The URL can be used to link to this page

Home My WebLink AboutRes2004-024 I I I Failed Sponsored by: Shealy CITY OF SEWARD, ALASKA RESOLUTION 2004-24 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, INCREASING THE CITY EMPLOYEE'S HEALTH PLAN CONTRIBUTION RATE FOR ALL EMPLOYEES ELIGIBLE UNDER THE APUlT HEALTH PLAN FROM 7.5% TO 10% AND APPROPRIATE THE SAVINGS TO THE CITY OF $25,000 TO THE INSURANCE RESERVE FUND TO HELP OFFSET FUTURE INSURANCE COST INCREASES WHEREAS, on February 11, 2002 the Council approved Resolution No. 2002-010 which established an employee health contribution rate 00.5% ofthe health plan contribution rate when the contribution rate exceeds the base rate of$824.23 set on January 1, 2002; and WHEREAS, a percentage rate was established so that if the health plan contribution rate goes up, the employee contribution would go up and if the rate goes down, the employee contribution would go down; and WHEREAS, the preliminary CY2004 budget which anticipated an increase in the APUIT health plan contribution rate had proposed that the employee contribution rate increase from the current 7.5% to 10% ofthe health plan rate; and WHEREAS, the City's health plan contribution rate was decreased from the 2003 rate of $1,035.96 to $935.00 per employee per month for 2004 resulting in a savings to the City after the employee contribution is accounted for of approximately $97,000; and WHEREAS, with an employee contribution rate increase to 10%, employees will be contributing on an annual basis $1,122 towards their health insurance plan; and WHEREAS, the City is required by federal law to provide employees with a 30 day notice of any employee contribution rate changes. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEWARD, ALASKA, that: Section 1. The City employee's APUIT health plan contribution rate be increased from 7.5% to 10%, provided however, that ifthe APUIT health plan contribution rate drops below the base rate of $824.23 set on January 1, 2002, the employee rate will be discontinued. The new rate of 10% is effective for the May, 2004 health plan contribution and all eligible employees will contribute the required amount through payroll deductions beginning with the pay period that ends April 17, 2004. CITY OF SEWARD, ALASKA RESOLUTION NO. 2004-24 Section 2. Funds in the amount of$25,000 be appropriated from the General Fund fund balance, account no. 101-0000-3050 to the General Fund insurance reserve, account no. 101- 0000-3040. Section 3. This resolution shall take effect immediately upon its adoption. PASSED AND APPROVED by the City Council of the city of Seward, Alaska, this 8th day of March, 2004. THE CITY OF SEWARD, ALASKA c::; 'J;?;v~ ~' C. David Brossow, Mayor AYES: NOES: ABSENT: ABSTAIN: None Shafer, Branson, Dunham, Clark, Valdatta, Brossow Amberg None ATTEST: ewis \ City lerk ,\i,'UIU.;, ~~..\~ Of Sr=,~.t~,q#". (City SeaL-,:-"~,,'o??OA;q';,..:'9<>" S .....v '(t.';-. ~ ~ ..~':' -e- c.. ~ :: ! \ ~~~ = .: SE__AL : g ~~ ~ \ : :.: _ . ___ . fl" ~ ...~ 'V.... iY ~ I.~;"~~ 1 ..~~-::,t:\^'.. ~~ ....&>"-:....~.~.,,,l... ".'-:..? ,,''<i.1~ "~:,~:'!~~ O~~ r\~~' 'I> ':;!.+~ '4\ .t,ff;;'~' _. . .<~~;~:""J;' COUNCIL AGENDA STATEMENT Meeting Date: March 8, 2004 Through: Phil Shealy, City Manager From: Rick Gifford, Assistant City Manager Agenda Item: Employee Health Plan Contribution Rate BACKGROUND & JUSTIFICATION: On February 11, 2002 the Council approved Resolution No. 2002-010 which established an employee health contribution rate of 7.5% of the health plan contribution rate when the contribution rate exceeds the base rate of $824.23 set on January 1, 2002 (copy attached). A percentage rate was established so that if the health plan contribution rate goes up, the employee contribution would go up and if the rate goes down, the employee contribution would go down. The resolution also stated that if the health plan rate were to drop below the health plan rate set on January 1, 2002, the employee contribution rate would be discontinued. Prior to 2002, the City’s health plan under the Alaska Public Utilities Insurance Trust (APUIT) did not allow participating employers to collect a portion of the contribution from employees. Currently the City of Seward is the only APUIT employer which collects a portion of the contributions from its employees. The City’s health plan contribution rate was decreased from the 2003 rate of $1,035.96 to $935.00 per employee per month for 2004 resulting in a savings to the City after the employee contribution is accounted for of approximately $97,000. The preliminary CY2004 budget which anticipated an increase in the APUIT health plan contribution rate had proposed that the employee contribution rate increase from the current 7.5% to 10% of the health plan rate. By the time the final CY2004 budget was approved, the budget was adjusted downward anticipating a reduction in the health plan rate. However, the actual reduction was larger than anticipated. Based on the 2003 policy of employees contributing 7.5% of the health plan rate, the savings to the City’s approved CY2004 budget as a result of the rate reduction would be approximately $69,000. If the employee rate is increased to 10%, the savings to the City is estimated to be approximately $94,000 or an additional $25,000 in savings due to the increased employee contribution rate. As a result of the savings to the City due to the health plan contribution rate reduction, administration rd had recommended that Council keep the employee contribution rate at 7.5%. At the February 23 Council meeting, Council directed the administration to prepare a resolution that would increase the employee contribution rate from 7.5% to 10%. The City is required by federal law to provide employees with a 30 day notice of any employee contribution rate changes. Therefore, the earliest effective date for the change in the employee health plan contribution rate would be for the May, 2004 health plan contribution, if the resolution increasing the employee contribution rate to 10% is th approved at the March 8 Council meeting. Currently City employees (not including the IBEW union employees) are paying $77.70 per month towards their health insurance plan which is based on 7.5% of the CY2003 health contribution rate of $1,035.96 per month. The City pays 100% of the IBEW union employees health plan rate of $908 COUNCIL AGENDA STATEMENT Meeting Date: March 8, 2004 Employee Health Plan Contribution Rate Page 2 per month. Based on the $935 contribution rate for CY2004, an employee contribution of 7.5% would be $70.13 and 10% would be $93.50. If the employee rate is increased to 10% or $93.50 per month, that would be a $15.80 increase or a 20% increase from the current amount of $77.70 per month. If the employee rate remained at 7.5%, the employee’s monthly amount would be decreased from $77.70 to $70.13 representing a $7.57 per month reduction. Based on the percentage rate, increasing the employee rate from 7.5% to 10% would be an increase of $23.37 per month, representing a 33% increase. If Council approves the 10% rate, employees will be contributing on an annual basis $1,122 towards their health insurance plan. Currently the IBEW union employees pay nothing towards their health plan. If the Council increases the employee contribution rate to 10%, the administration recommends putting the additional savings as a result of the increase to the employee health contribution rate, approximately $25,000, into the City’s insurance reserves to help offset future increases in the health contributions. CONSISTENCY CHECKLIST: Yes No 1. Comprehensive Plan 2. Strategic Plan 3. Other 4. Not applicable X FISCAL NOTE: If the employee contribution rate remains at 7.5% of the health plan rate, the savings to the City’s approved CY2004 budget as a result of the rate reduction would be approximately $69,000. If the employee rate is increased to 10%, the savings to the City is estimated to be approximately $94,000 or an additional $25,000 in savings due to the increased employee contribution rate. Approved by Finance Department: RECOMMENDATION: Council not approve Resolution’s 2004-24, increasing the City employee’s health plan contribution provided however, rate for all employees eligible under the APUIT health plan from 7.5% to 10%, that if the APUIT health plan contribution rate drops below the base rate of $824.23 set on January 1, 2002, the employee rate will be discontinuedThe new rate of 10% is . effective for the May, 2004 APUIT health plan contribution and that eligible employees will contribute the required amount through payroll deductions beginning with the pay period that ends April 17, 2004 and appropriate the savings of $25,000 to the insurance reserve fund to help offset future insurance cost increases.