5.4 ERMUSR 10-10-2017 - Laserfiche WebLink

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Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Theresa Slominski—Finance & Office Manager MEETING DATE: AGENDA ITEM NUMBER: October 10, 2017 5.4 SUBJECT: Wage and Benefits Committee Update ACTION REQUESTED: Approval of dental insurance provider, ancillary insurances provider, health insurance renewal, and H.S.A. contribution amounts. BACKGROUND: The Wage and Benefits Committee meets at least annually to discuss issues of insurance, staff projections,wages, and benefits to bring recommendations to the full Commission for approval. This meeting focused on the insurance renewals, and also discussed some considerations for future meetings. DISCUSSION: Our dental insurance, and ancillary insurances of long term disability and life insurances, are up for renewal with the expiration of a two year rate guarantee when we switched to Assurant in 2015. Assurant was purchased by SunLife shortly after we switched and so the renewal is with SunLife. The SunLife renewal proposed 18.47% increase for all services, or 13.6%for dental and 26.63%for life and long term disability. In anticipation of a sizeable rate increase with the rate guarantee expiration, our broker went out for bid on the dental and ancillary services. Upon review of the bids, our broker recommended splitting off the dental from the ancillary services (having two separate providers) for the greatest savings. Additionally,the long term disability insurance benefit of 67%tax-free was no longer a viable option, as 60% is the norm in the industry and was what was submitted with the returned bids. The committee reviewed summaries of the five bids received, along with the broker recommendations. The committee determined that separating the dental from the ancillary services was the best option.For dental insurance, Delta provided the best rate option with a 5% decrease from our current rates that also includes an increase in the annual maximum benefit from $1,500 to $2,000, and a two year rate guarantee. Also, Delta has had very modest rate increases over the past several years so we should see more stability in our future rates,which should eliminate the need to switch providers every few years just to keep the rates manageable. For ancillary insurances of life and long term disability,the committee determined that Principal provided the best rate option with at 19.06%decrease from our current rates and a two year guarantee. Page 1 of 2 79