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HomeMy WebLinkAboutEXECUTIVE SESSION - 03/11/2014 - Executive Session Minutes Personnel (6) EXECUTIVE SESSION- PERSONNEL COMMITTEE March 11, 2014 4:00 p.m. Chernick Conference Room TOPIC: ❑ LITIGATION X PERSONNEL ❑ LAND ACQUISITION COMMITTEE COMMITTEE MEMBERS PRESENT MEMBERS ABSENT STAFF PRESENT J. FRANKE R. RUMMEL Village Trustee Village Manager J. PETRI J. CAREY Village Trustee Assistant Village Manager C. PROCHNO Village Trustee Pursuant to a duly made and approved motion and a majority vote at a regularly scheduled meeting of the Personnel Committee on March 11, 2014, this Executive Session was called to consider a Personnel matter. Number of pages attached: 1 Date(s) of review for release: October 2014 Date of approval for release: March 11, 2014 4:00 p.m. Personnel The Personnel Committee meeting was called to order at 4:00 p.m. and entered into Executive Session upon unanimous roll-call vote. Changes to Employee Health Insurance Programs The Village Manager made a presentation to the Personnel Committee members regarding Affordable Care Act and its impacts upon employee health insurance. The Affordable Care Act (aka Obamacare)will compel higher co-pays and deductibles. This is necessary in order for the insured to take responsibility for their personal health. The enforcement mechanism to reduce premium costs via higher co-pays and deductibles will be the "Cadillac Tax." The Cadillac Tax will become law in 2018. It sets specific thresholds for insurance premiums. Any premiums above the threshold are taxed at a rate of 40%. The tax is not deductible. In 2019, the threshold will be indexed to the cost of living plus 1%. In 2020 and beyond, the threshold will be indexed to the cost of living only. The Cadillac Tax actually has 2 thresholds: the general threshold and the "high risk"threshold. �. Police and Fire personnel fall within the "high risk" threshold. The IRS has not established the tax laws for the Cadillac Tax as of yet. As of now, it appears under the law that all Village employees may fall under the higher threshold but that is not clear at this time. In order to try and prevent any impact from the Cadillac Tax, the health insurance deductibles and co-pays will need to be increased over the next 3 years. This will be necessary to reduce premium costs. There are working limitations on the adjustments of co-pays and premiums. Those include specific Fire Union contract language and Police Union contract language. The good news is that the union contracts expire before 2018 and can be negotiated. Moreover, the Fire Union President and Vice-President are supportive of making annual changes and are willing to have side letters in the contract beyond the levels allowed in the contract. In 2014, the PPO health insurance premiums will fall 4.2% overall due to a good plan year combined with changes such as having the deductible increased from $200 to $300 (maximum allowed under the Fire Union Contract); adding an ER co-pay of$100 unless admitted to the hospital; and encouraging the utilization of generic prescriptions by amending the prescription co-pays from $5/10/20 to $5/20/40. The HMO plan will increase 2.46% on May 1. The HMO has no deductibles. However, the ER co-pay and prescription drug plan will both change to the same as the PPO program. In total, the Village will save around 85% of$200,000 on the health insurance program. The employees will save the remaining 15%. Going forward, the employees need to be educated concerning the impacts of Affordable Care �-- Act on co-pays and deductibles. A meeting with the unions needs to occur. Everyone needs to be made aware that annual changes to the health insurance program will become the norm due to the Affordable Care Act and the Cadillac Tax. After additional discussion, the Committee recommended approving the HMO and PPO rates along with the changes to the Village Board. The Village Manager will make a presentation to the Village Board this same evening. The meeting adjourned at 4:45 p.m.