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HomeMy WebLinkAbout2011-05-09 Council Packet - Work SessionOnzi E E/C E/S E/F $ 558.46 1,070.24 1,270.72 1,782.16 Premium Rates $ 6,701.52 $ 12,842.88 $ 15,248.64 $ 21,385.92 Annual Total 187,642.56 FY04 128,428.80 FY05 335,470.08 FY06 834,050.88 FY07 ,485,592.32 5.66% 4.59% 7.43% 7.88% Employee Contribution FY08 FY09 FY10 FY11 Average 9.09% 8.38% 7.36% 6.76% 7 14% Total Costs Total Premium Max Self Insurance Unutilized Self Insurance HRA Admin Fee Total Health Care $ 1,485,592.32 $ 297,500.00 $ (104,125.00) $ 12,000.00 $ 1,690,967.32 !E /C E /S E/F Premium Self Insurance + HRA W /unutilized included 731.33 $ 8,776.01 1,243.11 $ 14,917.37 1,443.59 $ 17,323.13 1,955.03 $ 23,460.41 Annual Total $ 245,728.42 E $ 149,173.75 E/C $ 381,108.97 E/S $ 914,956.18 E/F $ 1,690,367.32' Premium + Self Insurance + HRA (7.14% of total) 52.24 $ 626.94 $ 88.80 $ 1,065.66 $ 103.13 $ 1,237.52 $ 139.66 $ 1,675.95 $ Annual Total $ 17,554.22 10,656.60 27,225.47 65,362.18 20,798.48' Total Costs Without Unuti Total Premium Max Self Insurance Unutilized Self Insurance HRA Admin Fee Total Health Care lized included $ 1,485,592.32 $ 297,500.00 12,000.00 795,092.32 E E/C E/S E/F Prem $ 1,531.24 $ 2,042.68 um + Self Insurance + HRA W /out unutilized included 818.98 $ 9,827.78 1,330.76 $ 15,969.14 $ 18,374.90 $ 24,512.18 Annual Total $ 275,177.91 E $ 159,691.43 E/C $ 404,247.86 E/S $ 955,975.12 E/F $; 1.795092.32 Premium +Self Insurance + HRA W /out unutilized (7.14% o $ 58.51 $ 702.07 $ $ 95.07 $ 1,140.80 $ $ 109.39 $ 1,312.66 $ $ 145.92 $ 1,751.09 $ Annual Total $ otal) 19,658.02 11,407.96 28,878.46 68,292.47 28, 236.91 Max Self Insur. Per /Employee Self Insurance Per /Employee HRA per Employee 3,005.05 1,953.28 121.21 Employee (E) Employee /Child(ren) (E /C) Employee /Spouse (E /5) Employee /Family (E /F) 28 $ 10 $ 22 $ 39 $ Current Plan 70.00 56.00 126.00 Monthly for all Yearly for a l l Monthly Total 700.00 1,232.00 4,914.00 $ 6,846.00 $ 82,152.00 Administration Proposal 59.00 112.00 131.00 177.00 Monthly Total $ 1,652.00 $ 1,120.00 $ 2,882.00 $ 6,903.00 $ 12,557.00 $ 150,684.00 7.14% for all but (E) $ 89.00 $ 103.00 $ 140.00 Monthly Total Difference From Admin Proposal 890.00 2,266.00 5,460.00 8,616.00 103,392.00 47,292.00; BUDGET WORK SESSION MAY 9, 2011 6:00 P.M. CITY COUNCIL CHAMBERS AGENDA ITEM 1: BUDGET REVIEW a. Changes to Health Care (continuation of 4/19/2011 discussion) b. Review of Budget by Department ITEM 2: SCHEDULE ADDITIONAL WORK SESSIONS► ITEM 3: ADJOURNMENT ithk KENA ALASKA "village with a Past, C with a Future 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907- 283 -7535 / FAX: 907 - 283 -3014 MEMO: TO: City Council FROM: Rick Koch DATE: May 6, 2011 SUBJECT: City of Kenai Budget FY12 — Employee Health Care Program The purpose of this correspondence is to submit for your consideration Administration's proposed changes to the Employee Health Care Program. The changes represent monetary components of Administration's proposed FY12 Budget. Before I discuss the specifics of Administration's proposal, I want to identify the goals that guided the process. My goals are as follows: Provide a quality health care program for City employees at a reasonable and fair cost, not only to our employees, but to the citizens of Kenai, the shareholders of our Municipal Corporation. Maintain open dialogue with our employees throughout the process so that they are informed of any changes which may be proposed by Administration. Encourage Council Members to meet with me to discuss Administration's ongoing work and provide an opportunity to ask questions and make suggestions. Identify a logical process in which future increases to health care costs may be addressed. Research and examine other Alaskan Municipalities with shared employee /municipality health care cost systems to assure what is being proposed is consistent with similar plans. Support and institute an employee wellness program. I believe all of the above goals were met and /or surpassed. That being said, it is important that anyone considering the Administration's proposal to realize that there is no silver bullet or magic solution to the health care issues the City is facing. Administration's proposal attempts to present a fair and reasoned solution to a bad (and expensive) situation. Not everyone will be pleased with the proposed changes, some employees believe strongly that the individual employee should not pay health care premiums, other employees believe strongly that all employees should pay health care premiums at some percentage consistent with the overall premiums. Outside of our employees, I have been approached by Citizens of Kenai that believe strongly that municipal employees should have to pay more for their health care. The cost of health care premium increases absorbed by the City since the last increase to employee health care premiums, including Administration's P112 proposal (FY06- FY12), is $603,312.16 or roughly the equivalent of one (1) mill of property tax. The proposed increase in employee annual premiums over that same time period is proposed to be 562,100. As was discussed in the Council's budget work session on April 19`h, the financial magnitude of the premium increase for FY12 requires that a decision on the funding components of employee health care be determined prior to addressing other areas within the proposed budget. As you are aware, Administration had initially included funding in the proposed FY12 budget for a 15% increase to health care premiums. The initial proposed renewal quote was for a premium increase of 56 %, that was subsequently reduced to 50 %. Neither of the initial proposed premium increases included any modifications to the plan benefits. At approximately 2PM on Wednesday, May 4th the City received the final renewal quote, it provides for 39.9% increase in premium, increases in deductibles, and increases in maximum out of pocket limits. An explanation of the changes to plan benefits is provided in the Finance Director's memorandum to me dated May 6, 2011 (attached exhibit A). Administration received proposals from four (4) other carriers in addition to the Aetna renewal quote. After painstaking review, Administration is proposing to maintain coverage through the Alaska Political Subdivision Plan /Aetna. The proposed changes are summarized as follows: All employees