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Summary of 2004 Proposed Annusl!gity Contribution to gmp&yee Health Insurance Costs 003 2004 Difference Annual City Health Insurance Costs S 933,374.28 $9891P375.76 $567001.48 NOTE: This assumes that the City picks up the entire 6% increase in health premiums. Financial Impact: 1. As you can see from the tables on the previous page, the incorporation of a single +1 tier of insurance levers the cost to eligible retirees and employees by hundreds of dollars per month. Compared to the rates they paid for family coverage in 2003, in 2004 retirees choosing single+I coverage would save fz-om 15 to 280 per month, depending on whether they were using the 100% or 80%-20% medical insurance plan in 2003 and whether they elect to use the 100% or 80 % -20% plan in 2004. 2. However, unless the City continues to contribute in 2004 more money to employees with family coverage than it does to employees with single coverage and, now, to employees with single+ 1 coverage, the single+l tier will increase the cost to employees with families by hundreds of dollars per month. For example, if the City were to contribute the same amount to 2004 to employees with family coverage as the City contributed in 2003, the premiums in ' 2004 for employees with family coverage would increase anywhere from $120 to $150 per month -- which is equal to $1,400 to S 1,800 more per year that employees with families would have to pay for medical insurance premiums. However} there is a solution to this dilemma. lead on.... 3. we had budgeted a 12% increase in City insurance costs ' in 2004, which is approximately $120,000. With a 6% cost increase in 2004 instead of a 12% cost increase, the City is "saving" $60,000. Now, if the City dedicates this $60,000 in budget. "swings," due to lower than expected health care insurance cost increases, to offset the huge increase in family health care premiums due to the addition of the new single+I tier, then employees with families will only have to pay about 0 more in premiums per year i f they are on the 100% plan in 2004. And like all other employees, employees with family coverage can still save a little money if they choose to use the 80%-20% plan in 2004. 4. All single employees would still have their entire health and dental care insurance premiums paid by the City in 2004. In addition single employees choosing the 80%-20% medical plan would take home a little more money each month in 2004 due to the effort to begirt to equalize City contributions to employees. 5. Those employees who choose to "opt out" of our Flan, that is who choose to use their spouse's or another's health care insurance rather than the City's health care insurance (35.25 FTF's currently), will continue to receive $284-00 cash per month. This is still well above the Stanton Fire group average of $ 228.08 per month for the 14 out of 23 cities that pair employees who choose to opt out of that city's health plan. Council Action Reguested; Motion to approve a health insurance contract for 2004 with Preferred One pursuant to the health insurance program set forth above.