County keeps planned 2% premium increase, adopts single out-of-pocket structure and approves employee FSA

Pennington County's board on Oct. 7 approved human resources' recommendation to keep the previously budgeted premium change for 2026, consolidate health plan tracking to a single out-of-pocket (OBS) structure and authorize the implementation of a flexible spending account (FSA) program for employees.

HR Senior Manager Sandy Sortland presented three premium and plan-design options. Option 1 matched the amount already budgeted for 2026 and kept the employee/employer splits unchanged; Option 2 preserved employee premium splits but would create an unbudgeted county cost of roughly $64,000 if every eligible employee enrolled; Option 3 would change the employer–employee split toward industry norms and carry an estimated unbudgeted maximum county exposure of about $113,000. Commissioners voted to adopt Option 1.

Sortland also described the administrative need to move from the county’s current two-OBS approach (separate out-of-pocket structures for single and employee-plus-one) to one OBS with single and family tiers. The change simplifies plan administration, aligns with common marketplace structures and makes premiums and record-keeping simpler for Wellmark/Blue Cross Blue Shield and county payroll. Implementation work will proceed after open enrollment; HR said it needs roughly two months to prepare the systems and payroll deductions, which places delivery of the full system changes into the 2026/2027 implementation timeline.

The board approved establishment of a flexible spending account (FSA) offering, which HR said would be voluntary and pre-tax. HR will seed the plan with initial funds to enable the January front-loading of accounts and will administer the plan as a separate custodial fund. Sortland said typical participation would balance out net employer exposure because some employees spend the full front-loaded amount and some do not; IRS rules mean the employer cannot claw back funds an employee used then left employment mid-year.

Commissioners and staff discussed worker pay increases and payroll impacts. HR and the commission noted that the county recently approved a 4.4% pay increase; staff presented an example showing the family-plan premium effect at roughly $7.59 per biweekly pay period under the budgeted Option 1, while a lower-paid employee receiving a 2.9% cost-of-living adjustment would see a net gain in take-home. Commissioners asked HR to pursue a tiered premium model in future budget cycles; staff said the four-tier arrangement suggested will require additional payroll and benefits-system build work and will be targeted for 2027 implementation.

Open enrollment was scheduled to begin the week of Oct. 12 with the new single-OBS structure and the budgeted premium levels in place. The FSA program will be made available to employees and administered by HR.