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Memo - City Council 2015 Budget and Tax Levy Discussions 7 As you can see from the chart above, once the City offered the high deductible plans, we were successful in lowering our increases dramatically. The Council only allowing Benefit Parity if employees took the High Deductible option was a big factor in having our employees shift away from the Co-Pay Plan. Some years (especially 2009, 2012, and 2013) we only received rate increases as a result of a State Statute that governed small group plans – we only have 25-27 employees on our health and dental insurance as union members are on the union insurance. As a result, the cooperative that we are a part of, Lakes Country, gave us dividends back since they could not drop our rates lower. We received $24,288.74 in 2010 based on our 2009 claims history, $18,373.97 in 2011 based on 2010 claims history, and $9,118.73 in 2013 based on 2012 claims history. We received a decrease in rates for 2011 as the cooperative went out for bids and they were able to reduce our costs based on our favorable claims history. While Lakes Country would like to see these funds distributed back to the employees on the plan, the City choose to put these monies aside and use for wellness activities as these savings or the reduced usage was a direct result of wellness activities we instituted in 2009. We have also used them to offset the City’s share of the insurance increases when levy limits were effective. Experience has shown that people use health services differently if they are on a Co-Pay Plan versus a High Deductible Plan. The end result is lower rates based on usage history. In survey’s from surrounding employers, both small and large – we have found that we have had one of the most favorable experiences with health care costs as most cities were fighting double digit increases many years and the amount of monthly contribution to employees range from $700 - $1,000. Salary and Benefits are looked at together when doing compensation packages so while some are rich in salaries others are rich in benefits and benefits play a key part in the recruitment of employees. Our compensation study is taking both into account as a total package when they do their comparisons. Our Benefit Parity approach is a common program for cities as 30 cities out of the 65 that responded to our survey have the same system we do. At the request of the Personnel Committee, staff is compiling data that will be handed out on November 24th to give more details on what those cities offer their employees as well as the insurance premiums and structure. At the last worksession, Council directed staff to communicate that they would be looking to fund a max total to employee’s HSA accounts of $2,000 but not change the contribution to family or higher cost plans (union would fall into this). It was communicated to all employees during open enrollment that the Council was considering this change. It is difficult to determine what the impact would be to the General Fund or in whole, as many employees are no w switching to the lower deductible option, or family coverage, and the enrollment period does not end until November 30, 2014. General Fund Revenues and expenditures are shown in the following table. We have highlighted the impact the tax levy and proposed budget on the next page to give you a brief overview. More detailed commentary is found in the department and funds pages of the budget document.