Agenda Packet- Workshop- Health Ins. 7-12-11 Commission Workshop
Adele Grage Cultural Center
July 12, 2011
5:00 pm
AGENDA
Call to order
1. Employee Health Insurance Options
Adjournment
In accordance with the Americans with Disabilities Act and Section 286.26,
Florida Statutes, persons with disabilities needing special accommodation to
participate in this meeting should contact the City Clerk by 5:00 PM, Friday,
July 8, 2011.
July 5, 2011
MEMORANDUM
TO: Jim Hanson, City Manager
City Commission
IN TURN
FROM: George Foster, Human Resource Manager r
SUBJECT: July 12 Health Insurance Workshop
Attached are two charts that show health insurance costs and premiums in a shorter format than
provided within the previous staff report. The second chart shows premiums paid in 2005 versus 2010,
pay increases from 2005 to current and the starting pay for a Grade 14 employee.
Some questions that the Commissioners may wish to consider are:
1. How much should the City and /or employee pay for health insurance? Note: The City is
currently paying 95% of Base employee only coverage and 45% of the difference in cost for any
other Base insurance selected by the employee. The long term goal of the City was to pay 90%
of Base employee only coverage and 0% of the difference in cost for any other insurance
selected by the employee by making changes at 5% per year. This goal was placed on hold when
employee pay adjustments were discontinued in 2009.
2. Should this amount be a percentage or a "fixed" dollar amount?
3. Does the City make changes during periods where employees are not receiving pay
adjustments?
4. Is there any minimum health insurance coverage that should be provided to employees? That is,
at what point is a co -pay, deductible, or maximum out -of- pocket to high?
5. Do decisions made this year help or make next year's decisions more complex. Note: The
increase to "normal" health insurance for 2012 is estimated too be 8% or more.
3 Attachments: 1. Cost Data Chart
2. Insurance Premiums and Pay Charts
3. June 27 Staff Report
Current Plan New Plans
Same Current Benefits Lower Benefits
10/1/2010 10/1/2011 10/1/2011 10 /1/2011 10/1/2011
CoI A Col B Col C Col D CoI E
% paid by City 95/45 (1) 95/45 (1) 90/40 (3) Note 3 Note 3
% paid by employee 5/55 (2) 5/55 (2) Note 4 Note 4
Cost increase
Total N/A $ 278,098 $ 278,098 $ 192,442 $ 153,795
City N/A $ 206,246 $ 155,138 $ 75,883 $ 1,768
Employee N/A $ 71,852 $ 122,961 $ 116,559 $ 152,027
Cost to Employee
Emp Only Coverage $ 21.40 1 $ 30.18 1 $ 60.35 $ 54.87 1 $ 52.11
Cost to Employee
Family Coverage $ 463.82 1 $ 653.92 l $ 731.47 $ 665.02 I $ 631.60
Note 1: City pays 95% of Base Employee Only premium and 45% of the differnce for any other
Base coverage selected by the employee.
Note 2: Employee pays 5% of Base Employee Only premiums and 55% of the difference for any
Base other coverage selected.
Note 3: City pays 90% of Base Employee Only premium and 40% of the difference for any other
Base coverage selected by the employee.
Note 4: Employee pays 10% of Base Employee Only premiums and 60% of the difference for any
Base other coverage selected.
ATCH 1
MONTHLY INSURANCE PREMIUMS
Employee Paid
Number 2005 2010 Increase %
BASE
Employee 66 $ - $ 21.40 $ 21.40
Emp + Child(ren) 11 $ 118.50 $ 216.60 $ 98.10 82.78%
Emp + Spouse 12 $ 166.50 $ 299.02 $ 132.52 79.59%
Emp + Family 14 $ 261.40 $ 463.82 $ 202.42 77.44%
City Paid
Number 2005 2010 Increase %
BASE
Employee 66 $ 302.42 $ 447.72 $ 145.30 48.05%
Emp + Child(ren) 11 $ 447.23 $ 660.65 $ 213.42 47.72%
Emp + Spouse 12 $ 505.91 $ 742.42 $ 236.51 46.75%
Emp + Family 14 $ 621.88 $ 906.01 $ 284.13 45.69%
EMPLOYEE PAY ADJUSTMENTS
Employees must have over 6 months of service and receive a
satisfactory evaluation report to receive a Merit pay increase.
