11-13-2000 Council Packet - Laserfiche WebLink

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REQUEST FOR COUNCIL ACTION COl'Mr'M NOV 1 3 2000 DATE: Novembejj^'iZQlDOOHONO ITEM NO: Department Approval: Name Ron Moorse Title City Administrator Administrator Reviewed: Vy Agenda Section: City Administrator’s Report Item Description: 2001 Cafeteria Benefit Plan/Health Insurance Contribution Attachment: 1 . Comparison of Health Insurance Costs - 2000 vs. 2001 In past years, the City’s cafeteria benefit plan/health insurance contribution has been determined along with the annual pay adjustments. This year, the cafeteria benefit plan contribution is being brought to the Council separately for two reasons. First, the annual pay adjustment percentage has not yet been determined, and negotiations regarding the 2001 police officer contract are not complete. Second, the annual open enrollment process for employee insurances needs to move ahead. The City’s cafeteria benefit plan contribution is an important element of this process. Staff Recommendation For 2001, the City’s health insurance premiums are increasing substantially. The average premium increase is $80 per month, which is a 1 2-14% increase. This increase is similar to what is happening throughout the health insurance industry. The cafeteria benefit plan contribution increase has generally been set to cover one-half of the average health insurance premium increase. 50% of the average monthly premium increase is $40 per month. Staff recommends the City’s cafeteria benefit plan contribution be increased by $40 per month, which would increase the contribution from $370 per month to $410 per month. Efforts to Control Future Health Insurance Costs The City currently participates with a large group of Hennepin County cities to cooperatively purchase health and life insurance. In surveying cities outside of this group regarding their insurance costs, some are higher and some are significantly lower. Some who are lower participate in a purchasing cooperative, others are on their own. Those with the lowest costs are in narrower networks with a smaller choice of doctors and clinics. Given the trend of significantly increasing health insurance costs, it is important for the City to look at ways to control the health insurance costs, both in the short term and in the long term. This could include making efforts to encourage healthy lifestyles and assisting employees in making the most effective use of their medical resources. In addition, over the winter months all staff will be surveyed regarding what they view as essential and non-essential elements of a health insurance plan; as part of a process to determine if there is a type of plan acceptable to staff that will enable reduced costs. Other purchasing cooperative options that would provide the types of plan elements staff wants at a lower cost, both in the short term and over the long term, will also be explored. COUNCIL ACTION REQUESTED: Motion to approve a cafeteria benefit plan contribution of $410 per month for the year 2001.