participate in payment of premiums. This will require a change to the Kenai Municipal Code. Employee premiums are based on a 9% share of the health care premium and self - insured deductible utilization. Annual deductible increases are 5100 for an employee, $250 for an employee with child(ren), $200 for an employee with spouse, and $300 for an employee with family. There is no net increase to maximum out of pocket limits. The City will fund an employee wellness program. Administration's proposal results in no other modifications to the draft budget document that was submitted to Council on April 7, 2011. The changes to health care result in the General Fund projected surplus decreasing from $87,277 to $64,439. The following are attachments to this document: Exhibit A — Finance Director Memo Exhibit 8 —Summary of Historical Costs Exhibit C — Detailed Comparison of Current Aetna Plan with Proposed Aetna Plan with 9% Employee Share Exhibit D — Comparison of Employee Health care Costs with Other Alaskan Municipalities Thank you for your attention in this matter. If you have any questions, please contact me at your convenience. attachments "V'llae with a Past, Gay with a Future" FINANCE DEPARTMENT 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 - 283 -7535 ext 221 / FAX: 907- 283 -3014 To: Employees with City Health Care From: Terry Eubank, Finance Director Thru: Rick Koch, City Manager Date: May 6, 2011 Re: Employee Health Care Renewal There have been new developments regarding the FYI2 Health Insurance Renewal since our Last meeting. Aetna has proposed to reduce the renewal increase from 50% to 39.9% in exchange for changes in coverage. Under Aetna's proposal employee deductibles would increase from $1,500 individual /$3,000 family to $2,000 individual and $4,000 family. Also the maximum out of pocket (at plan participating hospitals) would increase from $2,500 individual /$5,000 family to $3,000 individual /$6,000 family. The City has also received prices from four other carriers interested in the City's business. Premera, Oregon Dental Services (ODS), CIGNA, and Alaska Public Utility Trust (APUIT). Quotes from Premera, ODS, and CIGNA were for high deductible plans similar to the City's current plan. Rates quoted by Premera, ODS, and CIGNA are not competitive with the Aetna renewal rates at a 39.9% increase, With an increase in deductible and maximum out of pocket by the same amount there is opportunity for the City to self-insure for both. By the City increasing the employee medical deductibles and eliminating the reimbursement for up to three dental deductibles, the total health care deductible increased from $200 individual, $400 employee with spouse or children, and $450 family, to $300 individual, $600 employee and spouse, $650 employee and children and $700 family and self-insuring for the remaining deductible increase, the maximum employee out of pocket (for both deductible and co -pay) will increase from $1,200 to $1,300 for an individual, from $2,400 to $2,600 for an employee and spouse, from $2,400 to $2,600 for an employee with children (calculated using a employee and two children), and from $2,400 to $2,650 for a family (calculated using a family size of four). Also included in the latest recommendation is plans to fund an employee wellness program that will include financial incentives for employees to exercise and see their doctor regularly. Employees and their spouses each have the opportunity to eam $275 per year in cash incentives that can be applied to their portion of heath care costs. The wellness program is expected to cost $20,060 in the first year and $17,060 in subsequent years and is being proposed to be fully funded by the City. -4- Summary of Administration's Proposed Changes to City of Kenai Health Care Benefits for FY2012 Budget May 5, 2011 Employee Costs Based on 91% of Health Care Cost Borne by City and 9% of Health Care Costs Borne by Employees Coverage Classification Present Annual Deductible` Proposed Annual Deductible Increase Present Annual Premium* Proposed Annual Premium Increase Total Annual Increase Employee $ 20000 $ 300.00 $ 100.00 $ - $ 708.00 $ 708.00 $ 808.00 Employee w /Spouse $ 400.00 $ 600.00 $ 200,00 $ 672.00 $ 1,572.00 $ 900.00 $ 1,100.00 Employee w /Child(ren) $ 400.00 $ 650.00 $ 250.00 $ 840.00 $ 1,356.00 $ 516.00 $ 766.00 Employee w /Family $ 450.00 $ 700.00 5 250.00 $ 1,512.00 5 2,124.00 $ 612.00 $ 862.00 * Includes $50 Dental Deductible Reimbursable for up to hree participans AETNA Plan Changes Dependent children will remain eligible under the plan up to age 26. Remove lifetime maximum of $2 million individual Plan -- Increase deductible to $2,000 and out of pocket limit to $3,000. Additional out of pocket for non -par hospital care woutd be 51,000 Family Plan -- Increase deductible to $4,000 and out of pocket limit to 56,000 Additional out of pocket for non -par hospital care would be $2,000. Add a $500 per admission deductible for non -par hospital admissions. Remove additional deductible currently in place for non -par hospital care. Remove $500 maximum for preventive care. Make generic medications mandatory Remove pre - existing conditions limitation for children under age 19 City Deductible Changes Eliminate $50 per participant dental deductible reimbursement. Individual deductible increase to $250. Family deductible increase to $500. CITY OF KENAI FY2012 BUDGET SUMMARY OF HISTORICAL COSTS AND FY12 PROPOSED PLAN CHANGES Fiscal Year FY03 FY04 FY05 FY06 P107 FY08 FY09 FY10 FY11 Employee Contribution to Health Care $ 44,352.00 $ 44,532.00 $ 88,704.00 $ 88,704.00 $ 85,848.00 $ 83,328.00 $ 84,000.00 $ 82,152.00 P112 (Proposed) $ City Contribution Total Health Care to Health Care Costs $ 796,403.52 $ 796,403.52 $ 739,791.36 $ 784,143.36 $ 924,851.16 $ 969,383.16 $ 1,105,566.48 $ 1,194,270.48 $ 1,037,425.92 $ 1,126,129.92 $ 858,376.80 $ 944,224.80 $ 910,996.92 $ 994,324.92 $ 1,057,111.92 $ 1,141,111.92 $ 1,133,403.84 $ 1,215,555.84 150,804.00 $ 1,528,163.32 $ 1,678,967.32 Employee Percentage 0.00% 5.66% 4.59% 7.43% 7.88% 9.09% 8.38% 7.36% 6.76% PY12 Proposed Plan Includes an increase in Annual Employee Paid Deductibles as follows: Annual Coverage Classification Present Plan Proposed Plan Increase Employee $ 200.00 $ Employee w /Child(ren) $ 400,00 Employee w /Spouse $400.00 Employee w /Family $ 400.00 $ 8.98% 300.00 $ 100.00 $650.00 $ 250.00 600.00 $ 200.00 