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<br />~ <br />.--A~HILLS <br /> <br />MEMORANDUM <br /> <br />DATE: <br /> <br />October 11, 2007 <br /> <br />1.E. <br /> <br /> <br />TO: Honorable Mayor and City Council <br />Michelle Wolfe, City Administrator <br /> <br />FROM: Sue Iverson, Finance Director ~ <br /> <br />SUBJECT: 2008 Health Insurance Benefit Options <br /> <br />Background: <br /> <br />During the May 21, 2007 work session, Staff and Council discussed the City contribution toward health <br />insurance and directed staff to pursue other options, such as an HSA plan. Council directed staff to set <br />the City contribution using the following formula: <br />Taking the lower cost plan (Deductible plan), 50% of the increase in the family premium will be <br />added to the current contribution of$615. (New contribution for 2008 is $648) <br /> <br />Discussion: <br /> <br />Current renewal <br />Based on our experience, the Co-op has given us their lowest increase of 7%. This will apply to both of <br />our current plans. Our brokers did a market comparison to see if the market was competitive with similar <br />plan designs currently offered. The market comparison showed that the City of Arden Hills' current rates <br />were competitive and after discussion with City staff, it was decided that there was not enough potential <br />saving to proceed with going to market. <br /> <br />HSA and VEBA Options <br />Staff asked our brokers to price out and obtain quotes on HSA and VEBA plans per City Council <br />direction. Since these plans are structured differently and have a savings account attached them, staff <br />feels that a transition to these plans will be necessary to give time educate employees on these options. If <br />we implement one of these plans, staff recommends that it pairs it with one of the current plans to offer <br />employees a choice and give them time to compare these plans. Our broker has confirmed that we may <br />offer either the HSA or VEBA with one of our current plans. <br /> <br />A HSA may take contributions from either the employer or employee, while a VEBA may only take <br />contributions from the employer. Currently, the excess flex dollars not used for insurance by those taking <br />single coverage are put into an ICMA retirement account. This has posed some problems according to <br />regulations and is not allowed, we have been looking into options to correct this. An HSA or VEBA <br />would correct this problem as all of the contributions would be deposited into the health savings account. <br />If the City were to provide this option, staff would recommend that only those participating in the HSA or <br />