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ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION – OCTOBER 13, 2014 7 policy allows employees that select single insurance coverage to place the balance of the insurance payment that the City provides into an authorized deferred compensation program. Staff reviewed a chart illustrating the costs of coverage to employees per month for medical and dental since 2004 as well as the City’s contribution amount. It was noted that the City has offered a co-pay plan (BCBS Aware Gold), but to reduce costs, the City tried a $300 deductible plan in 2007 and the high deductible plan with an HSA in 2008. Employees have had their choice of two plans since 2007. In 2009, the Council only allowed Benefit Parity if employees took the high deductible plan option to encourage employees to move from the co-pay plan to the high deductible plan. By 2013, all employees had switched to the high deductible plan and the City discontinued the co-pay plan and replaced it with another high deductible plan that had an embedded deductible amount for families. This plan had a much higher deductible for both single and family. Dental insurance is through Health Partners and in 2008 the City changed from single/family to single/single plus one/family which helped lower those costs. All union employees are on the union plan for medical and dental and pay the same whether they have single or family coverage. Director of Finance and Administrative Services Iverson explained that once the City offered the high deductible plans, the City was successful in reducing premium increases dramatically. The Council only allowing Benefit Parity if employees took the high deductible option was a big factor in shifting employees away from the co-pay plan. Some years (especially 2009, 2012, and 2013) the City only received rate increases as a result of a State Statute that governed small group plans. As a result, Lakes Country, the cooperative the City belongs to, gave the City dividends back since rates could not be lowered. The City 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. The City received a decrease in rates for 2011 as the cooperative went out for bids and was able to reduce costs based on the City’s favorable claims history. While Lakes Country would like to see these funds distributed back to the employees on the plan, the City chose to put these monies aside to be used for wellness activities as these savings, or the reduced usage, was a direct result of wellness activities the City instituted in 2009 and employees managing their health care. Those funds have also been used to offset the City’s share of 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. Director of Finance and Administrative Services Iverson reported that surveys from surrounding employers (both large and small) show that the City of Arden Hills has had one of the most favorable experiences with health care costs. Most cities have been fighting double digit increases for many years. The surveys also show that the amount of monthly City contribution to employees range from $700 - $1,000. The City currently provides $699.61 per month per full- time employee for benefits (pro-rated for permanent part-time employees). Salary and benefits are looked at together when doing compensation packages so while some cities are rich in salaries, others are rich in benefits, and benefits play a key part in the recruitment of employees. The City’s compensation study is taking into account both salary and benefits as a total package for the comparisons being made. The City’s Benefit Parity approach is a common program for cities.