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City budgets for health‑insurance increase; officials project 5% rise in employer share
Summary
Finance staff proposed a health insurance working rate that assumes a 5% increase in calendar‑year premiums that will be reflected in employer contributions for FY26. The administration presented details by plan type and said the city will monitor claims and rebates through quarterly reporting.
City officials told the budget committee that the FY26 health‑insurance figures are budgeted on a working‑rate basis and assume a 5 percent increase in employer costs for the second half of the fiscal year. CFO Bob Ekstrom said the administration used current enrollments and an expected January 1 premium adjustment to compute the FY26 employer share.
“On January 1, we’re anticipating it bumping up 5%,” Ekstrom said; the administration had used a larger figure last year. Finance staff described the figure as a blended rate because half the year uses premiums already set and the second half reflects the projected increase.
Why it matters: Health insurance is a large recurring expense in the operating budget. Councilor Perera asked whether the city should expect another 10 percent increase; Ekstrom said the administration used a 5 percent projection for FY26 but noted FY25 saw a near‑10 percent jump and that pharmacy and claims trends remain key drivers.
Administration and HR staff said they will continue quarterly reviews of claims and rebates and report back to the council. The budget book includes a line‑by‑line working‑rate schedule for pension, Medicare penalties, and various plan tiers; finance staff said they will share plan‑level metrics and the employee enrollment mix to explain how the blended employer total was calculated.
Ending: Finance staff asked the council to treat the number as a planning estimate and said they will return with quarterly claims updates and any adjustments needed at the rate‑setting step.
