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HomeMy WebLinkAboutResolution No. 2009-24i~±a-~-. /, \\ rkaury~f// NENA~ SNA CI1°Y ®F KENAI Suggested by: Administration RESOLiJT°I®PI IV®. 2009-24~ A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AUTHORIZING SHARING COST SAVINGS FROM THE CALENDAR YEAR 2008 HEALTH INSURANCE PLAN WITH EMPLOYEES. WHEREAS, the City maintains a health insurance plan that includes a $1,500 individual or $3,000 family deductible; and, WHEREAS, the cost for this plan is significantly less than the premium for the $200 individual and $400 family deductible plan; and, WHEREAS, the City self insures the $1,300 per individual and $2,600 difference in the deductible; and, WHEREAS, the maximum exposure for this self insurance was calculated to be $242,500; and, WHEREAS, the actual cost of the self insurance was $99,389 less than the maximum exposure; and, WHEREAS, as a motivation for the employees to reduce the City's self-insured health care costs, when the plan was implemented the administration told the employees that it would seek to share Calendar Year cost savings with them; and, WHEREAS, the administration recommends that half the savings be shared with employees; and, WHEREAS, sufficient funds are appropriated in the various departmental health insurance accounts. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that in recognition of the fact that there was a savings of $1,170 per employee in the Calendar Year 2008 health insurance plan due to under utilization of the self insurance cost calculated in the plan, the City Manager is authorized to pay $585 to each current employee that was covered by health insurance in 2008. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this third day of June, 2009. ~ ~ ~(,~ PAT PORTER, MAYOR ATTT: ~ ~-~/ ,~ dig Carol L. Freas, City Clerk Approved by Finance: /° ;~,~,~~ _~, '~l~i~~a~e twitti a Past, G~~ wit~t a Futuv'e" _~~ ~, "' FINANCE DEPARTMENT "~ 210 Fidalgo Avenue, Kenai, Alaska 99611-7794 Telephone: 907-283-7535 ext 221 /FAX: 907-283-3014 ftie~~y~f KENA~ SKA nth To: Rick Koch, City Manager '~ ~ From: Teary Eubank, Finance Director Date: May 27, 2009 Re: Resolution 2009-24 In January 2007 the City implemented a new health insurance plan that increased the employees deductible substantially with the resulting insurance premiwn being significantly lower than the prior low deductible plan. The City then self-insured for the increased deductible by reimbursing the employees through ~a healthcare reimbursement account for the increased deductible. During the first year of the plan the City saw savings of more than $90,000 of which it shared approximately half with the employees as recognition of the employees efforts to reduce the City's self instu-ed health care costs. Again in calendar year 2008 the City's expenditures for the self-insured health care costs was significantly under its maximum and budgeted amount. The City budgeted $242,500 for its portion ofself-insured health care yet incurred only $143,111 in actual expenditures for a saving of $99,389 or $1,170 per eligible employee. In recognition of their efforts and motivation for employees to continue to reduce the City's self insured health care expenditures the administration recommends that half, X585 per person, be shared with the employees.