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1. Health InsurancerK �� City of Kalispell Post Office Box 1997 - Kalispell, Montana 59903-1997 -Telephone (406) 758-7000 Fax - (406) 758-7758 y4 REPORT TO: Honorable Mayor and City Council FROM: Chris Kukulski, City Manager SUBJECT: Health Insurance MEETING DATE: June 21, 2004 BACKGROUND: Attached is a spread sheet that represents the current and recommended health insurance premiums from Blue Cross and Blue Shield. The health Insurance committee which is made up of two representatives for the AFSCME Union, and one representative from each of the other bargaining units, retirees and non union staff is recommending that the city no longer remain self insured. Also included on the spreadsheet are the costs per the Council discussion of June 16, 2004 of splitting the increase 50150 and the insurance committees recommendation on how to create a new rate structure. FISCAL EFFECTS: The increased cost will be dependent on which direction the Council recommends. The health insurance committee's recommendation will result approx. a 6.5 mill increase and the 50150 proposal would increase will result in approx. a 4.25 mill increase. RECOMMENDATION: The City Council provide the city manager with direction as to what portion of the insurance premiums are to be paid by the city and which are to be paid by the employees. Respectfully submitted, Chris A. Kukulski, City Manager Suggested rate splitting increase 50150 council /employee Fully Funded Blue Choice 70/30 plan plus $125,000 run out FYI 2004 rates RATE CITY EMP RATE CITY $ 468.00 $ $ 923.00 $ $ 1,063.00 $ Retirees -medicare $ 221.25 $ $ 442.50 $ 416.00 $ 52.00 758.00 $ 165.00 846.00 $ 217.00 100% - $ 221.25 $ 442.50 EMP $ 364.00 $ 364.00 $ - $ 720.00 $ 656.50 $ 63.50 $ 834.00 $ 731.50 $ 102.50 Retirees -medicare 100% $ 196.00 $ $ 196.00 $ 375.00 $ $ 375.00 18-Jun-04 Committee comments: The problem with this rate is that the employee share for two party $165 is three times the single rate $52. The rate should be no more than twice the single rate. Blue Cross's total rate for two party S923 is shghlty less twice the single $468. Additionally the employee increase for family from $102.50 to $217 is 112%, City increase is 14%. 2 party increase from $63.50 to S165 is 159%, City increase is 14%. HEALTH COMMITTEE - recommended rate structure Fully Funded Blue Choice 70J30 plan plus $125,000 run out FYI 2004 rates RATE CITY EMP RATE CITY EMP $ 468.00 $ 418.00 $ 50.00 $ 364.00 $ 364.00 $ - $ 923.00 $ 823.00 $ 100.00 $ 720.00 $ 656.50 $ 63.50 $ 1,063.00 $ 913.00 $ 150.00 $ 834.00 $ 731.50 $ 102.50 Retirees -medicare 100% Retirees -medicare 100% $ 221.25 $ - $ 221.25 S 196.00 $ - $ 196.00 $ 442.50 $ - $ 442.50 $ 375.00 $ - $ 375.00 Committee Comments: Committee felt a flat rate for employees was fair and equitable. Consideration - the County family rate for employees is $202 a month, however, their deductible is $300 with 75/25 plan. Our plan has a $1,000 deductible and a 70/30 co -pay which means more out of pocket to our employees. The increase to employees will be just over 50% for both two party and family. ASFCME raises..30 hour=$52.00 a month