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12102009CouncilMinutes-WSCITY OF AMMON CITY COUNCIL – WORK SESSION MINUTES THURSDAY, DECEMBER 10, 2009 AGENDA: CITY OF AMMON 2135 SOUTH AMMON ROAD CITY COUNCIL AGENDA – WORK SESSION THURSDAY, DECEMBER 10, 2009 – 4:30 P.M. DISCUSSION ITEMS: 1.City Code 5-9-10 Handbill Postings Rewrite or Not (Leslie) 2.HRA Proposal (Jennifer/Leslie) 3.Misc. MINUTES City Officials Present: Mayor Bruce Ard Councilmember Dana Kirkham Councilmember Lee Bean Councilmember Randy Waite Councilmember Rex Thompson City Clerk Leslie Folsom City Engineer Lance Bates City Planner Ron Folsom City Treasurer Jennifer Belfield City Officials Absent: Councilmember Brian Powell DISCUSSION ITEMS: Mayor Ard opened the meeting at 4:39 p.m. at the City Office Building located at 2135 South Ammon Road. 1. City Code 5-9-10 Handbill Postings Rewrite or Not (Leslie): Leslie explained that she feels this is an obsolete bill and would like to remove it. This is concerning solicitations on door knobs, even political signs. The City would have a hard time to enforce this law. She feels bad that the law obeying constituents are being hurt more than the rest. With the current economic environment more people can afford to take the time to deliver a flyer door to door than to pay the postage. Ron said he searched other cities and there are only two who regulate handbills. Councilmember Bean said he is afraid of what’s going on the doors. Discussion ensued concerning enforcement. Councilmember Waite stated this ordinance affects the boy scouts, food drives, churches and the City. Councilmember Bean said it’s ok to adjust the ordinance and remove it. Ron stated he will fix it. 2. HRA Proposal (Jennifer/Leslie): Jennifer addressed the Council. Some employees never use their health plan, since they have other coverage, so the City is making an insurance payment that is never used. She would like to propose an alternative for the employees with double coverage to encourage them to not take the insurance. HRA’s could be vested at 80% of the insurance premium, then they can use the HRA for the deductible and if terminated, the funds roll back to the City of Ammon. She introduced Ray Severe who sets up and administers the HRA’s. Ray Severe, Lincoln Employee Benefits, 1958 First Street, addressed the Council stating the employee is receiving 100% of the policy and some are double insured. He said if you are paying 100% of anything, you will have people take the policy whether they want it or not. He explained what happens with double coverage, which is, insurance coordinate benefits. The primary carrier will pay as if there is no other carrier and the second carrier will pay the difference according to their plan. Most companies don’t pay 100%. If the employees’ Council Minutes 12-10-09 Page 1 of 3 premium is $312 and the City paid 80%, this would amount to a savings of $62.50 to the City. This will help alleviate employees from taking a plan when it wasn’t needed. He has set up some options. Health Reimbursement Arrangement (HRA) makes it so that all eligible employees would receive the funds to help offset medical costs with those who take the City insurance having the premium paid in full and those not on the health plan would only receive 80% of the premium. Employees can pay for premiums on their non-City insurance, other medical expenses, etc. If they don’t use the funds, you can decide how much to carry forward year to year. If terminated they can submit claims for so long, then the funds go back to the City. Councilmember Kirkham asked what the maximum is that most employers pay. Ray stated most are 80%, some 50%. Leslie stated that the City of Idaho Falls is 100%, but they are self-funded. Councilmember Kirkham stated that the City likes to offer this plan, since most municipal salaries are lower than private industry and this helps to be more competitive. Councilmember Thompson said this might be a good plan. Councilmember Bean asked about insurance premiums being based on experience. Ray said that is not true – it depends on the total premium and expected risk. Having employees not go on the plan can work for you or against you. More unhealthy people would be double covered, since they want to be sure they get every benefit that they can. Ray said your plan can be the primary carrier. Councilmember Thompson said this would only be for double covered people. Ray said the question would be those not taking coverage at all. Councilmember Bean said he would like to see a spreadsheet. Jennifer said the HIPAA (Health Insurance Portability and Accountability