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HomeMy WebLinkAbout1987-12-15; City Council; 9242; Health insurance cost increases\B# y2qz ATG. 12/15/87 IEPT. PER RECOMMENDED ACTION: Adopt Resolution No. 9 ?/F amending the group benefit consulting services with Towers, Perrin, Forster and Crosby and transferring funds and Resolution No. ?J/? , authorizing the transfer of funds to pay increased employee health insurance costs. TITLE: DEPT. HD. b HEALTH INSURANCE COST INCREASES CITY ATTYYIM CITY MGa ITEM EXPLANATION: Two separate but related issues are addressed in this agenda bill. The first is a request for additional funds for continued benefit consultant services. The second request is to pay for the increased health insurance costs. Towers, Perrin, Forster and Crosby provide benefit consultant services for the city. Since the beginning of the fiscal year, this service has cost $9,782. Additional services will be required during the remaining part of the fiscal year. The City Council is required to approve an expenditure in excess of $10,000. Therefore, is requested the City Council approve Resolution No. d authorizing the transfer of $15,000 from Contingency Funds to Account No. 001-820-1510-2479, Professional Services, and amending the consultant agreement. The policy year for employee health insurance ends December 31, 1987. Insurance increases for renewal are 4.85% for the Kaiser plan and 39% for Northwestern National Life's indemnity plan. Increases to health insurance costs were expected. Data from the city's consultant showed that Carlsbad's experience closely parallels that of other employers. Hospital use decreased while outpatient and overall plan utilization increased greatly. Cost containment programs implemented over recent years stemmed increases for a time, but have now been overwhelmed by medical care inflation. The medical care Consumer Price Index nearly equaled that for all items in 1981. In 1986 it was four times greater and is growing. In light of this information, staff reviewed several options in search of a method of managing increasing health care costs over the short term and long term. Two viable courses of action were identified. The first and recommended choice is to continue with our present carriers and plans. The city will absorb increases for the balance of Fiscal Year 1987-1988 and budget for these increases next fiscal year. Concurrently, staff will begin working with employee groups to make cost saving plan design changes and create a Flexible Benefit Plan for calendar year 1989. This provides a long term plan to control increasing medical care costs, provides employees with choices and begins to change the concept of health care from benefit to compensation. The second viable plan would be to contract for health insurance with the Public Employees' Retirement System. This is an attractive option for the short term. Employees can select from several plans and change plans yearly. Health insurance administration and employee assistance is removed from the city to PERS. The disadvantages are lack of dental, optical and life insurance coverage. The long term disadvan- tage is that the city will eventually pay the increasing costs of health insurance for retired employees. This would be a new and growing cost not now required nor paid by the city. It is requested the City Council approve Resolution No. 93f9 authorizing the transfer of $130,000 from Contingency Funds to various other accounts. FISCAL IMPACT: The requested fund transfer will reduce the General Fund Contingency Account 001-840-1990-2999 by $145,000. Health insurance costs for Plan Year 1987 are estimated to be $840,000 and $1,150,000 for Plan Year 1988. EXHIBITS : 1. Resolution No. ?-3/r . 93/9* 2. Resolution No. 3. Chart of Health Insurance Monthly Rates Effective January 1, 1988. t I. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 --- RESOLUTION NO. 9318 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AMENDING THE AGREEMENT FOR GROUP BENEFIT CONSULTING SERVICES BETWEEN THE CITY AND TOWERS, PERRIN, FORSTER AND CROSBY AND TRANSFERRING FUNDS. WHEREAS, the City Manager and Towers, Perrin, Forster and Crosby signed a benefit consultant agreement on January 20, 1987; and WHEREAS, that agreement under the provisions of Section 3.28.170 of the Carlsbad Municipal Code charges for services cannot exceed a sum of $10,000; and WHEREAS, the services of the consultant will generate fees exceeding $10,000, and WHEREAS, additional fees of $15,000 will be needed for the remainder of the fiscal year; and WHEREAS, the City Council must approve the amendment of the agreement, it is attached hereto and made a part hereof and is offered for City Council consideration. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the Mayor is authorized to sign the agreement amendment attached hereto and made a part hereof as Exhibit A. 3. That the transfer of $15,000 from General Fund Contingency Account 001-840-1990-2999 to General Fund Personnel Account, Professional Services,001-820-1510-2479. /// /// 3 2 5 4 C c t r 1 € E IC 11 12 12 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 15th day of De cembe 1: , 1987, by the following vote, to wit: AYES: Council Members Lewis, Kulchin, Pettine, Mamaux and Larson NOES: None ABSENT: None ATTEST: a- ALETHA L. RAUTENKRANZ, City dVerk ( SEAL) 2. AMENDMENT This will serve to amend only the approval authority portion of the agreement of January 20, 1987, between the City of Carlsbad and Towers, Perrin, Forster and Crosby. This amendment is required by Section 2.28.170 of the Carlsbad Municipal Code, as services rendered under the provisions of the agreement are expected to exceed $10,000. In Witness Whereof, we have hereunto set our hands and seals. Title At kest: Approved as to Form: City Clerk neY Exhibit A 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9319 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AUTHORIZING THE TRANSFER OF FUNDS TO PAY INCREASED EMPLOYEE HEALTH INSURANCE COSTS. WHEREAS, costs of employee health insurance have increased for 1988; and WHEREAS, under existing Memorandums of Understanding most additional insurance costs are borne by the City; and Whereas, funds must be transferred to departmental budgets to ensure payment of health insurance costs. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That the following amounts are hereby appropriated: From Account No. 001-840-7990-2999 131-890-3330-0000 161-890-0000-0000 180-890-8123-0000 181-890-8119-0000 181-890-8120-0000 181-890-8118-0000 501-890-6310-0000 511-890-0000-0000 620-890-5210-0000 640-890-0000-0000 810-840-3410-0000 To Account No. 001-840-Various-1940 131-840-3330-1940 131-840-6210-1940 180-840-8123-1940 181-840-8119-1940 181-840-8120-1940 181-840-8118-1940 501-840-6310-1940 511-840-6110-1940 620-840-5210-1940 640-840-1920-1940 810-840-3410-1940 Amount 118,190.52 1,160.70 499.07 465.69 441.87 21.86 77.22 2,519.04 2,969.42 2,140.78 274.34 1,239.49 /// .- 1 2 3 4 5 6 7 e 9 1c 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 20 PASSED, APPROVED AND ADOPTED at a Regular Meeting of the Carlsbad City Council held on the 15th day of December 1987, by the following vote, to wit: AYES: Council Members Lewis, Kulchin, Pettine, Mamaux and Larson NOES : None ABSENT : None ATTEST : && A. R- ALETHA L. 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