4.0. SR 12-06-1999 - Laserfiche WebLink

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. . . Employee Health Insurance December 6,1999 Pae-e 2 of3 A cafeteria program was proposed to the City Council by an employee committee in 1990, and was again presented to the council in 1994. Both times the proposal was rejected by the council. I recommended the City Council vote against both proposals based mainly on cost. For example, the difference between what the city offers (based on $355/month) and the cost of single coverage insurance amounts to about $96 per month times 12 months times 40 employees, or $46,000. This amount could be even higher if more employees are selecting single coverage and the city contribution amount increases. While this is expensive to the city, I believe we need to move toward something on this order to be able to attract and retain quality employees and to improve employee morale. This is somewhat an acknowledgment that it is a much different employee market in 2000 than it was in 1990 or 1994. An employee committee needs to work on this and present a recommendation to the council in the not too distant future. Dealing with the rising cost of family medical insurance premiums is very difficult. In spite of changing providers, the city premium for family coverage is again going up dramatically for 2000. We experienced similar increases in 1989 and in 1994. If nothing is done for our employees that have family insurance coverage, they will see a minimum of an extra $79 being taken out of their check for insurance. This is not unlike the $90 per check increase the family coverage employees saw in 1994. (In some cases this $79 per check figure is higher because of the deductible plan that the employee chose in 1999.) The easy solution for the City Council is to give more money so that the employee selecting family coverage will not have to pay as much out of each paycheck. However, the city has to look at the cost of this easy solution. For example, assume the city offered an extra $100 per month for a contribution of $455 in 2000. There will be about 20 employees with family, spouse, or child coverage that will realize this benefit and this will cost the city about $24,000 (20 employees x $100 x 12 months = $24,000). Additionally, the city will see a number of single coverage employees switch to either family or employee/child or employee/spouse coverage as it will be cheaper with the city than where they are currently getting this insurance. The difference between the single insurance policy and a $455 city contribution is $196 per month and if only 10 employees made an insurance policy switch, this would amount to an extra $23,000. By adding these together it is conceivable that the solution of offering an extra $100 per month for insurance could cost the city about $47,000. (However, the city will have some additional expense regardless, assuming a "typical" contribution increase is made by the city.)