SUBJECT
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Discussion with possible action to approve the proposed changes to the medical insurance rates for the City of Laredo Health and Benefits Plan for all employees, retirees and dependents. Funding will be available in the Health and Benefits fund.
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VIVA LAREDO PLAN ALIGNMENT
Alignment Rating: Strong
Supporting goal(s)/policy(ies):
Policy 7.2.1: “Support and enhance access to preventive care and wellness services through employer-sponsored health benefits and incentives.”
(Page 7.22, Viva Laredo City of Laredo Comprehensive Plan)
Policy 7.2.3: “Encourage healthy behaviors and provide incentives for wellness within public employee programs.”
(Page 7.22, Viva Laredo City of Laredo Comprehensive Plan)
Goal 7.2: “Promote health equity by supporting health care access and preventive health practices for all residents.”
(Page 7.22, Viva Laredo City of Laredo Comprehensive Plan)
Policy 7.3.1: “Ensure affordability of care and access to insurance coverage for vulnerable populations.”
(Page 7.22, Viva Laredo City of Laredo Comprehensive Plan)
Policy 7.4.1: “Incorporate health into city budgeting and decision-making, particularly with respect to city staff programs.”
(Page 7.22, Viva Laredo City of Laredo Comprehensive Plan)
Summary of alignment:
The agenda item proposing changes to medical insurance rates for FY25-26 exhibits strong alignment with the Viva Laredo Comprehensive Plan. By adjusting premium spreads and dependent coverage contributions while introducing an HSA incentive, the City of Laredo is directly supporting policies that advocate for equitable access, affordability, and incentivized wellness in employee health care.
These proposed actions reflect a deliberate integration of health considerations into city operations and budgeting-an approach emphasized in Goal 7.2 and Policy 7.4.1. Additionally, the item reinforces broader planning themes such as public health, equity, fiscal responsibility, and sustainability of municipal services.
PREVIOUS COUNCIL ACTION
N/A
BACKGROUND
In response to rising healthcare expenditures and evolving member needs, the City’s benefits consultants, local insurance broker and City staff conducted a comprehensive review of the current medical compensation plan. Their analysis considered factors including increased medical and prescription drug costs, higher member utilization, and the growing frequency of high-cost claims. Based on this evaluation, the consultants recommended a series of strategic amendments to the City’s existing compensation plan to ensure its continued affordability, sustainability, and competitiveness.
These recommendations were presented to the City Council during Budget Workshop No. 2 on May 28, 2025. At this time, the City Manager requested authorization to return to the Council on June 2, 2025, for formal action on the proposed changes. The purpose of these updates is to proactively manage the financial health of the City’s self-funded plan while maintaining equitable access to healthcare for employees, retirees, and their dependents.
The proposed amendments include:
A 12.5% premium spread between plan tiers (High Deductible Health Plan, Health Maintenance Organization, Preferred Provider Organization)
A uniform application of the 50% dependent contribution policy has been implemented across both civilian and emergency personnel active employee plans (excluding retirees)
An 11% spread for civilian retiree premiums across plan types
A $750 incentive for employees who participate in the Health Savings Account (HSA)
These changes are critical to ensuring long-term fiscal stability and preserving quality benefits for all plan participants.
COMMITTEE RECOMMENDATION
N/A
STAFF RECOMMENDATION
recommendation
Staff recommends Council approve the changes to the medical health plan as presented.
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Fiscal Impact
Fiscal Year: 2026
Budgeted Y/N?: N/A
Source of Funds: Health & Benefits
Account #: 660
Change Order: Exceeds 25% Y/N: N/A
FINANCIAL IMPACT:
No financial impact at this time.