The Sandpoint City Council on Oct. 15 approved the city's 2026 employee benefits package and authorized staff to move the city's medical coverage to Blue Cross of Idaho, which offered a two-year rate cap of no more than 12 percent.

Why it matters: Employee health insurance is one of the city's largest non-salary expenditures. Staff and the council framed the decision as an effort to limit near-term premium volatility while preserving a range of plan choices for employees.

City staff and the city's broker reviewed multiple proposals after a large renewal increase from the incumbent carrier. The Blue Cross offer includes a guaranteed maximum increase of 12 percent for the coming renewal period and places the city in a mid-size pooled arrangement with Blue Cross. Key elements approved by the council:
- Plan design changes: the classic (standard) plan's deductible increases (from $1,500 to $2,000) and its out-of-pocket maximum rises; the buy-up plan deductible increases (from $500 to $1,000) with a maximum out-of-pocket at Blue Cross limits; and the HSA plan has a $4,000 deductible with a $5,500 max-out-of-pocket and a city contribution of $1,800 to employees' HSAs.
- Pharmacy: the city will move from a four-tier to a six-tier pharmacy structure; the highest-cost specialty drugs (tiers 5 and 6) will be percentage-based coinsurance, which could increase costs for members on specialty biologic medications until they reach the out-of-pocket maximum.
- Pediatric and preventive care: Blue Cross's network provides $0 office visits for children under 18 for covered preventive and primary-care visits; staff noted the Blue Cross network includes local providers in Sandpoint and Coeur d'Alene for many services.
- Voluntary long-term disability: staff proposed making long-term disability a voluntary, employee-paid benefit (the change would save the city approximately $27,000 annually if employee enrollment meets the carrier's participation threshold). Short-term disability and life insurance retain current structures.

Officials emphasized drivers of rising costs. Autumn Porter, from the city's broker, said high-priced prescription utilization is a primary factor: "a couple of members are on biologic prescriptions where each fill averaged $22,000 for a 30-day supply," she told the council, and other high-cost specialty drugs and an aging workforce are increasing claims.

Council members asked about tradeoffs between plan generosity and budget sustainability, the administrative differences tied to Blue Cross (reporting and HSA integration vary), and whether the city should explore alternative delivery models such as hybrid direct primary care. Mayor Jeremy Grama and staff signaled interest in studying alternative models during the two-year rate-lock period.

Action taken: The council voted to approve the 2026 employee benefits agreement (medical, dental, vision, life) and the brokered recommendation to move to Blue Cross of Idaho with the described plan designs and implementation steps. The vote passed by roll call.

What happens next: Staff will finalize plan documents, prepare open-enrollment materials and notify employees; HSA onboarding and the voluntary long-term disability program will be included in enrollment communications. The city will monitor claims experience under Blue Cross and will report back to the council about utilization and cost trends during the guaranteed rate period.

Ending: Council members characterized the vote as a compromise to contain near-term rate increases while preserving benefit options for employees and asked staff to return with further information about alternative health-delivery models over the coming two years.