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City Council Miautes Page 11 November 5, 2007 • The meeting was re-adjourned at 7:54 p.m. 9.1. Health Insurance Update Ms. Wipper presented the staff report. Ms. Wipper stated the dental rates did not increase for 2008, but the health insurance rates went up significantly and therefore, the council is asked to consider terminating the contract with B1ueCross Blue Shield. She introduced the City's insurance brokers, Barry Rosenberg and Rick Nelson of Minnesota Insurance Services, who were present at the meeting. Mr. Rosenberg explained the bid received by HealthPartners, who offered renewal of the current plan designs at the lowest premium rates, which are 16-20% increases over 2007, and guarantee no more than a 16% rate increase for 2009. Councilmember Farber asked why cities continue to see high rate increases from pear to year, and commented that the insurance companies can't be losing money each pear. Mr. Rosenberg agreed but stated city employees participating in group health insurance had a large number of claims in the last year. He explained the HDHP with the HSA, and stressed the importance of how these plans are funded. The premium rates quoted by HealthPartners fora $2,200 deductible plan are 21.5% lower than the renewal rate for the $500 deductible plan. Mr. Rosenberg continued to explain the plan has to be funded properly in order for this to • be successful. Mayor Klinzing asked how the city would accomplish this. Mr. Rosenberg stated you don't have to contribute much. For example, for single coverage, $59.23 a month could go into the HSA for a yearly total of $720 or a matching plan up to a certain dollar amount. Ms. Johnson stated that would require adjusting the budget but the incentive for employees to use the HSA would be good with the aty's contribution. Mayor Klinzing asked how that would be done. Mr. Rosenberg stated it takes from 12 to 20 employees to start this but are they qualified and willing to contribute their own money. He said there was a good turnout from employees at the meetings and they asked good questions. He discussed how an HSA is similar to an IR.A. Ms. Johnson commented that there is no control over which employees chose this plan. Mr. Rosenberg agreed. Mr. Nelson stated there is a challenge when you go with an HSA as it's a huge monthly increase. It gets people to see what they're spending. You need to look at it over a 12 month period, and HSA may make more sense. Employees need to educate themselves about their • health care costs.