5.1.A. ERMUSR 10-11-2011 - Laserfiche WebLink

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Elk River Municipal Utilities 13069 Orono Parkway • P.O. Box 430 Elk River, MN 5 5 3 30-0430 UTILITIES COMMISSION MEETING PO~NppEBED 81 ~H~~~~ ;.µ~. .~ Phone: 763.441.2020 Fax: 763.441.8099 TO: FROM: Elk River Municipal Utilities Commission Theresa Slominski -Finance and Office John Dietz -Chair Manager Daryl Thompson -Vice Chair Al Nadeau -Trustee MEETING DATE: AGENDA ITEM NUMBER: October 11, 2011 S.la SUBJECT: Review and Consider Insurance Options and Renewal BACKGROUND: This year we have an unprecedented (to my knowledge) decrease of 9.5% to our health insurance plan rates. Instead of discussing how to manage an increase we can discuss other components of the health insurance. We have considered offering a Health Savings Account (HSA) plan alongside the current 100% Coverage Awaze Gold (AG) plan in the past but never implemented it, largely because of the staff concern of meeting the deductible in the first year. We would like to be able to offer this HSA plan option in 2012 and provide some assistance in meeting that deductible. DISCUSSION: HSAs have been azound now for quite some time and have been utilized by many companies as a means of reducing premium cost and encouraging health conscious decisions from the participants. In an HSA plan, the participant has a vested interest in the utilization and preservation of the funds, rather than ahands-off or disconnected association because it is the insurance company's funds in the AG plan. Obviously, our staff is doing a goodjob of managing their healthcare and is already making some health conscious decisions because we have had low utilization the past three years and received the reduction in premium cost for 2012. This is the type of group that would benefit from an HSA and creates awin-win situation as both the employer and the employee recognize premium decreases. An HSA may not be the right plan for everyone, but we provide the employee with a choice if we offer the two plans. With an HSA account, there aze two components, a premium payment component and a deductible funding component. The premium component is a shared cost between ERMU (80%) and the employees (20%) now. The premiums are much lower in an HSA because there is a high deductible and the employee pays all of their health care costs for doctor visits, prescriptions, etc. out of pocket until the deductible is met. The deductible funding component would be new and can also be shared by the employee and the employer.