Agenda - Council - 11/27/2001 - Laserfiche WebLink

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PC CASE RENEWAL OF HEALTH INSURANCE CONTRACT WITH THE PUBLIC EMPLOYERS INSURANCE PROGRAM (PEIP) By: Rhonda Heryla, Human Resources Manager Background: The City of Ramsey's health insurance contract with the Public Employees Insurance Program (PEIP) terminates on December 31, 2001. On October 26, 2001, the City received notice from PEIP that the renewal rates for 2002 were to increase by 19.5% with no guaranteed rate in the second year of the contract. (PEIP requires participation for a two-year term.) The current plan is a $10 copayment, $15 prescription copayment, 100% hospitalization plan. With the termination of the existing health insurance contract, the increase in rates, and the pending contract renewals for both the AFSCME and LELS bargaining units, it seemed to be the opportune time to reexamine the City's health insurance and consider other options. Staff contacted T.C. Field & Company for assistance in obtaining bids from health insurance carders. They contacted three carders for quotes; however low employee participation rates and lack of claims information prevented the carders from quoting new rates. As a result, the City finds itself with no other option than to renew its contract with PEIP for another two year term. The deadline for a renewal is December 11, 2001. Observations: In Minnesota, health insurance carders quote rates for employers based on the total number of eligible employees and the number of participating employees. In the City of Ramsey's case, there are'more than fiRy (50) eligible: employees, but less than fifty (50) participating employees. With this classification, carders thus require either a 50% or higher participation level or two years of claims experience in order to quote rates. Both Medica and Blue Cross Blue Shield denied quotes for the City of Ramsey on this basis, and it is anticipated that Health Partners will do the same. Employee Participation In September 2001, T.C. Field & Company completed a Benefits Review Analysis for the City of Ramsey, and this information was presented to the City Council as part of a closed union negotiation session during the Personnel Committee meeting on October 9, 2001. Basically the discussion centered around the issue of low employee participation rates and considerations to draw employees back to the City's health insurance and other benefit programs. The City of Ramsey currently has 46% of eligible employees participating in health insurance. The remaining 54% choose to waive coverage and instead receive $290 as a cash-out option. This cash-out option continues to pull the -183-