The

City of Montpelier offers a health benefits package similar to other comparable cities in Vermont. Keep in mind, insurance premiums costs are the result of not just the benefit package offered but also the experience of the insurance pool.

Health Benefits Comparison and Summary DRAFT (9/7/12) Prepared by Jane Kast and Nolan Langweil

Rising health care costs continue to burden both public and private employers (and their employees) continually applying pressures on budgets and bottom lines. The City of Montpelier, like many other employers has tried to address this by adjusting the benefit package at least five times in the last ten years. 2001 The city paid 100% of health insurance premiums for a single-person plan, and 85% for two-person and family plans. 2004 The city increased premium cost sharing for two-person and family plans from 85% to 82.5% (meaning the employees share of the premium increased from 15% to 17.5%)

 2007 The city switched from Blue Cross Blue Shield of Vermont (BCBSVT) to CIGNA. The city also increased premium costs-sharing to 95% for a single person plan and 80% for two-person and family plans. 2010 The city switched to a CIGNA high deductible health plan (HDHP) with deductibles of 3,000 for individuals and $6,000 for families. The city also provided health reimbursement accounts (HRA) to cover the majority the high deductible costs. The city continued to pay approximately 95% of the premium for single and 80% for two- person and family plans (includes HRA funding). 2012 Although the changes made in 2010 saved the city $190,000 it still faced an additional 20% premium increase in 2011. As a result, the city made further changes in 2012 switching to a BCBSVT high deductible health plan (HDHP) with deductibles of $4,000 for individuals and $8,000 for families with an HRA to assist in covering the cost of the high deductibles. The HRA covers up to $3,500 for individuals and $7,000 for families and the beneficiaries can roll-over up to 10% of their unused HRA for the following year. In budgeting for this the city assumed a 65% usage rate of the HRA (in that not everyone would use the all of their HRA). The city continues to pay approximately 95% of the premium for single and 80% for two-person and family plans (includes HRA funding). Employees can choose to opt-out of the health insurance coverage and receive $2,125/year (paid incrementally through the bi- weekly payroll). NOTE: At this time it is not yet known what the total 2012 health costs will be until the end of calendar year 2012. The city projected a 1% cost above 2011 when it made its decision to move to this plan. The chart below is a summary of the annual rates and cost sharing for the citys 2012 health plan.

 The following graph looks at changes in premiums between 2004 and 2012 taking into account the aforementioned changes.

The following chart looks at premiums dollars paid between 2004 and 2012 again taking into account the aforementioned changes. Again, 2012 costs wont be known until the end of calendar year 2012.

 Currently, health care costs make up approximately 9% of the municipal budget.1 With average annual premium increases of 8.5%, the city is facing an escalating fiscal burden. Health benefits are negotiated as part of the overall union contract usually in conjunction with wages and other benefits such as retirement and as such are part of a broader discussion. Short of reducing staff, the only major tools towns (and other employers alike) have in addressing their exposure to rising health care costs are to reduce the benefit package and increase cost-sharing. That being said, it will be important for those in city governance to continue to find ways of offsetting foreseeable yearly increases in health care costs. At some future point Green Mountain Care may offer more affordable solutions, however, that is unlikely to happen before 2017.

This number is derived by comparing the citys share of employee medical costs (approximately $1 million) with the citys total general fund expenditure of $10,862,379 (for 2012).