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Lakeway council approves benefit changes that lower employee deductibles; net budget impact cited
Summary
The city council voted unanimously June 16 to adopt a staff-recommended benefits option that reduces deductibles and out-of-pocket maximums for employees. City staff said the change raises near-term costs modestly while improving employee cost exposure.
Lakeway City Council voted unanimously June 16 to approve a staff recommendation to adjust the city—s employee medical plans, reducing deductibles and out-of-pocket maximums and increasing the city contribution to health savings accounts for high-deductible plan participants.
City leaders and staff said the change is intended to reduce employees— potential out-of-pocket expenses while keeping overall benefits largely unchanged. Assistant City Manager Brenneman and Director Aske summarized the proposal for council and the public during the consent pull for Item 12.
Under the change approved as "Option 1," the PPO plan deductible drops from $2,500 to $2,000 for individual coverage and from $5,000 to $4,000 for dependents. The individual maximum out-of-pocket was described as dropping from $6,000 to $4,000 and the family maximum from $12,000 to $8,000. For employees on the high-deductible HSA plan, the city would increase its annual contribution by $400 (from $3,400 to $3,800 per employee). Staff said those adjustments would allow employees to retain current benefit structures while lowering possible annual outlays by as much as about $2,000 in some cases.
Staff told the council that employees had been surveyed about available plan options and that employees "overwhelmingly rejected" an alternative branded plan referred to as the "next level" option and preferred the current plan structure. Council members also heard that staff surveyed surrounding municipalities (listed in the staff report as Bee Cave, Bourne, Cedar Park, Georgetown, Leander, Kyle and Taylor) to benchmark employer premium contributions.
On cost, staff said the city would face an $11,052 increase over the current year but would forgo a previously projected 3% decrease in the renewal; the net budget impact compared with the earlier renewal projection was presented as roughly $50,000. Multiple council members cautioned that future-year premiums could change and that the council might face a tougher decision if renewal rates reversed next year. Several council members said they preferred to take advantage of the current favorable pricing to help reduce turnover and support staff.
Public comment on the item included Scott Foster, speaking as a member of the Lakeway Police Foundation, who asked whether the package was competitive for recruiting and retention; staff responded that the city—s employer contribution percent is comparable to the surveyed municipalities.
A council member moved to approve Item 12, Option 1, and the motion passed unanimously, 6-0.
The council record shows the action will be reflected in the upcoming fiscal-year budgeting process and staff asked that the change, if implemented, align with the next fiscal year so it can be incorporated in the FY26 budget cycle.
