HomeMy WebLinkAbout2012 07 23 Consent 201 Employee Benefits
COMMISSION AGENDA
Informational
Consent
X
ITEM201
Public Hearings
Regular
July 23, 2012KSSB
Regular MeetingCity ManagerDepartment
REQUEST:
The City Manager and Finance Department requests The City Commission consider the
Employee Benefit Proposal for FY 2013 and
authorize the City Manager to execute all
.
necessary contracts
SYNOPSIS:
This agenda item is needed for the Commission to consider the FY 2013 proposal for Benefits and
Health Insurance for the City employees. The management team is purposing to maintain the current
Healthcare plans that introduced an increase in “cost sharing” between the City and its’ employees
and to change providers for the Accidental & Dismemberment Insurance and Life Insurance. The
team is also proposing to include a Vision plan to the employee benefit plan at a cost 100% incurred
by the employee. The primary drivers for these changes are cost containment.
CONSIDERATIONS:
Background
Healthcare (Cost Share):
In the past, the City has provided subsidized healthcare for its employees and their families in order
to attract top talent. Two years ago, faced with rising healthcare costs, the City explored ways to
curb and contain the rate of increase in premiums from year-to-year. A review of our plan utilization
indicated that diagnostic testing and over utilization of hospital emergency rooms was one of the
primary drivers for the increases in costs. The City initiated a new cost sharing partnership with the
employees and modified deductibles and co-pays to better balance cost sharing responsibilities
between employee and employer. The two plans that are being purposed this year are as
follows:
Consent 201 PAGE 1 OF 4 - July 23, 2012
Plan (4) is a traditional 80%/20% cost sharing between employees and employer. This simply means
that once the employee has met his/her deductible ($500 single coverage) they will be responsible
for 20% of the cost for certain medical care up to a maximum of $3,000 (single coverage). This plan
allows employees to still go to the family doctor and only pay $20 co-pay. However, if they would
require a MRI they would be responsible for paying an additional amount toward that
care/service.
Plan (6) is a high-deductible health plan (HDHP) which is a health insurance plan with lower
premiums and higher deductibles than a traditional health plan. Being covered by an HDHP also
allows the City to introduce health savings account (HSA). HSAs are a great way to offset the cost
of medical care with pre-tax contributions. High-deductible health plans are a form of catastrophic
coverage.
City Paid Other Benefits:
The following other benefit changes are also being purposed. In all cases highlighted below the
benefits offered by the new carrier either match or are superior to the existing insurance vendor. We
NOT
are purposing any new City paid benefits for this year, only changes in the vendor providing
the current benefits.
Insurance Type Carrier Current Cost Purposed Carrier Purposed Cost
Accidental Death and Mutual of Omaha 3¢ per $1,000 Unum 1¢ per $1,000
Dismemberment
City Pay Life Insurance Mutual of Omaha 13¢ per $1,000 Unum 13¢ per $1,000
Long Term Disability Mutual of Omaha 33¢ per $1,000 Unum 28¢ per $1,000
Employee Paid Other Benefits
Insurance Type Carrier Purposed Carrier Purposed Cost Reduction
Short-Term Disability Mutual of Omaha Unum 20% - 30%
Group Life Insurance Mutual of Omaha Unum 25% - 40%
Voluntary Group Life Mutual of Omaha Unum 31%
Financial Highlights
The City has received the FY2013 Health Insurance quote from our current provider, United
Healthcare. The renewal for the purposed Plan (4) represents a 15% increase in premiums over last
year. The summary of the quotes has been provided below:
FY2013 FY2013
Primary Plan (4)Buy-Down Plan (6)
Coverage Type
Employee $583.25 $477.43
Employee + Spouse $1,398.37 $1,144.34
Employee + Children $1,398.37 $1,144.34
Family $1,522.78 $1,249.89
Consent 201 PAGE 2 OF 4 - July 23, 2012
$578.25 for employee only
It is the proposal that the subsidy for both plans be the same (). The City
currently pays all but $5 of the entire cost of Employee coverage. Additionally, the City currently
pays 28% of the employees Dependent coverage premium. The chart below demonstrates the
recommended subsidy for both plans.
Employee Employee & Spouse Employee & Dependent Employee & Family
Plan 4 (Base) $578.25 $807.88 $807.88 $842.72
Plan 6 (Buy-Down) $578.25 $807.88 $807.88 $842.72
Finally, as can be seen in the chart below the cost for plan 4 and plan 6 are different, in-fact plan 6 is
lower in all four categories. This is due primarily because of the higher employee deductible and the
employee is willing to take on more of the cost share. Therefore, for all employees that choose plan
6 there would be a purposed reduction in premiums or directed contribution (difference between
plan 4 and plan 6 premiums) be deposited directly in their own HSA (Health Savings Account) to be
This will assure that the cost to the City for healthcare premiums is
used for future healthcare.
same for all employees.
Proposed FY2013 Proposed FY2013
Primary Plan (4) Employee Cost per Buy-Down Plan (6) Employee Cost
Coverage Type
Monthlyper Monthly
Employee $5.00 $5/$-100.82 HAS Contribution
Employee + Spouse $590.49 $336.46
Employee + Children $590.49 $336.46
Family $680.06 $407.17
FISCAL IMPACT:
Due to uncontrollable external factors such as National Healthcare Reform and Risk Pool
experiences the renewal rates for the City’s Healthcare benefits have risen over the prior
year. However, due to proactive management of our overall personnel compliment, if both plans
and the new subsidies are approved by the Commission the City’s health care cost will increase
$50,000
annually by approximately ≈ (General Fund-currently budgeted for FY 2013). Projections
are that this cost sharing approach will begin to reduce the controllable overall cost of providing
healthcare benefits to the City’s employees.
COMMUNICATION EFFORTS:
This Agenda Item has been electronically forwarded to the Mayor and City Commission,
City Manager, City Attorney/Staff, and is available on the City’s Website, LaserFiche, and
the City’s Server. Additionally, portions of this Agenda Item are typed verbatim on the
respective Meeting Agenda which has also been electronically forwarded to the individuals
noted above, and which is also available on the City’s Website, LaserFiche, and the City’s
Server; has been sent to applicable City Staff, Media/Press Representatives who have
requested Agendas/Agenda Item information, Homeowner’s Associations/Representatives
on file with the City, and all individuals who have requested such information. This
information has also been posted outside City Hall, posted inside City Hall with additional
copies available for the General Public, and posted at five (5) different locations around the
City. Furthermore, this information is also available to any individual requestors. City Staff
is always willing to discuss this Agenda Item or any Agenda Item with any interested
individuals.
Consent 201 PAGE 3 OF 4 - July 23, 2012
RECOMMENDATION:
The City Manager recommends that the City Commission approve:
The Florida League of Cities’ Florida Municipal Insurance Trust/ Untied Healthcare
1.
for FY 2013, based on their submitted Plans.
City offer two plans 4 (base) and 6 (buy-down) and the recommended subsidies.
2.
Add employee paid vision plan.
3.
Change insurance providers for employee paid optional insurance from Mutual of
4.
Omaha to Unum.
Authorize for the City Attorney and City Manager to prepare and execute all
5.
contracts and documents necessary to facilitate the above recommendations.
ATTACHMENTS:
N/A
Consent 201 PAGE 4 OF 4 - July 23, 2012