700.00 $ 300.00 FY12 Proposed Plan Includes an Increase in Annual Employee Premiums as follows: Coverage Classification Employee Employee w /Child(ren) Employee w /Spouse Employee w /Family Present Plan $ $ 840.00 $672.00 $ $ 1,512.00 $ Annual Proposed Plan Increase 708.00 $ $1,356.00 $ 1,572.00 $ 2,124.00 $ 708.00 516.00 900.00 612.00 City Percentage 100.00% 94.34% 95.41% 92.57% 92.12% 90.91% 91.62% 92.64% 93.24% 91.02% 9% Employee Share ETNA Current vs AETNA Proposed with: Elimination of dental deductible reimbursement Employee medical deductible increase to $250 Individual and $500 Family Maximum Health Care Costs Excluding Premium at Participating Hospitals Total City Employee Premium Costs Total City Employ dividual Plan Individual Plan Current: Dental Deductible ($50 per part.) Medical Deductible ($1,500 x i00 %) Medical Out of Pocket: (55,000 x 20 %) Total Medical Expenses (56500) Proposed: Dental Deductible ($50 per part.) Medical Deductible (52,000 x 100 %) Medical Out of Pocket: (55,000 x 20 %) Total Medical Expenses (59,000) 50 50 1,500 1,300 1,000 - 2,550 1,350 50 - 2,000 1.750 1,000 - 3,050 1,750 200 1,000 1,200 50 250 1,000 1,300 Total City Employe Employee & Spouse Current: Dental Deductible (550 per part.) Deductible ($3,000 x 100 %) Out of Pocket: (510,000 x 20 %) Total Medical Expenses (513,000) 100 100 3,000 2,500 2,000 - 5.,100 2,700 400 2.000 2,400 Proposed: Dental Deductible (550 per part) 100 - 100 Deductible (54,000 x 100 %) 4,000 3,500 500 tut of Pocket: (510,000 x 20 %) 2,000 - 2,000 To Medical Expenses (514,000) 6,100 3,500 2,600 Employee WI Current: Dental Deductible ($50 per part.) Deductible (53,000 x 100%) Out of Pocket: (510,000 x 20 %) Tot& Medical Expenses (513,000) dren Proposed: Dental Deductible (550 per part) Deductible (54,000 x 100 %) Out of Pocket: (510,000 x 20 %) Total Medical Expenses (514,000) Total City Employee 150 150 3,000 2,600 2,000 - 5,150 2,750 150 - 4,000 3,500 2,000 - 6,150 3,500 400 2,000 2,400 150 500 2,000 2,650 rent: 4,893 4,893 Proposed: 6,702 5,9 Total Cost Assuming 65% Deductible Utilization Total CI ty Employe ndividual Plan Current: 6,551 5,771 780 708 Proposed' 8684 7,1 Total City Employee Employee & Spouse Current: 10,995 10,323 672 Proposed' 15 249 13,677 1,572 Total City Employee Employee W /Chlldre Current: 9,381 8,541 840 Proposed: 12,843 11,487 1,356 Total City Employee Employee W /Family Current: Dental Deductible (250 per part) Deductible (23,000 x 100 %) Out of Pocket: ($10,000 x 20 %) Total Medical Expenses ($13,000) 150 150 3,000 2,600 2,000 - 5,150 2,750 400 2,000 2,400 Proposed: Dental Deductible ($50 per part.) 150 - 150 Deductible (54,000 x 100 %) 4,000 3,500 500 Out of Pocket: (510,000 x 20 %) 2,000 - 2,000 Total Medical Expenses (514,000) 6,150 3,500 2,650 Total City Employee Employee VV/Family Current: 15,479 13,967 1,512 Proposed: 21 386 19,262 2,124 Total City Employee Employee & Spouse Current: 14,310 12,078 2,232 Proposed: 19 214 15,952 3,262 Total City Employee Employee W /Children Current: 12,729 10,329 2,400 Proposed: 16 841 13,762 3,079 Total City Employee Employee WlFamily Current: 18,827 15,755 3,072 Proposed: 25 384 21,537 3,847 Ett-IIS T Paggfe Oi TOTAL ASSESSED VALUE Actual FY2009 City of Kenai Fiscal Year 2012 Operating Budget General Fund Budget Projection Actual FY2010 Original Budget Projection FY2011 FY2011 Budget FY2012 $ 599,191,558 $ 630,519,140 $ 654,763,371 $ 659,139,746 $ 662,423,646 MILL RATE 4.50 4.00 3.85 3.85 REVENUES Property & Sales Taxes Properly Tax Sales Tax Total Property & Sales Taxes State /Federal Revenue: PERS Funding Municipal Assistance Fish Tax Other Total State /Federal Revenue Other Revenue Licenses and Permits Ambulance Fees Interest Other Total Other Revenue Total Revenues Transfer From Other Funds Charges to other funds Capital Projects / Special Revenue Enterprise Trust Fund Total Transfers Total Revenues and Transfers EXPENDITURES /APPROPRIATIONS General Government Public Safety Public Works Parks, Recreation & Cultural Total Operating Expenditures Transfers or Non - Operating Total Expenditures /Appropriations Total Surplus (Deficit) Projected Lapse - 5% Adjusted Surplus (Deficit) Beginning Fund Balance Ending Fund Balance Nonspendable Restricted Committed Assigned 2,728,764 5,372,499 8,101,263 655,766 455,457 147,667 129,205 1,388 095 2,601,588 5,561,970 8,163,558 2,598,428 6,1 12,485 8,710,913 296,632 329,113 459,936 456,660 213,311 110,000 550.734 172,436 1 520.613 1,068, 209 2,598,428 6,393,250 8,991,678 336,838 456,660 152,249 264,029 1,209 776 3.65 2,627,254 6,489,149 9,116,403 507,745 446,474 200,000 172,436 1,326,655 220,955 86,164 91,000 53,100 66,000 226,237 260,948 275,000 275,000 300,000 564,031 145,689 200,000 200,000 250,000 934.663 1,038,713 967 785 997 055 823 680 1 945,886 1,531,514 1.533 785 1 535 155 1.439 680 11.435 244 11.215,685 11 312.907 11,736.609 11,882 738 1,310,613 1,159,613 1,216,800 1,216, 800 1,262,500 - 16,524 - - - 88,044 - 42,200 42,200 42,100 1.418 834 3,000 3,000 125.000 1,400.075 1 176.971 1 262.000 1,262,000 1,429.600 12 835 319 12.392,656 12.574,907 12 998.609 13 312 338 2,587,325 2,398,583 2,646,575 2,881,328 5,100.217 5,681,546 5,819,054 6,080,469 2,117,392 2,031,218 2,435,191 2,483,291 1,657.971 1.629.121 11.698 789 1.737,089 2,919,877 6,352,315 U 2,319,726 1.932.376 11,462,905 11,740,470 12,599,609 13,182,177 13,524,294 691,024 181.729 412 969 712,969 399,820 12,153,929 11,922,199 13,012,578 13,895,146 13,924,114 681,390 470,457 (437,671) (895,537) (611,776) - 62998C 559,109 678,215 681,390 470,457 192,309 (237,428) 64,439 11,004.219 11 685.609 10 635 305 12 156.056 11.918.636 11,685.609 12,155, 066 10, 827,514 11,918,638 11, 983, 077 (24,425) - (24,425) - - (248,512) (321,486) (317,414) (278,167) (375,687) (1,370,290) (1,370.290) (870,290) (1,070,290) (1,070,290) (1332.015) (1.332091) (1332.015) (1.454,015) (2,511.310) Unassigned $ 8,710,367 $ 9,132,199 $ 8.283,470 $ 9,116,146 $ _ _8,025790 TOTAL ASSESSED VALUE City of Kenai Fiscal Year 2042 Operating Budget Projection FY2013 $ 782,296,355 MILL RATE 3.85 REVENUES Property & Sales Taxes Property Tax Sales Tax Total Property & Sales Taxes State /Federal Revenue: PERS Funding Municipal Assistance Fish Tax Other Total StaterFederal Revenue Other Revenue Licenses and Permits Ambulance Fees Interest Other Total Other Revenue Total Revenues Transfer From Other Funds Charges to other funds