Act) laws won’t allow dissemination of personal information and she doesn’t have the knowledge of all the individuals needs and how they might have had double insurance. Councilmember Bean said create a spreadsheet to evaluate the savings and how much per employee it would be. Jennifer said everyone that is eligible is covered now. Councilmember Thompson said it would still be a benefit to be on the plan rather than just the HRA, but it would help those who are double covered. There was discussion concerning the reasons for double insurance with one being a married couple and she has insurance available through her work and the spouse is covered, but since it is free with the City they elect to have both. Leslie stated the other reason would be like herself where she has to maintain a personal policy, but has been told to take the coverage through the City also. Ray mentioned another IRS sanctioned option, an HSA (Health Savings Account), which is basically a health IRA. An HSA requires a major medical plan that fits the design, which Ammon’s does not. HRA’s are funded by the employer and you can customize the plan to suit your needs. With an HSA, the money goes with the employee, but with an HRA the funds stay with the City. Ray said an HRA gives the employee an option for out of pocket medical expenses. The employee would pay for the premium. HRA’s can carry over claims. With a cafeteria plan, you lose the money at the end of the year. The City can terminate an HRA anytime they want and amend it from year to year. HRA’s are flexible and work for the City. Councilmember Bean asked regarding the premium, can an employee pay a portion back. Jennifer said one proposal is if they choose not to participate in our medical plan, then they can have an HRA. Ray said the City will set up the parameters. Ray said if we are making the contribution for everyone that is eligible for the insurance plan, those who go on it will receive the full benefit and those who don’t will receive the 80% of premium and stop the double coverage. Councilmember Kirkham said this won’t cost the City any more and there is a potential savings of 20% and it will give an additional benefit to the employees. Councilmember Thompson said it gives the employee the opportunity to put more money in and save the taxes and help with their medical expenses. Ray presented a spreadsheet showing it will save the City FICA and the employee will save FICA. The benefit is the pretax dollars. Councilmember Bean asked what the cost was to administer it. Ray said he doesn’t charge anything to set it up, if he is the broker to handle the major medical. There would be a $4 charge per month per participant to administer the plan. Jennifer said the cafeteria plan isn’t requiring a payment, at this time, since it’s not set up to add funds to. Councilmember Kirkham asked what we pay the broker every month. Ray said his would be the same. Ray said you would have to change from the current broker to him and then it is $4 per month. If you wanted him to provide the service, but not the major medical the fee would be $1200 for the set up and $8 per month. If we went with him, he would also provide us at no cost a flexible spending cafeteria document plan, so people could pay for their babysitters, etc. with pretax dollars. He would suggest providing a 2 ½ month grace period at the end of the contract for yearly carryover. We would use the cafeteria first, then the HRA. The City is the trustee. Mayor Ard asked Jennifer to try and put this together. Councilmember Kirkham and Councilmember Thompson said we would look at 80% for the plan. Council Minutes 12-10-09 Page 2 of 3 3. Misc. Leslie stated that UCMC performs utility audits and asked the Council if they would be interested. If they don’t save the City any money, there is no charge. However, if they find the savings they keep 50% and the City gets 50% for three years forward and back.They will audit services provided by Utah Power & Light and would also audit services provided by the City of Idaho Falls. The Council advised to go forward with the Utah Power & Light audit and we will see from there. If the City doesn’t agree, we can tell them and there is no problem. Councilmember Waite motioned to adjourn. Councilmember Kirkham seconded. Roll Call Vote: Councilmember Waite – Yes, Councilmember Kirkham – Yes, Councilmember Bean – Yes, and Councilmember Thompson – Yes. The motion passed. The meeting adjourned at 5:30 p.m. ________________________________________ C. Bruce Ard, Mayor ________________________________ Leslie Folsom, City Clerk Council Minutes 12-10-09 Page 3 of 3