City staff recommend renewing Security Health plan; HSA city contribution cut slightly, dependent-care limit rises

City Administrator Steve Barker recommended the council approve renewing the city's employee health plan with Security Health for 2026, citing improved claims experience and a rate outcome that the administration described as "1.6% lower than inflation" compared with earlier estimates.

Barker said past years' high utilization had pushed premiums up, but recent improvements in employee plan usage had brought the city into a more favorable position. He said the city was expecting a possible 10% increase earlier in the year but ended up with a much smaller change and that Security Health remains a competitive local option tied to Marshfield Clinic providers.

Barker also outlined several employee-benefit changes for 2026: dental premiums will not increase; vision coverage continues with routine screenings and hardware covered; the federal dependent-care flexible spending account maximum increased from $5,000 to $7,500 (an IRS change); and the city's health savings account (HSA) employer contribution will be reduced from $1,200 to $1,000 for family plans and from $600 to $500 for single plans, which Barker said would save roughly $20,000.

Barker discussed the possibility of moving to self-insured status in future years if favorable claim experience continues, noting small employers can consider self-insurance when claims stabilize and reinsurance arrangements are available. He warned that self-insurance carries risk if several large claims occur in short order.

The preview did not record a formal council decision; Barker said the administration planned to present final plan documents and a recommendation at the council meeting.