City employee health plan premiums to rise for first time in over a decade

The Paducah City Commission voted Tuesday to approve a series of adjustments to the city's employee health plan, including raised premiums, for the 2026 fiscal year in light of rising health insurance costs.

The adjustments were approved on the consent agenda, meaning they did not receive individual votes, but were passed alongside a number of items considered routine. DJ Story, a benefits advisor with the brokerage HUB International, gave a presentation on the updates to the health plan.

Story said nationally, average health care costs have increased between 8% and 9% from 2025 to 2026, the highest inflationary change in more than a decade.

"Hospital labor shortages and the cost of labor when it comes to the health care industry is going up," Story said. "High-cost medications from GLP-1s and specialty drugs, as well as gene therapy medications, are driving those costs around the country. Then, rising costs of chronic claims and mental health claims — I've seen more mental health claims in the last couple of years than I've seen in all the time I've been doing this — and just more and more on the rise."

Story said the city has a self-insured health insurance plan, meaning the premiums paid into the plan by employees are used directly to pay claims. The city has an agreement with Anthem Blue Cross Blue Shield for administrative services for the plan, which was renewed for 2026 as part of the consent agenda. Story said the budgeted costs for the city's health care plan has been fairly stagnant over the past 10 to 12 years, managing to absorb inflationary changes, but it's overdue for an increase.

"We haven't raised our rates for how many years, since 2013?" Paducah City Commissioner Buz Smith said. "That's a long time to me. I kind of look at it as how we did the garbage. We kept the price, even though inflation kept coming up. It's kind of been the same way with this."

Story said increased premium costs for employees will be minimal. He used employees on the Investor Plan who do not participate in the city's Wellness Program as an example. He said individuals on that plan could expect a $5.25 increase per pay period, while those with family insurance on the plan would see a $39 increase per pay period. Vision and dental premiums will not increase.

Story said there will also be an increase in the investor plan's deductible from $3,330 to $3,400 to comply with new Internal Revenue Service minimums.

The commissioners also voted to adopt three ordinances introduced at the Oct. 2 meeting. The first was to amend a city ordinance related to body piercing. The language of the previous ordinance required anyone performing body piercing below the waist to be a physician licensed to practice medicine in the state of Kentucky. The amendment removed that requirement to make the ordinance consistent with state law, which requires that an individual must complete bloodborne pathogen training and register with the local health department.

Additionally, the commissioners adopted revisions to the city's Remote Worker Incentive Program. The revisions expand eligibility to self-employed workers and shift the incentives from a more complex system of reimbursements to a $5,000 lump sum paid in two installments, the first when the individual establishes residency in Paducah and the second upon one year of their relocation.

Commissioners also approved an amendment to the city's budget incorporating $583,406 in funds from a Community Development Block Grant (CDBG) from the Department of Housing and Urban Development. CDBG funds are intended for neighborhood revitalization efforts through addressing housing, community development and social services needs.