HomeMy WebLinkAbout4.D.1. 2016 Employee Insurance Benefits Consent Business 4.D. 1.
SHAKOI'EE
TO: Mayor and City Council
FROM: Kris Wilson, Assistant City Administrator
DATE: 11/04/2015
SUBJECT: 2016 Employee Insurance Benefits (E)
Action Sought
The Council is asked to offer Resolution No. 7632, a resolution establishing the
City of Shakopee's contribution levels for employee insurance benefits for the year
2016, and move its adoption. The Council is also asked to authorize the appropriate
officials to enter into contracts with Medica and Delta Dental for 2016 insurance
offerings.
Background
The City's current contracts for employee medical and dental insurance expire at the
end of the year. (Life and long-term disability benefits are currently covered under
contracts that run until December of 2016.) State law requires public-sector
employers to formally advertise for insurance services at least once every five years
and this was Shakopee's year to advertise for bids for its health insurance. (The
requirement for dental insurance was taken care of last year.)
Medical Insurance
Medica, the City's current insurance provider, has offered the City a renewal with
an 11.1% reduction in medical insurance rates for 2016. This offer is for the same
two plans that the City currently offers to employees, with no change in co-pays,
deductibles or out-of-pocket maximums.
The RFP process did yield four competing proposals, in addition to this renewal
offer from Medica. Three offered higher rates than our current provider and were
therefore ruled out. The fourth offer, from HealthPartners, offered even better rates
than the 11 percent decrease from Medica -- but only by a small amount. Health
Partners offered rates that are 11.4% less than what we are currently paying on our
co-pay plan and 13.8% less than what we are paying on our high deductible plan.
However, after discussing the offer with our insurance broker and employee
benefits consultant, I am recommending that the City renew with Medica instead.
The reasons for this recommendation are twofold:
1. A switch to HealthPartners has the potential to be highly disruptive to our
employees and their families due to the difference in provider networks and
covered prescription drugs.
2. The City has been with Medica since 2002, and in addition to the rate
reduction for 2016, received a smaller rate reduction for 2015 and no increase
for 2014. When the year comes that we have a high claims total, and that year
will inevitably cycle back around, having this longstanding relationship with
Medica is likely to serve the City well. However, a year of high claim
numbers in year three or four with a new carrier is more likely to result in a
spike in rates.
The renewal offer from Medica puts the City's monthly insurance premiums for
2016 roughly equal to the premiums we paid in calendar year 2010. This is good
news for the City and our employees!
City Contribution
For more than ten years, the City has paid 100% of the monthly premium for those
selecting Single coverage, 88% of the premium for those selecting 2-Party coverage
and 72.5% of the premium for those selecting Family coverage, based on the cost of
our lowest priced network. Employees selecting the larger provider network,
known as the "Passport" network, receive the same dollar amount contribution
but pay the added cost of this expanded network themselves.
The monthly premiums offered by Medica, and the employer -- employee
breakdown for each of the City's health insurance plans, are outlined in Attachment
A.
Dental Insurance
Delta Dental has offered the City a renewal of the current plans for 2016 at a 4%
increase in monthly premiums. The City's longstanding contribution toward dental
insurance has been an amount equal to the cost of single coverage, with employees
who select 2-Party or Family coverage picking up the difference. The proposed
dental rates for 2016, with employer and employee shares, is also outlined in
Attachment A.
Budget Impact
The reduction in health insurance rates, combined with a 4% increase in dental
insurance rates, is estimated to save the City approximately $134,000 in 2016,
compared to current expenditures for these items.
Recommendation
I recommend that the City accept the renewal offers from Medica and Delta Dental
for employees' 2016 medical and dental insurance and that the City maintain its
longstanding contribution rates for these benefits.
Relationship to Vision
Providing stable, quality insurance benefits for employees contributes 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 offer Resolution No. 7632, a resolution establishing the
City of Shakopee's contribution levels for employee insurance benefits for the year
2016, and move its adoption. The Council is also asked to authorize the appropriate
officials to enter into contracts with Medica and Delta Dental for 2016 insurance
offerings.
Attachments: Attachment A
Resolution No. 7632
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RESOLUTION NO. 7632
A RESOLUTION ESTABLISHING THE CITY OF SHAKOPEE'S CONTRIBUTION
LEVELS FOR EMPLOYEE INSURANCE BENEFITS FOR THE YEAR 2016
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 $462.76 per mo. $814.46 per mo. $1069.88 per mo.
High Deductible Plan $409.75 per mo. $721.15 per mo. $947.31 per mo.
HSA Contribution $750.00 per year $1500.00 per year $1500.00 per year
Dental $42.00 per month $42.00 per month $42.00 per month
For individuals actively employed by the City on January 1, 2016 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, 2016. 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, 2016.
Adopted in regular session of the City of Shakopee, Minnesota held this 4th day of
November, 2015.
Mayor of the City of Shakopee
ATTEST:
City Clerk