Capital Projects i Special Revenue Enterprise Trust Fund Total Transfers Total Revenues and Transfers EXPENDITURES /APPROPRIATIONS General Government Public Safety Public Works Parks. Recreation & Cultural Total Operating Expenditures Transfers or Non - Operating Total Expenditures /Appropriations Total Surplus (Deficit) Projected Lapse - 5 "/ Adjusted Surplus (Deficit) Beginning Fund Balance Ending Fund Balance Nonspendable Restricted Committed Assigned Unassigned 3,046,841 6,683,823 General Fund Budget Projection Projection FY2014 Projection FY2015 5 797,942,282 $ 813,901,128 3.85 3.85 3,107,078 3,168,519 6,884,338 7,090,868 9,730,664 9,991,416 10,259,387 522,977 538,666 554,826 424,150 402,943 382,796 150,000 150,000 150,000 50 000 50.000 50.000 1 147,127 1.141,609 1 137.622 67,980 70,019 72,120 309,000 318,270 327,818 299,577 330,277 391,615 848 390 873 842 900 057 1 524,947 1,592,405 1,691,610 12 402.738 12 725.433 13.088,619 1,300,375 1,339,386 1,379,568 43,363 44,664 46,004 125,000 125,000 125 000 1.468, 738 1,509.050 1.550,572 13 871.476 14.234,483 14.639 191 3,007,473 3,097,597 3,190,628 6,542,884 6,739,171 6,941,346 2,389,318 2,460,998 2,534,828 1,990,347 2,050 057 2.111 559 13.930,022 14,347, 923 14,778,361 1 611.816 424 169 436,894 15,541,837 14,772,092 15,215,255 (1,670,361) (537,509) (576,064) 696,501 717 396 736 918 (973,860) 179,787 162,854 11 983 077 11 009,217 11.189 004 11,009,217 11,189,004 111,351,858 (465,687) (555,687) (645,687) (570,290) (570,290) (570,290) (1 372,910) (1 372 910) (1,372,910) 5 8,600,330 $ 8,590,117 $ 8,762,971 Row Labels EC EE ES FAM Grand Total Values Sum of Sum of Health & Life ealth Multiplyer Insurance 10 159300 28 446039 22 350461 39 621269 99 1577069. Employee Contribution Rate $113.00 $59.00 $131.00 $177.00 Employee Annual Premiums $13,560 $19,824 $34.584 $82,836 $150.,804 Health $15,930 Make the bottom line total work! should agree to total to allocate below. (half) State Polisub plan EE EC ES ESC 28 10 22 39 99 558.46 1,070.24 1,270.72 1,782.16 Max Ded Exposure EE 28 1,750.00 EC 10 3,500.00 ES 22 3,500.00 ESC 39 3,500.00 99 Total premium max self ins Unutilized Self Insurance Less ee contrib Wellness Flex Total Life insurance Total to allocate Total Allocated Difference -10- 15, 636.88 10,702.40 27,955.84 69, 504.24 123,799.36 49, 000.00 35,000.00 77, 000.00 136, 500.00 297,500.00 1,485,592.32 297, 500.00 (104,125.00) (150,804) 20,060 12,000 1,560,223 16,800 1,577,023 1,577,069 (46) t1at�la�sl "d _ 0 CITY OF KENAI FY2012 BUDGET COMPARISON OF EMPLOYEE HEALTH CARE COSTS WITH OTHER ALASKAN MUNICIPALITIES NOTE - All Comparable Data is from CY2010 and does not include any subsequent Increases Except for Soldotna Municipality City of Kenai (Present) City of Kenai (Proposed) Matanuska Susitna Borough Fairbanks North Star Borough Kenai Peninsula Borough City and Borough of Juneau Kenai Peninsula School District Kodiak Island Borough Ketchikan Gateway Borough 5itka City of Ketchikan City of Wasilla City of Homer City of Palmer City of Soldotna (w 2012 Increase) City of Nome City of Petersburg Dillingham Haines Borough Population 7,000 7,000 Employee Employee w /Spouse $ - $ 56.00 $ 59.00 $ 131.00 88,379 $ 150.00 $ 150.00 98,660 $ 40.00 $ 55.00 51,900 $ 40.00 30,711 97.50 $ 282.53 51,900 $ 311.67 $ 311.67 13,568 $ $ 198.91 12,842 $ $ 8,627 $ $ 120.13 7,503 $ 79.24 $ 160.06 7,028 $ - $ 72,66 5,435 $ - $ - 5,382 $ - $ - 4,061 $ 81.44 $ 386.44 3,468 $ 3,155 $ - 363.30 2,491 2,257 $ 66.00 172.00 57.41 $ 136.04 86.10 64.06 $ Average $ Employee Employee w /Child(ren) w /Family $ 70.00 $ 112.00 $ 113.00 $ 177.00 $ 150.00 $ 150.00 $ 55.00 $ 55.00 $ 60.00 $ 60.00 $ 282.53 $ 282.53 $ 311.67 $ 311.67 $ 274.33 $ 274.33 $ $ - $ 172.11 $ 172.11 $ 215.16 $ 215.16 $ 124.36 $ 124.36 $ - $ $ - $ - $ 610.60 $ 610.60 $ 154.25 $ 154.25 $ 621.86 $ 621.86 $ 172.00 $ 172.00 $ 188.46 $ 188.46 CITY OF KENAI BUDGET WORK SESSION CITY COUNCIL CHAMBERS APRIL 19, 2011 6:00 P.M. AGENDA ITEM 1: OVERVIEW ITEM 2: AGENDA REVIEW a. Changes to Health Care b. Review of Budget by Department ITEM 3: SCHEDULE ADDITIONAL WORK SESSION(S( ITEM 4: ADJOURNMENT -12- CITY OF KENAI BUDGET WORK SESSION CITY COUNCIL CHAMBERS APRIL 19, 2011 6:00 P.M. NOTES Council present: M. Boyle, R. Molloy, T. Bookey, R. Marquis, J. Moore, P. Porter, B. Gabriel Staff present: C, Freas, M. Joiner, M. Bonduran.t, M. Kebschull, K. Stearns, B. Plates, K. Lyon, R. Craig, J. Dye, R. Koch. T. Eubank Mayor Porter called the work session together at 6:00 p.m. City Manager Koch thanked the City Attorney, City Clerk and staff for their efforts in producing the budget document and noted, the budget had to be recalculated after receiving notice of a large increase to health care costs. ITEM 1: OVERVIEW Finance Director Eubank presented an overview of the draft budget, provided a handout of his presentation and a memorandum indicating changes from the FY 2011 budget, etc. ITEM 2: AGENDA REVIEW 2 -a. Changes to Health Care A lengthy discussion took place related to health care costs and the proposed plan submitted by Administration, i.e. a three- pronged approach of the employee monthly premium, employee deductible, and unutilized self - insurance refund. Koch and Eubank reviewed the differences between the current plan and proposed plan. Comments included: • Some employees understood and were acceptable of the proposed plan, others were not. • Concern employees felt the proposed plan was declared to be what would be. • Suggestion a secret ballot vote could be taken of employees to know really how they felt about the proposed plan. • The proposed plan would be the equivalent of a $2,000 loss to each employee in a take - home -pay perspective and without notification to the employee, could make budgeting very difficult or an extreme financial hardship for some employees; suggested the City pay more this year and move into a new health care plan more gradually. • Increases in health care costs not unique to the City of Kenai. • Concern in asking the employees to double their premiums which was done the last time the cost of health insurance increased; felt the City needed to balance the costs if this was going to be the trend; this would be a hardship to some of the lower paid employees; and, felt it was unfair. • No objection to eliminate the unutilized self- insurance refund. -13- COUNCIL BUDGET WORK SESSION APRIL 19, 2011 PAGE 2 Belief employees need