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ITEM 5.7. <br />MEMORANDUM <br />er TO: Mayor & City Council <br />FROM: Lori Johnson, Assistant City Administrator <br />DATE: June 19,1995 <br />SUBJECT: Discuss Health Insurance Renewal Bids <br />At the Tune 5, 1995, Council meeting, some preliminary non-union group health quotes <br />and information were presented. Action on the renewal was delayed until HealthPartners <br />submitted its renewal rates. All of the rates have now been received. The two plans being <br />considered aze renewal of the current HealthPartners plan and the Medica Premier <br />Chamber plan. <br />Because of the new law for small groups, our rates are now based on age. We no longer <br />receive set single and family rates. Each time an employee or dependent is added or <br />deleted and each time an employee changes from one age group to another, the premium <br />charged will change. Under the new method of calculating premiums, each employee's <br />premium is based on his or her age and dependent coverage is based on the spouse's age <br />and the number of dependents. There are two rates for children depending upon whether <br />• only one child is being covered or if two or more children are being covered. Based on <br />the current census information the average rates are as follows: <br />single family <br />HealthPartners $158.23 $555.21 <br />Medica Premier $150.88 $502.33 <br />Both plans aze basically the same except that Medica's prescription co-pay is $2.00 <br />higher. Of course, most of the clinics and hospitals that are part of the Medica network <br />are different than the ones used by HealthPartners; Mork and Fairview are members of <br />both networks. The risk pool for HealthPartners is much larger than the one for the <br />Medica plan. However, the Medica plan is new, and it is anticipated that the number of <br />enrollees will increase substantially. The major benefit of the Medica plan is the three <br />year contract which guazantees no more than a six and one half percent increase for <br />renewal in 1996 and no more than a six percent increase for renewal in 1997. <br />Another issue that needs to be addressed is how premiums will be paid given the fact that <br />the average rates could change monthly based on the individual premiums charged. If <br />each employee is responsible for paying his or her premium, some employees will see a <br />substantial decrease in the cost of their family coverage. There is also the possibility that <br />an employee with single coverage would have a premium cost above the City <br />• <br />13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425 <br />