Network Choice Network Monthly Premium up 5.3% Monthly Premium up 10% Employee Employee 2009 2010 City Employee Increase 2009 2010 City Employee Increase Single $ 410.28 $ 432.18 $ 432.18 $ - $ - $ 436.47 $ 480.13 $ 432.18 $ 47.95 $21.76 (83%) 2-Party $ 820.59 $ 864.38 $ 760.65 $ 103.73 $5.26 (5.3%) $ 872.96 $ 960.28 $ 760.65 $ 199.63 $48.79 (32%) Family $ 1,308.38 $ 1,378.21 $ 999.20 $ 379.01 $19.20 (5.3%) $ 1,391.90 $ 1,531.13 $ 999.20 $ 531.93 $88.61 (20%)