East Grand Forks City Council discusses whether to move away from group health insurance plan

Aug. 27—EAST GRAND FORKS — The East Grand Forks City Council discussed the city's 2025 budget during its work session Tuesday night.

The city will have to pass a preliminary budget by the end of September and pass a final budget by the end of December. Much of Tuesday's discussion centered around a high-level budget overview and whether to change health insurance plans.

The city's current estimates are for a $14.1 million budget in 2025, a 5% increase over last year, which doesn't include any increases in cost for health insurance premiums. The preliminary budget showed to the council called for a 3% property tax levy increase, or $207,902 in value. Last year, the City Council approved a 5% levy increase.

However, those numbers could change if the city decides to change health insurance plans — specifically, switching from a group health insurance plan to an individual coverage health reimbursement account system.

Currently, the city uses Blue Cross Blue Shield to provide a group health insurance plan to employees. The city did solicit bids from other providers, eight in total, but only the Public Employee Insurance Plan gave a quote to the city. PEIP has a 9.1% increase over the current premium cost and the city would likely be locked into a contract for four years, unless a rate increase was over 20%.

"It can increase 19% each year over the four years and you'd be committed to staying," City Administrator Reid Huttunen told the council. "When we provided this update to employees with the experience we had with PEIP a few years back, the combination of those two elements wasn't viewed very favorably by employees."

The individual coverage health reimbursement account — or ICHRA — that the city is considering works differently than the current setup. The city would give employees a certain amount that the city is willing to reimburse, similar to how it covers a portion of the premium in a group insurance plan. However, unlike a group plan — where everyone is using the same provider — employees, through a city vendor, find a plan that fits their needs in the individual market, and the costs are paid through an ICHRA. An ICHRA system also means that employees over 65 would have to use Medicare.

The city has seen a 66% increase in health insurance costs since 2021.

"Past practice has, when we've made changes to our group insurance provider, we've made those changes based on a majority vote from our employees," Huttunen said. "We would consider that same practice for this going forward whether we stick with Blue Cross Blue Shield renewal or consider an ICHRA."

In other news, the council:

* Discussed ways the city can help with bus stop arm violations. East Grand Forks School District Transportation Director Cody Hlavka came to the council to bring updates on changes the department has made to bus stop locations and widespread issues with stop arm violations, both within the city and across the rural parts of the district.

* Received information from Polk County Public Health about how it's soliciting information from the community for use of the funds being received from American Crystal Sugar's air pollution violation. The city is receiving $126,000 from the violation. It's one of the first instances of a new law in Minnesota that says that 40% of a fine

over $250,000 must be allocated to the local community health board.

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