09-25-17 Regular Meeting of the La Porte City Council

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REQUEST FOR CITY COUNCIL AGENDA ITEM Budget Agenda Date Requested: 09-25-17 Source of Funds: Insurance Fund Requested By: Matt Hartleib Account Number: 014-6144-515 Department: Admin – Human Resources Amount Budgeted: $7,634,287 Report: Resolution: Ordinance: Amount Requested: Recommendation. Exhibits: Impact Projections of Recommendation results in cost reduction Exhibits: Budgeted Item: YES NO SUMMARY & RECOMMENDATION The 172 Board met on Monday 09/18/17 to finalize a recommendation regarding changes for the 2018 plan year. This recommendation is intended to address the continually rising cost of providing medical insurance to employees in a manner that enables the City to recruit and retain quality employees while administering a sustainable and fiscally responsible self-insured plan. The Chapter 172 board reviewed and discussed several options including both plan design changes and premium schedule changes. The recommended changes are: Plan design changes: Move from a PPO to EPO Network which will eliminate any City provided subsidy of medical services provided outside of the designated network. Adding a deductible/coinsurance responsibility to members on the PPO 500 plan in addition to the ER copay of $150 Instituting mandatory usage of mail provision of maintenance drugs instead of the current option for members to obtain those drugs via retail locations. Premium schedule changes: For plan participants onboard prior to 01/01/2018, premiums will increase up to 70.2%, as outlined in the attached exhibit. Premiums for the costliest plan (PPO 500) will increase the most with premiums for the least costly plan (HF 1500) remaining unchanged. Plan options that include only the employee (no dependents) will also remain unchanged. Employees on the plan prior to 01/01/2018 will be able to move to any of the three plans with the new premiums. Employees who become eligible for benefits on or after 01/01/2018 will have the option to enroll in the HF 1500 plan at rates outlined in the attached exhibit. These recommended changes project to result in total savings/cost transfer of $488,444.00 for the City in year one. Please note that the estimated savings/cost transfer is based on the current enrollment in each plan and does not factor in employee migration to lower cost plans. It is 172’s recommendation that we implement these changes, educate employees through the open enrollment period and beyond regarding optimal usage of the plan, and analyze the impacts during the budget process next year to determine what other steps should be considered moving forward. Action Required by Council: Consider approval or other action of a recommendation from the Chapter 172 Employee/Retiree Insurance and Benefits Board regarding plan design and premium schedule changes for the 2018 plan year. Approved for City Council Agenda Corby Alexander, City Manager Date