to share in some of the costs, but would like to look at a less burdensome plan, Review of increases in the plans followed. It was noted, if the plan changed to require employees to pay a portion of their health care, an amendment would be required to KIM 23,40.120. Discussion continued, with comments including: Did not like that an employee did not pay for health insurance. The Borough's health plan did not charge the employee for health care. A comparison of some private sector wages was provided. • With the one percent COLA planned this year, employees would be taking more responsibility for costs. Next year, a larger COLA would probably be given and employees would be better able to handle a health insurance increase. • Suggestion to take back the unutilized self - insurance refund and do a lesser increase to see how it would affect employees before deciding on health care. • Removing the unutilized self- insurance refund would stilt be a loss of income to employees; would favor the City taking the brunt of the cost this year; and, the proposed plan would be a big change from how the City had taken care of its employees for a long time. • An amendment to the Code would be required to charge the employee a fee for health insurance. Approval of the plan by Council at this point would be premature. • Belief the proposed plan was acceptable. Felt when doubling the premium, there would be a risk the City would drive employees away and, attended one of the meetings with employees and felt the tenor of the presentation was the plan choice was not negotiable. • Stated support of Administration's proposal. • The State and Etna were still negotiating the renewal. Suggested Council set a target of cost to work toward. BREAK TAKEN: 7:50 P.M. BACK TO ORDER: 8:00 P.M. Public Comments: Mike Navarre -- Health. Care: Cost of insurance takes away from community needs. Boys & Girls Club: Requested City's financial support for the Kenai Clubhouse; encouraged renegotiating the Recreation Center management agreement; reviewed changes made to lessen their operating costs, i.e. raising fees, cut hours at the Center, cut staff, etc.; the funding request was for the Kenai Clubhouse. Jennifer Beckman, CARTS Executive Director -- Requested a $5,000 donation toward the CARTS program; funds received would he used to leverage for grant funding. -14- COUNCIL BUDGET WORK SESSION APRIL 19, 2011 PAGE 3 Dale Sandahl, Mike Navarre -- Discussed the possibility of building a covered, turf multipurpose facility; believed there were many needs in the community for such a facility; suggested an advisory question be placed on the fall ballot to find out if citizens would be interested in building such a facility; and, it would be a quality of life issue. It was suggested a survey be sent to Kenai residents. Another suggestion was to prepare a conceptual drawing for residents to consider, then do a survey. Estimated cost for drawing an.d survey was stated as $25,000. Council stated no objection for Administration to investigate grant funding that may be available to pay for the conceptual drawing. 2 -b. Review of Budget by Department Department budget reviews would be taken up at the next budget work session. ITEM 3: SCHEDULE ADDITIONAL WORK SESSION(S) A second budget work session was scheduled for May 9, 2011 to begin at 6:00 p.m. ITEM 4: ADJOURNMENT The work session ended at approximately 8:40 p.m. Notes prepared by: Carol L. Freas, City Clerk -15- Proposed Changes to City of Kenai Employee Health Care Program for FY 2012 Coverage Classification Employee Employee Costs City Costs Present Coverage Annual Annual Maximum Premium Deductible Total $ ®® $ 200.00 $ 200.00 $ 4,893.12 $ 1,350.00 $ 6,243.12 $ 4,893.12. $ 1,550.00 $ 6,44 Proposed Coverage Annual Premium Annual Maximum Deductible Total Annual Maximum Increase (Assume 100% Deductible Utilized) $ 600.00 $ 450.00 $ 1,050.00 $ 6,531.12 $ 1,100.00 $ 7,631.12 $ 7,131.12 $ 1,550.00 $ 8,681.12 850.00 $ 1,388.00 $ 2,238.00 Employee & Spouse Employee Costs City Costs $ 672.00 $ 400.00 $ 1,072.00 $ 10,322.76 $ 2,700.00 $ 13,022.76 $ 10,994.76 $ 3,100.00 $ 14,094.76 $ 1,344.00 $ 900.00 $ 2,244.00 $ 14,915.28 $ 2,200.00 $ 17,115.28 $ 16,259.28 $ 3,100.00 $ 19,359.28 ,172.00 $ 4,092.52 $ 5,264.52 Employee & Child /Children Employee Costs City Costs $ 840.00 $ 400.00 $ 1,240.00 $ 8,541.12 $ 2,750.00 $ 11,291.12 $ 9,381.12 $ 3,150.00 $ 12,531.12 Family Employee Costs City Costs $ 1,512.00 $ 400.00 $ 1,912.00 $ 13,967.04 $ 2,750.00 $ 16,717.04 $ 15,479.04 $ 3,150.00 $ 18,629.04 $ 1,680.00 $ 950.00 $ 2,630.00 $ 14,915.28 $ 2,200.00 $ 17,115.28 $ 16,595.28 $ 3,150.00 $ 19,745.28 $ 3,024.00 $ 950.00 $ 3,974.00 $ 19,765.32 $ 2,200.00 $ 21,965.32 $ 22,789.32 $ 3,150.00 $ 25,939.32 Employee 1. Monthly Premium Increases from $0.00 to $50.00, Effective Ju y 1, 2011 2. Maximum Deductible Increases from $200 to $450, which includes $50 Deductible for Dental 3. Increased Deductibles not Effective Until Policy Year Beginning January 1, 2012 Employee & Spouse 1. Monthly Premium Increases from $56.00 to $112.00, Effective July 1, 2011 2. Maximum Deductible Increases from $400 to $900, which includes $100 Deductible for Dental 3. Increased Deductibles not Effective Until Policy Year Beginning January 1, 2012 Employee & Child /Children 1. Monthly Premium Increases from $70.00 to $140.00, Effective July 1, 2011 2. Maximum Deductible Increases from $400 to $950, which includes $150 Deductible for Dental 3. Increased Deductibles not Effective Until Policy Year Beginning January 1, 2012 Family 1. Monthly Premium Increases from $126.00 to 5252.00, Effective July 1, 2011 2. Maximum Deductible Increases from $400 to $950, which includes $150 Deductible for Dental 3. Increased Deductibles not Effective Until Policy Year Beginning January 1, 2012 $ 1,390.00 5,824.16 7,214.16 $ 2,062.00 5 5,248.28 $ 7,310.28 Ride Purpose Overall 504,446 Rides 28`,0 Dis ' ed 14% School 12% Child /A.dult Care Programs 4% Mental Health/ Substance Abuse 5% )Y,[,e�?Ats:�tizzl'dV'.;�1:Uy Local Cash Federal Dollars Total Benefit City of Kenai Leveraged 6,678 trips $10,000 + $110,745.00 = $120,745 Service 6% ,o/ c,;YY ,, CITY OF NAI FY2012 ADVIINIST TIOn PROPOSED BUDGET EMPLOYE -' HEALTH CARE PROGRAM EMP I IOY FI h; HEALTH CARE PROGRAM IMPORTANT FACTS /EVENTS - ADMINISTRATION INITIAL PROPOSED BUDGET INCLUDED 15% INCREASE ($167,000) FOR HEALTH CARE PREMIUMS