1987-07-27 Regular Meeting - Laserfiche WebLink

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e e R~Q1,J~.S.t .fO.R. .GIrl .GOU.N.GlL. AGE.NUA ITEM :... _.....__*.._..~-.._. _ .._":...~ _-r'O..-.. .... ... ...-"-.-.-;--;___~'_.. .... .!.._......~;,.-.-. ....-.....4-, ....... "..-p. ..~_~ _. _....._. -_-..... ~...' ,,-._~~.,-.........-. "';;" 0-;-........... .. _..-'_~-'. "0 .or ........ -. -; .-.;~.._ ......... ", ..-._....,-~-~..-~-=,;._..~ Agenda Date Requested: ~__..1l~1./...87 Requested By: __RQQ~r.tuH~rr.?L~__ Department: _},-QrrJinistratjon ___xx_____u Report Resolution Ordinance Exhibits: ::-:;;~_~_'!'"_-....---~-~-..:-~-..;:--.-:-~~_-..;..-_~....:w~~~~..;.-..;.~~-~'!"'.;;..~_~~--_'!-_~...~....-~~":,,,"~___~__-..;.'~~~""'~~_-':'~~-:;;'~..;.=o...~"":;;...-=--_ . ~JIMMARL~__R..EC1LI1ME.NDA TION The City of La Porte has owned its employees' group medical insur'ance plan for ,over' 4 years now. Through these years, the City has saved literally thousands of dolJars in premium charges by paying itself these premiums and administering a prudent medical insurance plan document. Tlle Plan has seen rnodificaUorls the past several years dve in large part to medical inflation and a generally tougll reinsurance market. Reinsurance merely is the point where an insurance carrier takes over after the plan has paid out a certain amount. In our case, our stop-loss ceiling is $40,000 per case and any claims above that amount are automatically paid by the reinsurance card er Hartford Insurance Company. In retrospect, key modifications made to the plan in the past three years have been intended to avoid employee contributions by raising employee and family deductibles and by modifying high dollar benefits in the plan document. We are now at a point in the life of the plan where our consultants believe employee contributions can no longer be avo id ed . Al ta Heal th Strateg i es is recommend i ng tha t the City seriously consider a minimal employee contribution towards dependent coverage only. This will mean that employees wishing to cover their dependents under the exisU.ng plan will be deducted $15.56 monthly. This amount is consider'ed fairly minimal by indus tr'y s tanda rd s bu t we would 1 ike the Counc i 1 to consi de r a plan whereby this amount could be somewhat defrayed and by which the City's payroll taxes could be reduced. Many cost conscious organizations have undertaken Section 125 of the Internal Revenue Code which allows for' partially employee funded benefits to be discounted on a pre-tax basis from employees' paychecks. In other words, through a "cafeteria style" payroll arrangement, employees might save up to 20% of the cost of put'chasing the benefit fr'om the City. Additionally, the City benefi ts fr'om paying payroll taxes on the net payroll amounts rather than gross payroll totals. This could prove to be a win-win situation for the City and the employees. At least, this option would mini.mize employee out-of-pocket expenses nearly 20% while also saving the City in payroll taxes. v.Ie have asked Neal Welch of Al ta Heal th Strategies to address Council on the necessity of the employee contribution and the positive effects of the cafeteria-style benefit option for ruajor medical jnsur'ance beginning October 1, 1987. We expect to have Mr. Welch present at the July 27, 1987 Regular Council Meeting. Action Required by Council: None ___ ___ _._:..=,": ::::...:.:::...:.:::. =.~-=.=-~:;.:';:'" :...~:.:..:.....:=--:.....:.:..:..~:.. ~."L..:"_~::,'~:.:_:..~:o..-:..-~,~~;..:.:..o~.:"";,,,;:;:,:,~:..::,::=--:;,;,;,,,:,.::.::,::::':=--=-:-~ l\p.p.r9y~.d_ _ f9T_ _G.Jty_ J~QUItc),,:Ll'..&..~ u~O~__.];....~ Robert T. Herrera CIty Manager I - Z3 -() l ... "-'0---___ ....-. .l.. " .- " .. .. " - G... .. " .-.-.- __ 0.... --... .- ....._......_._.- DATE :.......~ _..~... _....;. ._~... !'_~_~':_...;;'~...o.:.~;.-~~.;.~~-~-r~-_-_-_:"..._-~-:""~~-_-__.._..___,..&~"--_-_-_-~_. _' _,_-~~_.._.._.._.-__~_~ ~-=- -=-_-....-_ ~~...~-..:..-.... _ _ _.'" ... .. ___