5.8. SR 06-05-1995 - Laserfiche WebLink

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ITEM 5. 8. ~} MEMORANDUM ver TO: Mayor & City Council FROM: Lori Johnson, Assistant City Administrator DATE: June 5, 1995 SUBJECT: Health Insurance Proposal Last fall, the city went through a rather lengthy and complex bidding process in an effort to reduce group health insurance costs for both the city and employees. As a result of the bidding process and the new Minnesota Care Law, the city was split into two employee groups; one for the police union and the second for all other non-union employees. The police union qualified for the new Minnesota Care Law allowing them to get much lower premium rates and better coverage. At that time, the non-union group did not qualify because the law only allowed for groups with 29 or fewer employees. The law has been expanded as of July 1, 1995, to cover groups with up to 49 employees. Since the non-union group now qualifies under the Minnesota Care Law, the city has • requested bids for health insurance for the contract period beginning July 1, 1995. Unfortunately, I do not have all of the bid information compiled yet. I have, however, reviewed the state statutes relating to the Minnesota Care Law. The law states that an employer that no longer meets the requirements of this law as a small employer (has more than 49 eligible employees, for example} may continue under the small employer contract until renewal. This means that the city would need to requalify for renewal on July 1, 1996. The city currently has 48 eligible non-union employees (including the zoning assistant) so only one additional non-union employee could be added prior to July 1, 1996, for renewal under the Minnesota Care provisions. The possibility of not being eligible under the Minnesota Care law in 1996 creates another issue. Should the city change coverage in July, 1995, in order to get lower premiums for a one year period knowing that unless no more than one new employee is hired prior to July 1, 1996, or unless the law expands the number of employees allowed under the small employer definition, we would not qualify for renewal in 1996? The city would then be subject to market rates and could be denied coverage on the basis of our claims and health history information. As you may recall, when insurance was bid in 1994 seven companies declined to quote based on our claims and health history. We received only one quote which was a renewal quote from Group Health. If the Council is in agreement that only one new non-union employee will be added prior to July 1, 1996, so the city qualifies for 1996 renewal, it would be best to change to one of the Medics plans offered under the • 13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425