AND DID NOT INCLUDE AN INCREASE IN EMPLOYEE PREMIUMS EMPLOYEE H F;ALTH CARE PROGRAM FIRST PROPOSED RENEWAL QUOTE - 56% INCREASE ($602,776) IN PREMIUMS NO CHANGES TO PLAN BENEFITS EMP I ,O'Y HE HEALTH CARE PROG M THIRD PROPOSED RENEWAL QUOTE 39.9% INCREASE($409,206) IN PREMIUMS, - INCREASE ANNUAL DEDUCTI'LES - Employee from $1,500 to $2,000 - Employee w /Spouse, Children, Family from $3,000 to $4,000 - INCREASE ANNUAL MAXIMUM OUT OF POCKET LIMITS Employee from $2,500 to $4,000 - Employee w /Spouse,Child(ren),Family from $5,000 to $8,000 H;MPI ,DYNE HF,AI ,TH CARF PROGRAM FINAL RENEWAL QUOTE - 39.9% INCREASE ($409,206) IN PREMIUMS INCREASE ANNUAL DEDUCTIBLES - Employee from $1,500 to $2,000 - Employee w /Spouse, Children, Family from $3,000 to $4,000 - INCREASE ANNUAL MAXIMUM OUT OF POCKET LIMITS - Employee from $2,500 to $3,000 - Employee w /Spouse,Child(ren),Family from $5,000 to $6,000 EMPLOYE' ,OYE N'. HEAI :HI CARE PROG µ M Historical Costs FY Employees City Total Employee % City % 03 $ 0 $796,404 $796,404 0% 100% 04 44,352 739,791 784,143 6% 94% 05 44,532 924,851 969,383 5% 95% 06 88,704 1,105,566 1,194,270 7% 93% 07 88,704 1,037,426 1,126,130 8% 92% 08 85,848 858,377 944,225 9% 91% 09 83,328 910,997 994,325 8% 92% 10 84,000 1,057,112 1,141,112 7% 93% 11 82,152 1,133,404 1,214,556 7% 93% Proposed 12 $150,804 $1,528,163 $1,678,967 9% 91% Does not include Wellness, HRA Admin. & Life Insurance @ $49,400 EMPLOYEE HEA I aTH CARE PROGRAM OTHER DATA /RESEARCH - MONTHLY EMPLOYEE HEALTH CARE PREMIUMS FROM SEVENTEEN OTHER ALASKAN MUNICIPALITIES WITH HEALTH CARE PROGRAMS SIMILAR TO THE CITY OF KENAI. Classification Range Average Employee $0- $311.67 $ 57.41 Employee w /Spouse $0- $386.44 $136.04 Employee w /Child(ren) $0- $610.60 $188.46 Employee w /Family $0- $621.86 $188.46 EMPLOYEE HEAI CARE PROG M ALTERNATIVES RESEARCHED BY CITY ADMINISTRATION EVALUATED QUOTE RECEIVED FROM PREMERA /BLUE CROSS - EVALUATED QUOTE RIECEIVED FROM ODS - EVALUATED QUOTE RECEIVED FROM CIGNA - EVALUATED QUOTE RIECEIVED FROM ALASKA PUBLIC UTILITIES INSURANCE TRUST (APUIT) - MET WITH DAVID FRAZIER & ASSOCIATES TO DISCUSS INDIVIDUAL /JOINT SELF - INSURANCE PROGRAM EMP ,OYE E, HEALTH CARE PROG frM ADMINISTRATION'S GOALS IN DEVELOPING PROPOSED CHANGES TO HEALTH CARE PLAN - QUALITY HEALTH CARE PROGRAM - REASONABLE COST TO EMPLOYEES AND MUNICIPAL CORPORATION - UTILIZE PROCESS FOR CONSISTENT CALCULATION OF HEALTH CARE COSTS IN THE FUTURE EMPLOYEE H EA I TIC CARE PROG M WHAT ARE THE DIFFERENCES BETWEEN THE PRESENT PLAN, THE PROPOSAL DISCUSSED BY COUNCIL AT THE APRIL 19TH WORK SESSION, AND ADMINISTRATION'S CURRENT PROPOSAL? EMPLOYEE HEA I ,,TH CARE PROG ,r M EMPLOYEE SHARE OF MONTHLY HEALTH CARE PREMIUMS Employee =EE, Employee /Spouse =ES Employee /Child(ren) =EC, Employee /Family =FAM Class Present 4/19 Prop. Current Prop. EE $ 0 $ 50 $ 59 EC $ 70 $ 140 $ 113 ES $ 56 $ 112 $ 131 FAM $ 126 $ 252 $ 177 EMPLOYEE, HEALTH CARE., PROG M C TY SHARE OF MONTHLY HEALTH CARE PREMIUMS Class Present 4/19 Prop. 5/6 Prop. EE $ 408 $ 544 $ 499 EC $ 712 $ 999 $ 957 ES $ 860 $ 1,243 $1,140 FAM $ 1,164 $ 1,647 $1,605 EMPI ,OYF1', HEAD TH CARE PROG , M EMPLOYEE SHARE OF ANNUAL DEDUCTIBLES Class. Present 4/19 Prop 5/6 Prop EE $ 200 $ 450 $ 300 EC $ 400 $ 950 $ 650* ES $ 400 $ 900 $ 600 FAM $ 450 $1,000 $ 700 ** * Assumes 3 Covered Individuals ** Assumes 4 Covered Individuals EMPLOYEE HEAL CH CARE PROG r M CITY SHARE OF ANNUAL DEDUCTIBLES Class. EE EC ES FAM Present $ 1,350 $ 2,750 $ 2,700 $ 2,750 4/19 Prop $ 1,100 $ 2,200 $ 2,200 $ 2,200 5/6 Prop $ 1,750 $ 3,500 $ 3,500 $ 3,500 EMPLOY -i,E HEALTH CARE PROG f M EMPLOYEE MAXIMUM OUT -OF- POCKET LIMITS UNDER THE FINAL RATE RENEWAL QUOTE THE MAXIMUM OUT -OF- POCKET LIMITS HAVE BEEN RAISED. THERE IS HOWEVER NO NET INCREASE TO THE EMPLOYEE BECAUSE THE DEDUCTIBLES HAVE INCREASED BY THE SAME AMOUNT, AND THE DEDUCTIBLES ARE INCLUDED IN THE MAXIMUM OUT -OF- POCKET CALCULATION. EMPLOYEE HEALTH CARE PROG i1 COMPARISONS Present 4/19 Prop 5/6 Prop Premium $1,076,386 $1,582,811 $1,485,592 City Prem. 994, 234 1,404, 507 1,334,788 Em p. Prem. 82,152 178,304 150,804 EMPLOYE E HEALTH CARE PROG n' M COMPARISONS Present 4/19 Prop 5/6 Prop Deductible $259,550 $267,900 $352,900 City Ded(max) 224,950 City Ded(65 %) 146,153 Emp. Ded(max) 34,700 187,000 121,550 80,900 297,500 193,375 55,400 EMP I ,O,YEE H FA I JTH CARE PROGRAM COST INCREASES TO EMPLOYEES Deductible Premium Annual Avg. Monthly Class Increase Increase Increase Increase EE $ 100 $ 708 $ 808 $ 67.33 EC $ 250 $ 516 $ 766 $ 63.83 ES $ 200 $ 900 $1,100 $ 9167 FAM $ 300 $ 612 $ 912 $ 76.00 Note -This is a worst-case-scenario as it assumes deductible limits are reached 14,MPLOYE1"1, HEAD TH CARE PROGRAM OTHER HEALTH CARE PLAN CHANGES /REQUIREMENTS - Employer must offer health cal e coverage to employees working 15 or more but Tess than 30 hours per week. Employer must pay at least 50% of the premium benefit paid on a full -time employee. Employer does not have to provide premium benefit for coverage beyond the employee. Employer does not have to provide HRA benefit to these employees. Monthly premiums for these employees would be as follows: • EE $ 308.73* • EC $ 820.51* • ES $1,020.99* • FAM $1,532.43* * No HRA Benefit will be offered. This will impact six employees. F;MP I IOY F E HEAI TH CARE PROGRAM OTHER HEALTH CARE PLAN CHANGES /REQUIREMENTS - Employees working at least 30 hours per week must be covered with no provisions to decline coverage. Currently there is one employee who is not currently covered who will have to accept coverage. Current Plan Premium Employee Emp. / Spouse Emp. / Child(ren) Emp. / Family Employee Count Premium 28 40776 22 916.23 10 781.76 39 1,289.92 Deductible Reimbursement Employee Emp. / Spouse Emp. / Child(ren) Emp. / Family Employee Premium Employee Emp. /Spouse Emp. / Child(ren) Emp. / Family 28 1,350.00 22 2,700 00 10 2,750.00 39 2,750.00 28 22 10 39 (56.00) (70.00) (126.00) Unutilized Deductible Reim. (estimate) HRA Administation Fee Employee Life Insurance City Wellness Program Total City Expense Total Employee Expense Employee Deductibles Employee Emp. / Spouse Emp. / chfld(ren) Emp. / Family Employee Maximum Out -of- Pocket Employee Emp. / Spouse Emp. / Child(ten) Emp. / Family $ Total 137,007.36 241,884.72 93,811.20 603,682.56 $ 1,076,385.84 37,800.00 59,400.00 27,500.00 107,250.00 231,950.00 (14,784.00) (8,400.00) (58,968 00) (82,152.00) (81,182.50) 