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<br />Item # 3.8. <br /> <br /> <br />MEMORANDUM <br /> <br />TO: Mayor and City Council <br /> <br />FROM: Lori Johnson, Finance Director <br /> <br />DATE: November 15,2004 <br /> <br />SUBJECT: Consider 2005 Health and Dental Insurance Contracts <br /> <br />At last Monday's Council work session, preliminary information on the upcoming health <br />and dental insurance contract renewals was presented. The Council agreed that based on <br />the information currently available, the best option was to accept the proposal from Blue <br />Cross and Blue Shield (BCBS) through the Service Cooperative for health insurance. At <br />that time I asked that the approval wait until after a meeting with representatives from <br />BCBS and the Service Cooperative to discuss renewal concerns and to get additional <br />information on the plans. Dental insurance was not discussed as the HealthPartners <br />renewal includes a five percent increase which is acceptable. <br /> <br />Barry Rosenberg and Rick Nelson, the City's brokers, Lauren Wipper and I met with <br />BCBS and Service Cooperative representatives on Tuesday. We discussed at length our <br />concerns about next year's renewal. After discussing the changes the Service <br />Cooperative has made in the methodology to calculate rate increases, we felt that there <br />would be more stability with this plan than we had experienced in the past. We also <br />requested a two year contract or a rate cap for the second year. Although this is not <br />something that is normally offered, the Service Cooperative did confirm on Thursday that <br />Elk River's rates would not increase more than 16 percent next year. This may seem a bit <br />high, but with the trend in health care costs and rate increases being over 12 percent, the <br />cap of 16 percent is not excessive. Having a rate cap is very advantageous and should <br />provide some level of comfort for next year in a climate where premium increases of 20 <br />percent are common. Hopefully, the actual rate increase will be lower than the cap based <br />on the City's actual claims experience. <br /> <br />At the work session we also discussed Health Savings Accounts, Health Reimbursement <br />Arrangements, and VEBA options. Offering a VEBA will be strongly considered next <br />year. There was some interest in this type of plan when it was discussed at employee <br />meetings; more may have been interested had they known more about the plan and the <br />