City Health Care Benefits Savings Plan Began November 8, 2008
The City’s Health Care Benefits Savings Plan was developed to prudently manage the cost of on going health care in the City of Indian Wells. Active employees and annuitants would remain in the current health care system. The current health care system would no longer be offered to future employees. All new employees would be placed into the new employee health care plan.
Under the new employee health care plan; the City will offer full coverage health care plans under the HMO umbrella. The HMO umbrella represents a cost savings of up to 58.3% compared to the original PPO care system. New employees can elect to participate in a PPO care system. The cost difference between plans would be the responsibility of the employee and would be seamlessly be administrated through the City’s payroll system.
The cost of retiree health care will decrease significantly with the implementation of a new employee vesting schedule:
- A minimum of ten years of state service credit is required to receive 50% of the employer contribution
- Credited State Service is compensated CalPERS service time earned (defined in G.C. 20069)
- Purchased “Additional Retirement Service Credit (ARSC)” does not qualify as it is not earned service.
- Five of those ten years of service must be performed at the City of Indian Wells
- Each additional service credit year after ten years increases the employer contribution percentage by 5% until 20 years at which time the retiring employee is eligible for 100% of the employer contribution
An actuarial analysis presented by Mathis and Associates determined the overall potential cost savings of implementing the City Health Care Benefits Savings Plan. The analysis determined nearly all current employees will either separate or retire by 2029. Through attrition the City will reduce health care costs by $4,013,052 between 2011 and 2029 simply by implementing the new employee health care plan to new active employees based on any employee (City Council are considered employees) hired after November 8, 2008 will be under the new health care benefit system.
The cost savings for retirement premiums between the current benefit plan compared to the new health care plan is extremely significant. The analysis indicates the City could cumulatively save as much as $23,392,361 between 2026 and 2045 as new employees begin to retire. The study compared the estimated cost of retirement of the current plan compared to the new employee health care plan during that same time period.