FY2024 Proposed Budget

HEALTH INSURANCE RESERVE

The City maintains insurance reserves for permanent employees’ health care coverage. The health insurance plan is partially self-insured, with a stop-loss policy which provides coverage for claims in excess of $125,000 per employee. Operating funds and participating employees are charged premiums which are deposited into the Health Insurance Reserve Fund. The City reimburses a health insurance provider for actual medical costs incurred plus a claims processing/ administrative fee. The State of Iowa requires all public entities which maintain a self-funded health insurance plan file an annual certificate of compliance with the Iowa Insurance Commissioner, along with an independent actuarial opinion and financial statement which demonstrate that the plan continues to meet the requirements of Iowa Code 509A.14-.15 as well as applicable provisions of the Iowa administrative code. In fiscal year 2022, health insurance premiums increased by 9.85%, and in fiscal year 2023, premiums increased by 6.68%. Premiums are budgeted to increase by 10.00% in fiscal year 2024.

Increases in employee contributions have been negotiated as shown in the following table:

The fiscal year 2023 estimated ending fund balance is estimated at $14,447,353. This is an increase of $11,500 or .08% from the fiscal year 2022 ending fund balance of $14,435,853. For fiscal year 2024, the fund balance is expected to increase to $15,562,882 which is an increase of $1,115,529 or 7.7%. Restricted/assigned fund balance represents the City’s Net OPEB Obligation. The City’s Net OPEB obligation at June 30, 2022 was $8,123,615. This decreased by $1,574,253 or 19.4% over the fiscal year 2021 restricted/assigned fund balance due to decreases in actual experience, assumptions, interest, and service cost estimates.

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