Employee Health Insurance Benefits for Fiscal Year 2026/2027. (Roll Call)

City Council Agenda Item Report FROM:

Ryan Cummins, City Manager Nicole Bredeweg, Treasurer/Finance Officer

MEETING DATE:

June 22, 2026

SUBJECT:

Employee Health Insurance Benefits for FY 26-27

DESCRIPTION: The City’s employee health insurance agent, Gallagher Benefit Services LLC, has provided renewal information and plan options for employee health insurance coverage for the upcoming fiscal year. The quote to renew the City’s current Priority Health plans would result in an 11.91% increase, which equates to an annual increase of $18,359.04. Total annual premium would increase from $154,145.92 to $172,504.96. The City currently offers multiple Priority Health plan options, including both traditional HMO and high-deductible HSA-qualified plans. Staff reviewed the renewal information and evaluated the available options, including the impact to the City, the impact to employees, plan design changes, deductible and out-of-pocket exposure, prescription coverage, and overall competitiveness of the City’s benefits package. The City currently pays 100% of the employee premium for health insurance. This benefit remains an important part of the City’s employee retention and recruitment strategy, particularly in a competitive municipal employment environment. REVIEW PROCESS Staff reviewed the renewal options and compared the available plans against the City’s current employee needs and overall benefit structure. In staff’s opinion, while cost savings were considered, the available alternatives did not provide enough savings to justify significant disruption to employees or a major reduction in the City’s benefit offering.

Staff also reviewed the City’s Health Savings Account contribution for employees enrolled in the high-deductible health plan. The City currently contributes $2,500 annually to eligible employee HSAs. In order to maintain the value of this benefit and help offset employee exposure under the high-deductible plan, staff recommends increasing the City’s annual HSA contribution to $2,600. RECOMMENDATION Staff recommends renewing the City’s employee health insurance coverage as presented and increasing the City’s annual HSA contribution from $2,500 to $2,600 for eligible employees enrolled in the high-deductible health plan. BUDGET ACTION: None at this time. LEGAL REVIEW: None at this time. SAMPLE MOTION: Motion to approve the employee health insurance renewal as presented and to increase the City’s annual Health Savings Account contribution for eligible employees enrolled in the highdeductible health plan from $2,500 to $2,600 for FY 26-27.

 Page 2

2026 - 2027

Health Insurance Recommendation

Nicole Bredeweg PRESENTATION TITLE

1 29

EMPLOYEE HEALTH INSURANCE RENEWAL FY 2026-2027 RECOMMENDATION: • Renew the existing employee health insurance plan structure. • Continue offering both low-deductible and HSA-eligible plan options. • Increase the City’s annual HSA contribution from $2,500 to $2,600. Last year was the larger decision point. This year’s recommendation is to maintain the structure that was put in place and avoid unnecessary disruption to employees.

6/18/2026

WHAT CHANGED LAST YEAR FY 2025-2026 PLAN STRUCTURE:

• The City moved from the prior plan structure to a menu of options. • Employees in partner counties were offered West Michigan Partners plan options. • Employees outside partner counties were offered non-partner plan options. • HSA-eligible high-deductible options were added. • The goal was to manage cost increases while preserving competitive benefits. Last year’s change helped reduce the projected cost increase while maintaining strong employee benefits. It also gave employees more 3 choice based on their own needs. 31

6/18/2026

CURRENT EMPLOYEE ELECTIONS: • 2 employees: low-deductible West Michigan Partners • 1 employee: low-deductible non-West Michigan Partners • 7 employees: high-deductible West Michigan Partners • 2 employees: waived coverage

The elections show that the plan menu is being used in a balanced way. Most employees selected the HSA-eligible plan, but the lowerdeductible options remain important for employees whose circumstances make that plan a better fit.

