City Council Meeting Date: October 7, 2025
To: Mayor and City Council
City Administrator Martig
From: Michelle Mahowald, Communications & Human Resources Director
Title
Consideration of 2026 Employee Benefits Renewal.
Body
Action Requested:
The Northfield City Council consider adopting a Motion approving rates and contributions for 2026 employee benefits coverage.
Summary Report:
The City of Northfield approved Gallagher Benefits Services as its broker for employee benefits in 2020. Gallagher Benefits Services Client Manager Katie Reger and Area Vice President Jessica Nikunen presented the renewal of health and other employee benefits to the employee benefits committee on September 10 and to the Council Employment Policy Committee on September 15. The employee benefits committee met again on September 23.
The following Blue Cross Blue Shield health insurance plans are recommended for the 2026 benefits renewal:
1. Continue offering the $500 deductible plan. Continue offering the $3,300/$6,400 embedded Heath Savings Account (HSA) plan. The deductibles will increase to $3,400/$6,800 in 2026. Both plans use the AWARE network (Northfield Hospital & Clinics, Mayo and metro hospitals included in network).
2. Replace the $1,000 deductible plan with a $5,000-$10,000 HSA using the High Value network (Northfield Hospital & Clinics are part of the network) Mayo is not in network.
Health Insurance History
In 2020, the City decided to switch from the Public Employees Insurance Plan (PEIP) to Blue Cross Blue Shield (BCBS). According to statute, the city must go out for proposal every 5 years for employee group benefits. In 2024, medical and dental quotes were requested from carriers. BCBS provided a final quote of 5% increase in premiums for 2025 and a 15% rate cap for 2026. The City received notice of a 15% premium increase in 2026 due to high claims.
Rate adjustments are based on group make-up, include age and area, employer contribution assumptions, historic claims costs, a forecast of future claim costs, administrative costs, taxes and assessments.
Renewals (across all plans):
2012 Premium adjustment of minus 2%
2013 Premium adjustment plus 2.4%
2014 Premium adjustment plus 8.5%
2015 Premium adjustment of 3.1%
2016 Premium adjustment of 1.55%
2017 Premium adjustment plus 3.5%
2018 Premium adjustment plus .8%
2019 Premium adjustment plus 3.1%
2020 Premium adjustment of minus 5.9%
2021 Premium adjustment plus 3.59%
2022 Premium adjustment plus 8.6%
2023 Premium adjustment plus 9.0%
2024 Premium adjustment plus 1.5%
2025 Premium adjustment plus 5%
2026 Premium adjustment plus 15%
Financial Impacts:
2026 premium costs for full-time and part-time employer and employee shares and tables with the historical costs of medical insurance premiums are shown in the 2026 City of Northfield Health Insurance Renewal, 2026 Monthly Medical Costs, and 2012-2024 Annual Medical Cost Tables (attachments).
Note:
Labor contracts are settled through December 31, 2027 for all four union groups. Premium contributions were adjusted effective January 1, 2025, to $650 per month and 50/50 split on renewal change for single coverage and $1,000 per month and 50/50 split on renewal change for family coverage for full-time employees.
Effective January 1, 2022 part-time employees working 20-29 hours per week were eligible for health insurance. The employer contribution for part-time insurance is 50% of the full-time contribution to the premium and 50% of full-time contribution of Health Savings Account (HSA) for both single and family coverage.
Dental, Basic Life/AD&D, Long Term Disability Insurance
Guardian is the current dental provider of the low and high plans offered to employs. Guardian provided a rate increase of 6% for 2026.
Full-time employees are eligible for dental coverage. 100% of the premium is paid for employees selecting the Low Plan.
Full-time employees are eligible for Basic Life + Accidental Death and Dismemberment (AD&D), Voluntary Life + AD& D, Long Term Disability, and Vision coverage. Rates will remain the same as 2025 for 2026.
Benefits Enrollment online enrollment platform
Human Resources staff will again use EASE online enrollment platform for 2026. The platform will show 2025 benefit selections and calculate benefit costs and options for employees.
Timelines:
Open enrollment educational meetings for employee and retiree benefits will begin in November. 2026 benefit information will be updated on the Inside Track (employee website portal). Enrollment will run through the end of November.