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REQUEST FOR COUNCIL ACTION <br />Date:September 14, 2020 <br />Item No.:9.c <br />Department Approval City Manager Approval <br />Item Description:2021Insurance Benefit Renewals andCity Cafeteria Contributions <br />1 B ACKGROUND <br />2 A cafeteria plan is a type of employee benefit plan offered pursuant to Section 125 of the Internal <br />3 Revenue Code. The Internal Revenue Code sets forth the requirements and tax treatment of cafeteria <br />4 plans. A cafeteria plan allows employees to choose between different types of benefits. Employees <br />5 may choose benefits such as health insurance, group-term life insurance, voluntary “supplemental” <br />6 insurance (dental, accident, etc.) and flexible spending accounts through the plan. <br />7 <br />8 The City of Roseville has a Cafeteria Benefits Plan that meets the requirements of Section 125 of the <br />9 Code. One of the main purposes of a cafeteria plan are the tax savings advantages for both the <br />10 employer and employee. Employees’ pretax contributions are not subject to federal, state or social <br />11 security taxes. As an employer, the City saves on the employer portion of FICA, FUTA and <br />12 worker’s compensation insurance premiums. <br />13 <br />14 Request for Proposal <br />15 In 2020, the city received a 10.67% increase in renewal rates for medical insurance. Since the city <br />16 had not gone out for a bid in several years, our benefits broker, NFP, suggested doing so prior to <br />17 receiving our 2021 renewal rates in order to determine if we were able to receive competitive <br />18 renewal rates for 2021. Earlier this spring, an RFP was sent out by NFP on our behalf to insurance <br />19 carriers to bid on our organization for medical insurance, Life and AD&D insurance, Voluntary Life <br />20 insurance and Long-term Disability Insurance. <br />21 <br />22 Medical Insurance <br />23 We received several competitive bids from the following providers for medical insurance: <br />24 Sourcewell –our current pool with HealthPartners selected as the pool provider <br />25 HealthPartners as a standalone carrier <br />26 Medica <br />27 BlueCross/Blue Shield <br />28 PreferredOne <br />29 PEIP (Public Employees Insurance Pool) <br />30 <br />31 Although each carrier bid on a structure similar to our current plans, all but one of them required <br />32 changes to either the benefits provided, or insurance plan structures. Rate increases ranged from 8% <br />33 increase to -4% decrease for the first year, with rate caps for the second year ranging from 12-19% <br />34 for the second year. <br />35 <br />Page 1 of 3 <br /> <br />