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Council tweaks city health-insurance policy to limit employer share to lowest-cost tier 1 or tier 2 plan
Summary
Facing 2026 premium increases, the council amended Policy 3.03 to allow the city to pay 80% of the lowest-cost plan among ETF tier 1 or tier 2 products, a move staff said would reduce the fiscal impact compared with remaining constrained to 'lowest tier-1' language.
Onalaska councilors on July 8 approved a change to city policy 303 that updates how the city calculates its employer contribution to employee health insurance. The change allows the city to pay 80% of the lowest-cost plan among ETF-designated tier 1 or tier 2 offerings instead of a strict reference to “lowest-cost tier 1,” giving staff flexibility to limit employer exposure to premium spikes.
Staff told the council the change was prompted by large premium increases for the 2026 plan year; depending on plan selections, increases cited ranged from roughly 17% to 29% across available plans. Under the policy as written, the council would have been directed to adopt the plan that qualifies as “lowest-cost tier 1,” which in 2026 would have increased employer costs by an estimated $256,000 compared with last year’s budget projection. Amending the policy to allow selection of the lowest-cost plan in tier 1 or tier 2 reduced the projected additional cost to about $95,000, staff said.
Human-resources and finance staff emphasized that the change affects employer contribution calculations and does not change the uniform benefits available under the city’s program. Staff also warned that moving to a lower-tier plan with fewer participating providers could constrain access for some employees; councilors asked for that trade-off to be monitored as open enrollment proceeds.
After discussion about coverage quality, provider networks and budgeting impacts, the council approved the amendment unanimously. Staff will proceed with open enrollment planning consistent with the amended policy language and report any major coverage-impact concerns back to council.
Key details: council approved a motion to strike the strict “tier 1” reference and to allow the employer contribution to be calculated as 80% of the lowest-cost plan among ETF tier 1 or tier 2 offerings. Staff stated that uniform benefits remain the same across plans administered by ETF and that final plan selection will be communicated during employee open enrollment.
