7.1. SR 11-20-2006 - Laserfiche WebLink

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City of Elk River REQUEST FOR COUNCIL ACTION Agenda Section Meeting Date Administration November 20,2006 Item Description Consider Ci Contribution to Flexible Benefits Plan Administrator Introduction At the November 13 worksession, the Council approved a motion increasing the City's contribution to the employee flexible benefits plan by $50,000 and directed staff to present a recommendation for the contribution rates for the four tiers in the plan. Further the Council requested that a $1,000 deductible health insurance plan be researched to see if it could be offered as an option to employees. Finally, the Fire Chief has requested that firefighters be covered by $10,000 of life insurance to assist in recruiting and retaining employees. Discussion Flexible Benefits Plan Contribution: Staff has reviewed several options to distributing the additional funds allocated by the Council. The proposed distribution increases the monthly contribution to family coverage by $125, employee and children and employee and spouse coverage by $65, and single coverage by $32. This allocation was selected because it brings the amounts paid by employees for dependent coverage closer by percentage. Single coverage is still paid entirely by the city for $25 co-pay, $250 deductible coverage. Single employees will pay for part of the coverage to buy the $25 co-pay plan. Based on the current demographics, this option will cost $48,660 per year. This leaves a slight cushion for employees who change plans and still remain under the $50,000 allocated by the Council. $1,000 Deductible Option: The rates for a $1,000 deductible are favorable for families willing to take on the additional risk of out of pocket expenses, but not for the other three tiers. There is also concern that employees who would be willing to take the risk of the $500 deductible may not be willing to take on the higher deductible. For these reasons, we are recommending that a $500 deductible be offered in 2007 and that a higher deductible be considered for 2008. Life Insurance: Life insurance rates were requested this year after getting notification from our current company that the rates would increase on January 1, 2007. The best rates available are from the Standard Insurance Company. These rates are $.63 per employee per month less for a $25,000 life and AD&D policy with better benefits. Fire Chief Bruce West included funds in his 2007 budget to provide $10,000 of life and AD&D coverage to firefighters not already covered by the city's life insurance plan. He feels that his will help him recruit and retain officers. The cost to provide this benefit is $1,200 per year based on the rates from the Standard Insurance Company. c: \Documents and Settings \ tallard\Local Settings \ Temporary Internet Files \ OLKF\Flex ben contribution. doc