Kenai considers changes for employee health care

Posted: Wednesday, May 11, 2011

Kenai's City Council asked the administration Monday to pencil out a new employee health care plan after a contentious and long budget work session on a plan no one was completely satisfied with.

The total cost of insuring Kenai's employees this coming year is about $1.6 million, up from $1.2 million for the July 2010 to June 2011 fiscal year.

Under this plan, city employees insuring only themselves will not be asked to contribute to their health care premiums. Employees insuring family members will pay about 8.5 percent of the cost, with the city shelling out the other 91.5 percent.

That was proposed by Mayor Pat Porter at the end of a more than three-hour meeting, when the council came to a stalemate over the exact terms of a compromise health plan.

Council members were divided between asking employees to pay 8 or 9 percent of the total cost for health care.

"Why don't you guys split it at eight-and-a-half?" she suggested.

Effectively, the compromise means that an employee insuring a child or children will pay $107 a month, an employee insuring a spouse will pay $124, and an employee insuring a family will pay $168, said Finance Director Terry Eubank.

All of the council members present -- Mike Boyle was absent -- supported choosing a percent split for what the city and employees paid because it will provide some consistency for employees. Over the last several years, employees have paid anywhere between 5 to 10 percent of the premium costs.

More than half of the council members present nodded their approval to that plan. To make the plan pencil out, the council agreed to lower spending on trails, which Councilman Terry Bookey had proposed adding to the budget when the council reviewed the overall budget for the coming fiscal year.

Eubank and City Manager Rick Koch asked the council to come to a tentative agreement that wouldn't get changed later, because the open enrollment period for city employees to adjust their health care coverage is coming up and employees needed to know what they were signing up for.

Open enrollment runs from May 23 to June 8.

"Those are key decisions for these employees to make," Eubank said.

Koch opened the meeting by suggesting a plan that asked employees to contribute 9 percent, and instituted a monthly premium for employees insuring only themselves.

Koch said he thought the 9 percent figure was a fair buy-in for employees, and would set a standard for how the city and its employees split the cost of insurance rather than just having premiums set at a whim.

Employees were mixed on the administration's plan.

City employee Nancy Carver said she supported the administration's proposal.

"I think we're very fortunate for Rick and Terry to spend all of this time trying to find us the best coverage," she said.

Other employees, including Matt Landry, said they opposed the single employee contribution.

"I consider the health benefits part of my salary," Landry told the council.

Some councilmen, including Bob Molloy, Ryan Marquis and Bookey opposed the employee contribution, which would require a change in city code to create.

"I kind of agree that it's part of a benefit package that we have," said Molloy.

Porter said she had done some research on other communities, and those that have no contribution for single employees are considering changing that within the next year. She said it seemed to fair to ask Kenai's employees to share the cost of their coverage.

"It's becoming cost prohibitive for the taxpayers of this town to pay more," she said.

Councilmen Brian Gabriel and Joe Moore argued that single employees should be asked to share that cost, but agreed to postpone that discussion in the interest of moving forward with the budget discussion.

Koch also briefed the council on the narrative behind this year's increases.

Initially, the city's provider came forward with a 56 percent increases in premiums. That was whittled down slightly, but later iterations of Aetna's plan had a significantly increased deductible. Koch said he felt that plan was unacceptable.

The final plan had a 39 percent increase, and Koch's proposal meant that employees wouldn't see a net change to their deductibles.

Koch said the city did look at different plans, including self-insurance.

"The level of risk associated with that I felt was too high for us to stand alone," Koch said.

None of the alternatives pencilled out for this year, but Koch said city administration would continue to look at them in the future.

Although the amount employees pay was the most contentious issue at the meeting, it isn't the only change to the city's health care coverage.

Koch said the plan now requires that the city offer health care to employees working between 15 and 30 hours a week. That probably means that six employees will now be eligible for coverage, although the city will split the cost of insurance with them rather than providing the same plan that full-time employees are under.

Eubank said the insurance provider, Aetna, argued that state statutes require that change.

The plan requires that people who work at least 30 hours but less than 40 hours also be included, meaning yet another employee could be added to the coverage plan, Koch said.

The city is also moving toward a wellness plan at the request of the employees, Koch said.

That plan, which is based on wearing a pedometer or logging activity on a website, provides incentives for certain amounts of activity.

Koch said the maximum cash incentive would essentially repay an employee for their premium.

The council also had a brief scuffle when Bookey presented his own numbers for the council to consider.

Bookey brought forward numbers on how health care would pencil out if the city asked employees to pay a lesser share of their health insurance.

Bookey's numbers were based on a 7.14 percent employee pay-in, and no contribution for single employees. He said his plan worked out to cost the city about $47,000 more than the administration's.

But Porter and Moore said Bookey's work was counterproductive when the city has employees drafting the plans.

"This is their job, Terry," Porter said. "This is their job."

Porter questioned why the city had an administration if the council wanted to do things on their own.

"Doing this like this for our administration, I call it micromanaging in the highest degree," Porter said.

Council micromanaging administration is a growing problem, she said.

"I'm getting very upset about it all," Porter told the council before adjourning for a brief break.

Koch told the council he hadn't taken offense to the proposal, but didn't think the council's divisiveness was productive.

"The system forces conflict and compromise," he told them.

Molly Dischner can be reached at

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