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Colona staff warns of 24.1% jump in employee health premiums, proposes phased cost-sharing options
Summary
City staff told the finance committee the city faces a 24.1% increase in employee health-insurance premiums for the July 1 plan year and presented options including higher-deductible plans, shifting a larger share of premiums to employees over several contract cycles, or changing carriers.
City staff told the Colona finance committee that the city’s health-insurance premiums rose 24.1% for the plan year beginning July 1, citing three consecutive years of claim experience above 120% as the principal driver.
The presentation gave committee members a snapshot of current costs: at the July 1 rates the annual employer cost is about $518,000; including stipends for employees who decline coverage the city’s gross annual exposure is about $539,000. "We ended up with a 24.1 percent increase for the plan year that started July 1 through June 30," the staff member said. The packet also showed the city budgeted $545,000 for the fiscal year.
Staff offered three cost-management options: add higher-deductible or HSA-style plan options to lower premiums in the short term; gradually increase employee premium contributions from the current 15% toward a 17–20% target over multiple bargaining cycles; or evaluate changing insurance cooperatives and carriers. "My goal would be to get everybody in the city to 20% here in the next couple years," a staff member said, adding that some bargaining-unit contracts will not be renegotiated until after 2029 and that changes must respect collective-bargaining agreements.
Committee members asked for additional detail and suggested staff and finance (Amanda was identified in the discussion as a staff contact) meet to model options. The staff member said the cooperative had provided plan-saving options in February but that timing prevented immediate changes; staff will request an updated options sheet with the new rates and return with specific recommendations.
The presentation and packet emphasized caution about abrupt midterm changes that could conflict with side letters or current contracts and noted the city would seek options that "save some money with the premiums without making huge changes to the plans because we have to keep in mind our bargaining units." The committee did not take a formal vote on benefit design but directed staff to continue analysis and meet with the finance contact to prepare a recommendation for future committee consideration.
Next steps: staff will obtain updated cooperative options, meet with Amanda to model plan designs and employee-share scenarios, and report back to the committee before negotiating contract changes with bargaining units.
