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Council asks staff to explore adding an HSA-linked high-deductible option after positive insurance report
Summary
City consultants told the council the 2025 employee health plan outperformed budget, adding roughly $674,000 to reserves, and recommended offering a high-deductible health plan paired with a health savings account (HSA) as an additional, cost‑neutral option; council directed staff to investigate implementation and costs.
Kim Wixson of Segal told the council the city’s employee health plan performed better than expected in 2025, reporting “a contribution to reserves of about $674,000,” which she said reflects stronger-than-projected contributions and lower claims overall. She highlighted two ‘‘lasered’’ participants who carry higher stop‑loss exposure and said staff will monitor their claims because they could affect 2026 results.
Wixson then reviewed examples of a high‑deductible health plan (HDHP) paired with a health savings account (HSA), explaining IRS rules, indexing of minimum deductibles, and that an employer HSA seed contribution can make a higher‑deductible option actuarially equivalent to the current plan. She described an Option 2 design that would raise deductibles while providing an employer HSA contribution to enrolled employees, and recommended offering the HDHP/HSA as an additional option effective Jan. 1, 2027 while preserving the current plan.
Council members asked for specifics on employee versus employer contributions, coinsurance, and whether the option would be cost neutral to the city. Councilmember Price requested a clear comparison showing how much additional city contribution the HSA option would require compared with current spending; Wixson and city staff said Example 2 was designed to be cost neutral and that additional implementation work would primarily be administrative.
After questions about stop‑loss exposure, participant claim totals, and employee education, the council gave staff direction to explore the HDHP/HSA option in more detail and return with more precise cost comparisons and a plan for employee outreach. "We are recommending, to implement an option 2," Wixson said during the presentation; council members signaled support for staff to proceed with analysis and implementation planning.
The council did not adopt a policy change at the meeting; staff will report back with cost comparisons and implementation details for future consideration.
