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Request for Council Action Department Approval Item Description: Date: 9/26/11 Item Number: 7 -f A a City Manager pproval Approve 2012 City Benerits Insurance Renewals & Cafeteria Contributions Medical Background and Renewal Recommendations: Each year the largest human resources expense aside from employee salaries is the cost of benefits, in particular medical insurance. The gap between the two keeps narrowing nationwide. City benefits costs were in excess of $1.3 million in 2011. As this expense continues to grow organizations are making changes to help ease the impact for both employees and employers. Over the last several years Roseville has made changes and additions in the benefits area to minimize increases and to share the burden while making health insurance as affordable and effective as possible. In response to escalating health care costs, the City began offering higher deductible plans with additional tiers of coverage. In 2004 we added a single-plus-one tier option to give employees and retirees the least expensive and most efficient alternatives. In 2005, the City added a High Deductible plan with a Health Reimbursement Account for payment of deductible expenses. In 2006 the City raised deductibles but also increased contributions to the health reimbursement account and added this account to the mid level plan to help staff control and minimize their risk. In 2008 Roseville dropped the no longer sustainable, rich, 100% coverage plan. Finally, in 2009 the City added a Health Savings Account (HSA) option. Regular employees are eligible on a prorated basis if they work a minimum of 20 hours per week. We currently have 160 total Full-Time Equivalents (FTE's). We also have 13 former employees who are on the City's health plan through COBRA. The City currently offers three medical options and three tiers through one provider, Health Partners, under the National Joint Powers Alliance consortium. The pool is National Joint Powers Association (NJPA). NJPA had previously only been associated with outstate Minnesota school districts; however, this has recently changed. The unique part of NJPA is that the pool is self-insured but underwritten and administered by Health Partners so it operates like a fully insured plan. NJPA is driven by its 33,000 members. This is of interest to Roseville for a couple of reasons. First, since our claims have been declining over the past four years due to wellness and consumer driven plan initiatives, we have been able to achieve less than trend increases. NJPA would allow Roseville to