12,000.00 16,800.00 $ 1,173,801.34 $ 82,152.00 5 200 5 400 5 400 400 2,500 5,000 5,000 5,000 Aetna Proposed 39.9% Increase, No City Changes mployee Count Premium 28 558_46 22 1,270.72 10 1,070.24 39 1,782.16 emium Employee Emp. /Spouse Emp. / Child(ren( Emp. / Family Deductible Reimbursement Employee Emp. / Spouse Emp. / Child(ren) Emp. / Family mployee Premium Employee Emp. / Spouse Emp. / Child(ren) Emp. / Family 28 1,850.00 22 3,700.00 10 3,750.00 39 3,75000 28 22 10 39 (56.00) (70.00) (126.00) Unutilized Deductible Reim. (estimate) HRA Administation Fee Employee Life Insurance City Wellness Program Total City Expense Total Employee Expense ppioyee Deductibles Employee Emp. / Spouse Emp. / Child(ren) Emp_ / Family mployee Maximum Out -of- Pocket Employee Emp. / Spouse Emp. / Child(ren) Emp. / Family Total 5 187,642.56 335,470.08 128,428.80 834,050.88 $ 1,485,592.32 51,800.00 81,400.00 37,500.00 146,25000 316,950.00 (14,78400) (8,400.00) (58,968.00) (82,152.00) Aetna Proposed 39.9% increase, City Changes to Employee Premium and Deductibles. remium Employee Emp. / Spouse Emp. / Child(ren) Emp- / Family mployee Count Premium Total 28 558.46 $ 187,642.56 22 1,27072 335,470.08 10 1,070.24 128,428.80 39 1,782.16 834,050.88 $ 1,485,592.32 Deductible Reimbursement Employee Emp. / Spouse Emp. / Child(ren) Emp. / Family Employee Premium Employee Emp. /Spouse Emp. / Child(ren) Emp. / Family 28 1,60000 22 3,200.00 10 3,200.00 39 3,200.00 28 (50.00) 22 (112.00) 10 (140.00) 39 (252.00) (110,932.50) Unutilized Deductible Reim. (estimate) 12,000.00 HRA Administation Fee 16,800.00 Employee We Insurance City Wellness Program $ 1,638,257.82 Total City Expense $ 82,152.00 Total Employee Expense 200 400 $ 400 $ 400 $ 4,000 $ 8,000 $ 8,000 5 9,000 mployee Deductibles Employee Emp. /Spouse Emp. / Child(ren( Emp. / Family Employee Maximum Out-of-Pocket Employee Emp. / Spouse Emp_ / Chad(ren) Emp. / Family 44,800.00 70,400.00 32,000 00 124,800.00 272,000.00 (16,800.00) (29,568.00) (16,800.00) (117,936.00) (181,104.00) (95,200.00) 12,00000 16,800 00 20,060.00 $ 1,530,148.32 $ 181,104.00 5 5 450 900 950 950 4,000 8,000 8,000 8,000 APUIT - With 10% Premium Increase January 1, 2012 Employee Premium Count Premium Total Employee 28 1,562.46 $ 524,986.56 Emp. / Spouse 22 1,562.46 412,489 44 Emp. / Child(ren) 10 1,562.46 187,495.20 Emp. / Family 39 1,562.46 731,231.28 $ 1,856,202.48 Deductible Reimbursement Employee Emp. / Spouse Emp. / Chil(' (ren) Emp. / Family 28 22 10 39 Employee Premium \ Employee 28 (5000) ..)1 (16,800.00) Emp. / Spouse 22 (112.00) (29,568.00) Emp. / Child(ren) 10 (140.00) ) (16,80000) Emp. / Family 39 (252.00) (117,936.00) /// (181,104.00) Unutilized Deductible Reim. (estimate) / - HRA Administation Fee Employee Life Insurance 16,800,00 City Wellness Program / 20,600.00_ Total City Expense Total Employee Expense / $ 181,104.00 $ 1,712,498.48 Employee Deduct Employee Emp. / Spouse Emp. / Chlld(r Emp. / Fami es Employee44aximom Out -of- Pocket Emp yee E p. /Spouse mp. / Child(ren)' Emp. / Family' $ 300 5 600 $ 650 $ 650 2,000 2,000 $ 2,000 5 2,000 kvil 90( Prt * Per covererd individual Current Plan Employee Employee w /Spouse Employee w /Children Employee /Family Monthly Premium $ 56.00 $ 70.00 $ 126.00 Annual Premium 672.00 840.00 1,512.00 CITY OF KENAI FY2012 HEALTH CARE PROGRAM COMPARISONS �Averrag Sub -Total Annual Employee Cost Deductible (60% (Less Maximum Utilization) Out of Pocket) 120.00 $ 120.00 Aetna Proposed 39.9% Increase, No City Changes Monthly Annual Premium Premium Employee $ - $ Employee w /Spouse $ 56.00 $ 672.00 Employee w /Children $ 70.00 $ 840.00 Employee /Family $ 126.00 $ 1,512.00 240.00 $ 240.00 $ 240.00 $ Averrage% Annual Deductible (60% Utilization) $ 120.00 $ 240.00 $ 240.00 $ 240.00 912.00 1,080,00 1,752.00 5 Sub -Total Employee Cost (Less Maximum Out of Pocket) 120.00 $ 912.00 $ 5 1,080.00 $ $ 1,752.00 $ Employee Max Out of Pocket (80/20) MOP includes Deductible 2,500.00 5,000.00 5,000.00 5,000.00 Employee Max Out of Pocket (80/20) MOP includes Deductible 4,000.00 8,000.00 8,000.00 8,000.00 Aetna Proposed 39.9% Increase, City Changes to Employee Premiums and Deductibles sEmployee Max Averrage Sub -Total Out of Pocket An Employee Cost (80 /20) MOP Monthly Annual Deductible (60% (Less Maximum includes Premium Premium Utilization) Out of Pocket) Deductible Employee $ 50.00 $ 600.00 $ 240.00 $ 840.00 $ 4,000.00 Employee w /Spouse $ 112.00 $ 1,344,00 $ 480.00 $ 1,824.00 $ 8,000.00 Employee w /Children $ 140.00 $ 1,680.00 $ 480.00 $ 2,160.00 $ 8,000.00 Employee /Family $ 252.00 $ 3,024.00 $ 480.00 $ 3,504.00 $ 8,000.00 City Monthly City Annual Contribution Contribution to Premium to Premium $ 407.76 $ 4,893.12 $ 860.23 $ 10,322.76 $ 711.76 $ 8,541.12 $ 1,163.92 $ 13,967.04 City Annual City Contribution Contribution to Premium $ 558.46 $ 6,701.52 $ 1,214.72 $ 14,576.64 $ 1,000.24 $ 12,002.88 $ 1,656.16 $ 19,873.92 City Contribution $ 508.46 $ 1,158.72 $ 930.24 $ 1,530.16 City Annual Contribution to Premium $ 6,101.52 $ 13,904.64 $ 11,162.88 $ 18,361.92 City Contribution to Deductible (60% Sub -Total City Utilization) Contributions $ 810.00 $ 5,703.12 $ 1,620.00 $ $ 1,650.00 $ $ 1,650.00 $ City Contribution to Deductible (60% Utilization) $ 1,110.00 $ 2,222.00 $ 2,250.00 $ 2,250.00 11,942.76 10,191.12 15,617,04 Sub -Total City Contributions $ 7,811.52 $ 16,798.64 $ 14,252.88 $ 22,123.92 City Contribution to Deductible (60% Sub -Total City Utilization) Contributions $ 840.00 $ 6,941.52 $ 2,160.00 $ 16,064.64 $ 2,160.00 $ 13,322.88 $ 2,160.00 $ 20,521.92 APUIT Deductible, per Calendar Year PPO and Non -PPO (Combined) Individual, per Calendar Year $250 Family, per Calendar Year 5500 Inpatient Hospital Deductible • Per admission 550 Emergency Room Deductible, per cause $25 The emergency room Deductible is waived for accidental injuries if treated within 2 days of Accident or when you are admitted to the Hospital immediately following your emergency room visit Out-of - Pocket Maximum Expense (excluding Deductible), per Calendar Year PPO and Non-PPO (Combined) Individual • PPO Facility in Anchorage & all other Covered Expenses $2,000 • Non -PPO Facility in Anchorage $6,000 Lifetime Maximums Full Plan Fertility Testing Hospice Care PPO and Non -PPO (Combined) Unlimited 1 exam 6 months PPO and Non-PPO (Combined) Chiropractic Services 15 visits Diabetic Instructional Program 1 per year Hearing