Since 2006, the city has had a high-deductible health plan (HDHP), with an annual deductible of $1,500 for a single person or $3,000 for anyone with 2-party or family coverage. This means that all medical expenses incurred up to the annual deductible amount, must first be paid by the employee. After reaching the annual deductible amount, co-insurance begins and employees pay a smaller portion of medical expenses- not to exceed the annual out-of-pocket limit that the plan has established. 

Per IRS guidelines, all HDHPs are allowed to be paired with a health savings account (HSA). An HSA holds pre-tax dollars in a separate account that can only be used to help employees pay for medical, dental, and vision expenses for themselves or dependent family members. Employees and employers can contribute funds into an HSA. 

Historically, the city has made an employer contribution into employees' HSAs. The last modification to the employer contribution was in 2009. In 2009, it was established that the employer HSA contribution would be $750 for single employees and $1,500 for those with 2-party or family coverage. Therefore, the city's contribution has remained to be half of the annual deductible that employees may incur. 

Since establishing those contribution amounts in 2009, the city added a second HDHP option in 2017 with a $3,000 deductible for single coverage and $6,000 deductible for 2-party or family coverage. Employees now have a choice between multiple plans and deductible options to choose the plan option that most closely meet their individual needs.  However, the employer contribution to employee HSAs has been based off the lower HDHP option. 

For 2024, the IRS has dictated that the lowest an annual deductible amount to be considered a qualifying HDHP will be $1,600 for single and $3,200 for 2-party or family coverages. Since historically Shakopee has traditionally contributed half of those qualifying plan amounts to employee HSA's, staff is recommending an increase to the employer contribution. Historically we strive to offer 50% so we are recommending an increase for 2024 to $800/$1,600 to remain consistent with this practice.