CPI COLA MERIT TOTAL
2011 4.10% 0.00% 0.00% 0.00%
2010 1.40% 0.00% 0.00% 0.00% 1.1% Bonus if more than 1 year
2009 -2.00% 0.00% 0.00% 0.00%
2008 5.60% 4.00% 3.00% 7.00%
2007 2.70% 2.70% 3.00% 5.70%
2006 4.50% 3.50% 3.00% 6.50%
2005 2.60% 3.00% 3.00% 6.00%
Averages 2.70% 1.89% 1.71% 3.60%
Starting Hourly Pay for a Grade 14
Year Hourly Annual
2010 $11.64 $24,211.20
2005 $10.53 $21,902.40
Diff $1.11 $2,308.80
ATCH 2
AGENDA ITEM # 8A
JUNE 27, 2011
CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM: Employee Health Insurance (A Strategic Issue)
SUBMITTED BY: George Foster, Human Resource Manager 4/
DATE: June 21, 2011
BACKGROUND: Based upon the small size of the City's workforce, high utilization, and
several major medical situations, the City's renewal premium, without changes, will increase
October 1, 2011 by $278,098 ( +28.65 %) with the City's cost increasing by $206,246 and
employee's increasing $71,852. This will be at least the fifth straight year that the City had
projected double digit rate increases with the City reducing employee coverage and increasing
employee premiums, co -pays and /or deductibles to maintain lower overall single digit increases to
the City.
For 10 /01 /2011 renewal, the City reviewed thirty -three (33) "off the shelf' health insurance plans,
including Consumer Directed Plans, and has attached a summary of four (4), including our current
plan, for review.
New plans listed have the City's contribution rate for the Base Employee Only coverage being
changed from 95% to 90% and the City's contribution rate for the cost of any other Base
coverage being changed from 45% of the difference to 40% of the difference.
SUPPLEMENTAL (GAP) INSURANCE POLICY: In addition to health insurance, the City
has identified a Major Medical Complement (GAP) insurance policy that will pay the employee's
deductibles and co -pays. Although this is not the solution to our ever rising health insurance
premiums, it is an option that we desire to provide to our employees. For example, for an annual
$4,000 Hospital Confinement and a $2,000 Outpatient benefit, an employee over the age of 50
would pay approximately $82 per month (10 /01 /10 data). This would be offered as an option to
employees at their cost.
TIMING: The City's health insurance is on a fiscal year basis and all enrollments must be
completed and entered into the CIGNA health insurance and City payroll systems in sufficient
time for employees to receive their health insurance cards and have payroll deductions from their
first paycheck in October. We not only have to have enrollment packages prepared but also need
to have an open enrollment period for employees. Therefore, we are unable to wait until the final
budget is approved for Commission guidance.
FUNDING: Required funding for this action will be included within the 2011/2012 budget based
upon the Commission's decision.
ATTACHMENTS: Attached is a summary of costs and benefits for our current 10/01/10 plan if
renewed and three additional health insurance plans.
ATCH 3
AGENDA ITEM # 8A
JUNE 27, 2011
Column A: Cost data and benefits that is currently in effect, i.e. effective: 10/01/2010.
Column B: Current benefits if renewed on 10/01/2011 with a 28.65% increase along with the
City continuing to pay the current health insurance ratios of 95% of the Base
Employee Only coverage and 45% of the cost difference of any other Base insurance
that the employee may select. Premium cost increase to the City would be $206,246
and $71,852 to the employees.
Colum C: Current benefits if renewed on 10/01/2011 with a 28.65% increase along with the
current health insurance ratios being changed to the City paying 90 %, instead of
95 %, of the Base Employee Only coverage and paying 40 %, instead of 45 %, of the
cost difference of any other Base insurance that the employee may select. Premium
cost increase to the City would be $155,138 and $122,961 to the employees.
Column D: New Plan with reduced benefits and current health insurance ratios being changed to
the City paying 90% of the Base Employee Only coverage and 40% of the cost
difference of any other Base insurance that the employee may select. Premium cost
increase to the City would be $75,883 and $116,559 to the employee.
Column E: New Plan with reduced benefits and current health insurance ratios being changed to
the City paying 90% of the Base Employee Only coverage and 40% of the cost
difference of any other Base insurance that the employee may select. Premium cost
increase to the City would be $1,768 and $152,027 to the employee.
Column F: New Plan with reduced benefits and current health insurance ratios being changed to
the City paying 90% of the Base Employee Only coverage and paying 40% of the
cost difference of any other Base insurance that the employee may select. Premium
cost to the City would be decreased by $22,380 and increased by $119,532 to the
employees.
ACTIONS REQUESTED:
1. That City Commission authorizes providing employees with an optional employee paid
Major Medical Complement (GAP) policy.
2. Based upon guidance received to not increase the health insurance cost to the City,
recommend that the Commission approve:
a. Changing the percentage of premiums paid by City from 95% to 90% for Base
Employee Only coverage and from 45% to 40% of premium differences for any other
Base insurance selected by the employees, and
b. Health insurance plan as listed in Column "E" to be effective October 1, 2011.
CITY MANAGER:
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