Aid Devices (includes maintenance) & Hearing Exam 1 each per year Naturopathic Services 15 visits 4outine Physical Exams (does not apply to well child care or 2 exams immunizations) Skilled Nursing Facility 60 days Medical AETNA Curren PPO and Non -PPO Combined) $1,500* $3,000* 80% after deductible 80% after deductible * Deductible after HRA reimbursement are $200 & $400. Maximum Out -of- Pocket 2,500 Ind. Or $5,000 Family 3,000 In d. Or $7, 000 Family PPO and Non -PPO (Combined) 2 Million unlimited unlimited PPO and Non -PPO (Combined) 25 visits unlimited 1 every other year 1 exam 120 days AETNA - Proposed PPO and Non -PPO (Combined) $2,000* $4,000* 80% after deductible 80% after deductible * Deductible after HRA reimbursement are $400 & $800. Maximum Out -of- Pocket 54,000 Ind. Or $8,000 Family 52,000 Ind. Or $6000 Family PPO and Non -PPO (Combined) unlimited unlimited unlimited PPO and Non-PPO (Combined) 25 visits unlimited 1 every other year 1 exam 120 days AP U IT Substance Use Disorders lnnatient • FPO Facility in Anchorage • Non -PPO Facility in Anchorage • All Other Inpatient Facilities Outpatient • PPO Facility in Anchorage • Non -PPO Facility in Anchorage • All Other Outpatient Facilities mergency Care (ambulance and emergency room) so' an Emergency admission to a non -PPO Hospital, or if a PPO Hospital is not located within 25 miles of where you live, or if you are referred to a non -PPO Hospital by a PPO Hosynlal, Covered 8apenses for the non -PPO Hospital be reimhmsed at 90 %n. Surgery Charges • PPO Facility In Anchorage 80% • Non -PPO Facility in Anchorage 60% • All other Hospital Facilities 80% Physician must certify MMedical Necessity of hasp ml'ninon for surgeries performed on an Inpatient basis; otherwise benefits X717 he reduced by 50 %. All other Covered Expenses 80% Medical AETNA - Current Benefit Percentage 80% 60% 80% 80% 80% 80% 80% 80% 80% 80% 80% AETNA - Proposed Benefit Percentage 80% 60% 80% 80% 80% 80% 80% 80% 80% 80% 80% APUIT Maximum Benefit Exam (one complete exam per Covered Person per Calendar Year $100 Lenses (per lens) Single Vision Lenses $30 Bifocal Lenses $44 Trifocal Lenses $58 Lentivular Lenses 5116 Frames (one pair of frames per Covered Person per Calendar Year) 5100 Contact Lenses per Covered Person per Calendar Year Single Vision 5130 Bifocal 5158 Benefit Limitations One complete exam per Covered Person per Calendar Year. One set of eyeglasses, or one 12 -month supply of contact lenses, but not both, per Covered Person per Calendar Year. One pair of eyeglass frames per Covered Person per Calendar Year. The Calendar Year Maximums do not apply to pediatric vision services (up to age 18). Vision AETNA - Current AETNA - Proposed 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 80% 2lenses per calendar year and 1 set of frames per 2 calendar years. To: "Village with a Past, Gity with ((Future" FINANCE DEPARTMENT 210 Fidaigo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907- 283 -7535 ext 221 / FAX: 907 - 283 -3014 Employees with City Health Care From: Terry Eubank, Finance Director Thru: Rick Koch, City Manager Date: May 2, 2011 Re: Employee Health Care Renewal There have been new developments regarding the FY 12 Health Insurance Renewal since our last meeting. Aetna has proposed to reduce the renewal increase from 50% to 39.9% in exchange for changes in coverage. Under Aetna's proposal employee deductibles would increase from $1,500 individual /$3,000 family to $2,000 individual and $4,000 family. Also the maximum out of pocket (at plan participating hospitals) would increase from $2,500 individual/$5,000 family to $4,000 individual /$8,000 family. The City has also received prices from four other carriers interested in the City's business. Premera, Oregon Dental Services (ODS), CIGNA, and Alaska Public Utility Trust (APUIT). Quotes from Premera, ODS, and CIGNA were for high deductible plans similar to the City's current plan. Rates quoted by Premera, ODS, and CIGNA are not competitive with the Aetna renewal rates at a 39.9% increase. APUIT is not a high deductible plan and has emerged as the Administrations preferred option. APUIT offers quality coverage but limits the maximum out of pocket to $2,000 per covered individual. Also included in the latest recommendation rs plann�to fund an employee wellness program that will include financial incentives for employees to exercise and see their doctor regularly. The wellness program is expected to cost S20,060 in the first year and $17,060 in subsequent years and is being proposed to be fully funded by the City. Attached are comparisons of health care options, a snapshot of the proposed wellness program, and a side -by -side comparison of Aetna's current benefits, Aetna's proposed benefits, and APUIT's benefits for you information. Questions are encouraged at the upcoming employee meetings. Meetings are scheduled for: ALASKA Notice is hereby given, the Kenai City Council will meet in a work session Monday, May 9, 2011 to continue discussions related to the the FY2012 budget. PUBLIC NOTICE The work session will be held in the Kenai City Council Chambers located at 210 Fidalgo Avenue, Kenai, Alaska and will begin at 6:00 p.m. The work session is open to the public. Contact the Kenai City Clerk's office at 283 -7535, extension 231 with questions. Carol L. Freas, City Clerk D/211 Publish: May 5, 2011 PUBLISHER'S AFFIDAVIT UNITED STATES OF AMERICA, } STATE OF ALASKA ss: Denise Reece being first duly sworn, on oath deposes and says: That I am and was at all times here in this affidavit mentions, Supervisor of Legals of the Peninsula Clarion, a news- paper of general circulation and published at Kenai, Alaska, that the Council Public Notice PO #93476 a printed copy of which is hereto annexed was published in said paper one each and every day for one successive and consecutive day in the issues on the following dates: May 5, 2011 X SUBSCRIBED AND SWORN to me before 9th day of May _ 2011 NOTARY PUBLIC in favor for the State of Alaska. My Commission expires 26- Aug -12 PUBLIC NOTICE Notice is hereby session Monday. M the FY2012 budget The wo p Kenai City Council Will meet inawork 1 to continue discussions related to the sion will be hel ]n ihe: Kenai City C 7 Pldalgo Avenue, Kenai, Alaska and wit rt session is open to the pobits. Contact the :Kenai Caty Clerk questions. Carol L. Frees, City Clerk Publish: May 5, 2011 283 -7!