6/18/2026

REVIEW PROCESS: • Compared plan offerings for both City cost and employee impact • Evaluated whether changes to the current plan structure would produce meaningful savings • Considered whether potential savings justified employee disruption • Determined that renewal of the existing plan structure best balances cost control, employee choice, and benefit stability

6/18/2026

RECOMMENDATION: • Renew existing plan offerings. • Maintain benefit stability for employees. • Support retention and recruitment. • Avoid unnecessary annual disruption. • Budget includes the anticipated increase. • Increase HSA contribution from $2,500 to $2,600 to offset the increase in deductible.

6/18/2026

CONCLUSION: The recommendation this year is not to make another major structural change. Last year, the City made the larger adjustment to its health insurance offerings in order to manage cost increases while still providing a competitive benefit package. This year, staff is recommending renewal of that same structure. Maintaining the current plan options supports employee retention, reduces disruption, and helps preserve trust in the City’s benefit offerings. The proposed HSA contribution increase is modest and is intended to help offset the deductible increase for employees who selected the highdeductible plan.

6/18/2026

Any questions?

6/18/2026

Gallagher

City of Saugatuck Medical I Fully-Insured Renewal Options I Effective 08/01/2026 RENEWAL

RENEWAL OPTION 1

RENEWAL OPTION 2

PriorityHealth PriorityHMO Gold G10 • West Ml Plan Name Partners Plan Type HMO Network

CURRENT

PriorityHealth PriorityHMO Gold G10 • West Ml Partners HMO

HAP

PriorityHealth

HAP

HAP HMO Gold B15

Gold G15 • West Ml Partners

HAP HMO Gold B1

HMO

HMO

HMO

Embedded $1,000 I $2,000 Embedded $8,150/$16,300 Co-Insurance maximum:$4,500/ $9,000 20% Covered 100% $20 $50 $10 $85 $250 (Copay waived if admitted) 20%AfterDed 20%AfterDed Lab:$35 Radiology:$75 Inpatient: 20%AfterDed $250 I Service

Embedded $1,000 I $2,000 Embedded $8,700 I $17,400 Co-Insurance maximum:$4,500/ $9,000 20% Covered 100% $20 $60 $10 $85 $350 (Copay waived if admitted) 20%AfterDed 20%AfterDed Lab:$35 Radiology: 20%AfterDed

Embedded $1,500/$3,000 Embedded $8,200 I $16,400 Co-Insurance maximum:$4,000 I $8,000 20% Covered 100% $35 $60 Covered 100% $65 $300 (Copay waived if admitted) 20%AfterDed 20%AfterDed $30

Embedded $1,500/$3,000 Embedded $9,200 I $18,400 Co-Insurance maximum:$4,500/ $9,000 20% Covered 100% $20 $60 $10 $85 $350 (Copay waived if admitted) 20%AfterDed 20%AfterDed Lab:$35 Radiology: 20%AfterDed

Embedded $1,000 I $2,000 Embedded $8,200 I $16,400

$300 / Service

20%AfterDed

$300 I Service

20%AfterDed

$5/$35/$75/$90 20% Up to $250; 20% UD to $450

$5/$35/$75/$90 20% Up to $250; 20% UD to $450

$5/$25/$40/$80 20% Up to $200; 50% UD to $500

$5/$35/$75/$85 20% Up to $250; 20% UD to $450

$5/$25/$40/$80 20% Up to $200; 50% UD to $500

Not covered

Not covered

Not covered

Not covered

Not covered

PriorityHMO Gold G10 • West Ml Partners $2,540.84 $30 490.08

PriorityHMO Gold G10 • West Ml Partners $2,858.34 $34 300.08 $3,810.00 12.50%

HAP HMO Gold 815

Gold G15 - West Ml Partners

HAP HMO Gold 81

$2,773.27 $33 279.24 $2,789.16 9.15%

$2,786.72 $33 440.64 $2,950.56 9.68%

$2,840.71 $34 088.52 $3,598.44 11.80%

Current

12 months

12 months

12 months

Carrier Name

PLAN DESIGN* In-Network Benefits Deductible Type Calendar Year (CY) Deductible (Individual/Family) Out-of-Pocket Max Type CY Out-of-Pocket Max (Individual/Family) Coinsurance (member pays after deductible) Preventive Care Primary Care Visit Specialist Visit Virtual Vlsllll Urgent Care Emergency Room Inpatient Hospital Outpatient Surgery Diagnostic Test (X-ray, blood work) Imaging (CT/PET scan, MRI) Prescription Drug Benefit Retail Tier I / Tier II / Tier Ill Specialty Out-of-Network Benefits Deductible Type CY Deductible (Individual / Family) Out-of-Pocket Max Type CY Out-of-Pocket Max (Individual / Family) Coinsurance lmember oavs after deductible)

PEPM Rates Estimated Monthly Premium Estimated Annual Premium

Dollar Difference Percent Change

•..1•, •■• • tn•r..., I

Rate Guarantee

12 months

Note: The information contained herein is subject to the disclosures and disclaimers on the Disclaimers page of this presentation.

RENEWAL OPTION 3

20% Covered 100% $35 $60 Covered 100% $65 $300 (Copay waived if admitted) 20%AfterDed 20%AfterDed 3000%

Private and Confidential

Gallagher

City of Saugatuck Medical I Fully-Insured Renewal Options I Effective 08/01/2026 Carrier Name Plan Name Plan Type Network PLAN DESIGN* In-Network Benefits Deductible Type Calendar Year (CY) Deductible (Individual/Family) Out-of-Pocket Max Type CY Out-of-Pocket Max (Individual/Family) Coinsurance (member pays after deductible) Preventive Care Primary Care Visit Specialist Visit

\11,tnal\ll■lta

Urgent Care Emergency Room Inpatient Hospital Outpatient Surqerv Diagnostic Test (X-ray, blood work) lmaaina (CT/PET scan, MRI) Prescription Drug Benefit Retail Tier I / Tier II / Tier Ill Specialty

Out-of-Network Benefits Deductible Type CY Deductible (Individual / Family) Out-of-Pocket Max Type CY Out-of-Pocket Max (Individual / Family) Coinsurance (member pays after deductible)

PEPM Rates Estimated Monthly Premium Estimated Annual Premium

•I••■�• ,._,.,.., I Rate Guarantee

CURRENT

RENEWAL

RENEWAL OPTION 1

RENEWAL OPTION 2

RENEWAL OPTION 3

PriorityHealth PriorityHSA HMO Gold G16 West Ml Partners HMO

PriorityHealth PriorityHSA HMO Gold G17West Ml Partners HMO

PriorityHealth PriorityHSA HMO Silver S23 West Ml Partners HMO

HAP HAP HMO Gold HSA DJ HMOQHDHP

Blue Care Network BCN HSA PCP Focus Gold Option 3 HMO

Aggregate $1,650 / $3,300 Embedded $4,500 I $9,000 20% Covered 100% 20% AfterDed 20% AfterDed $10 AfterDed 20% AfterDed 20% AfterDed 20% AfterDed 20% AfterDed Lab:$35 Radiology:$75 Inpatient: 20% AfterDed $250 I Service

Aggregate $1,700 I $3,400 Embedded $5,000 I $10,000 20% Covered 100% 20% AfterDed 20% AfterDed $1o AfterDed 20% AfterDed 20% AfterDed 20% AfterDed 20% AfterDed 20% AfterDed

Aggregate $2,300 I $4,600 Embedded $8,200 I $16,400 30% Covered 100% 30% AfterDed 30% AfterDed $10 AfterDed 30% AfterDed 30% AfterDed 30% AfterDed 30% AfterDed 30% AfterDed

Embedded $3,000 I $6,000 Embedded $4,500 I $9,000 30% Covered 100% 30% AfterDed 30% AfterDed 30% AfterDed 30% AfterDed 30% AfterDed 30% AfterDed 30% AfterDed 30% AfterDed

Aggregate $3,400 I $6,800 Aggregate $3,400 I $6,800 0% Covered 100% Covered 100% Covered 100% Covered 100% Covered 100% Covered 100% Covered 100% Covered 100% Covered 100%

20% AfterDed

30% AfterDed

30% AfterDed

Covered 100%

$5 / $35 / $65 / $85 (AfterDed) 20% AfterDed Up to $250; 20% AfterDed Up to $450

$5 / $35 / $65 / $85

$5 / $35 / $80 / $125

$5 / $30 / $50 / $80

AfterDed $0

20% AfterDed Up to $250; 20% AfterDed Up to $450

20% AfterDed Up to $350; 20% AfterDed Up to $550

20% Up to $200; 50% Up to $500

Not covered

Not covered

Not covered

Not covered

Not covered

PriorityHSA HMO Gold G16 - West PriorityHSA HMO Gold G17-West Ml Partners Ml Partners $6,486.34 $7,411.86 $88 942.32 $77 836.08 Dollar Difference $11,106.24 Percent Change 14.27% Enrollment

Current

12 Months

PriorityHSA HMO Silver S23 West Ml Partners $6,603.04 $79 236.48 $1,400.40 1.80% 12 Months

BCN HSA PCP Focus Gold Option 3 $7,372.74 $88 472.88 $10,636.80 13.67%

HAP HMO Gold HSA 03 $7,140.91 $85 690.92 $7,854.84 10.09%

12 Months

Note: The information contained herein is subject to the disclosures and disclaimers on the Disclaimers page of this presentation.

12 Months

Private and Confidential

Gallagher

City of Saugatuck Medical I Fully-Insured Renewal O�tions I Effective 08/01/2026 CURRENT

RENEWAL

RENEWAL OPTION 1

Carrier Name

Priori!}t_Health

Priori!}t_Health

Priori!}t_Health

Plan Name

PriorityHMO Gold G10

PriorityHMO Gold G10

PriorityHMO Gold G15

Plan Type

HMO

HMO

HMO

Embedded $1,000 I $2,000 Embedded $8,150 / $16,300 Co-Insurance maximum:$4,500 I $9,000

Embedded $1,000 I $2,000 Embedded $8,700 I $17,400 Co-Insurance maximum: $4,500 / $9,000 20% Covered 100% $20 $60 $10 $85 $350 (Copay waived if admitted) 20% After Ded 20% After Ded Lab:$35 Radiology: 20% After Ded

Aggregate $1,500 / $3,000 Aggregate $9,200 I $18,400 Co-Insurance maximum:$4,500 I $9,000

$300 I Service

$300 I Service

$5 / $35 / $75 / $90 20% Up to $250; 20% Up to $450

$5 / $35 / $75 / $90 20% Up to $250; 20% Up to $450

$5 / $35 / $75 / $85 20% Up to $250; 20% Up to $450

Not covered

Not covered

Not covered

Network In-Network Benefits Deductible Type Calendar Year (CY) Deductible (Individual/Family) Out-of-Pocket Max Type CY Out-of-Pocket Max (Individual/Family) Coinsurance (member pays after deductible) Preventive Care Primary Care Visit S_!)_ecialist Visit

Vlrtual Visits Urgent Care

Emergency Room Inpatient Hospital Outeatient Surge Diagnostic Test (X-ray, blood work) Imaging (CT/PET scan! MRI Prescription Drug Benefit Retail Tier I / Tier II / Tier Ill Specialty Out-of-Network Benefits Deductible Type CY Deductible (Individual / Family) Out-of-Pocket Max Type CY Out-of-Pocket Max (Individual / Family)

20% Covered 100% $20 $50 $10 $85 $250 (Copay waived if admitted) 20% After Ded 20% After Ded Lab:$35 Radiology:$75 Inpatient: 20% After Ded $250 / Service

Note: The information contained herein is subject to the disclosures and disclaimers on the Disclaimers page of this presentation.

20% Covered 100% $20 $60 $10 $85 $350 (Copay waived if admitted) 20% After Ded 20% After Ded Lab:$35 Radiology: 20% After Ded

Private and Confidential