CITY HALL — Santa Monica will soon cease being the only city among its peers in the region to cover 100 percent of employee health insurance premiums under a deal approved by the City Council on Tuesday that shifts about 5 percent of total premium costs to employees.

The new deal, which covers all Santa Monica employees except for police officers, received the council’s unanimous approval and was projected to cut City Hall’s compensation tab by $1.1 million in the next 18 months.

The move came after a City Hall report on the health insurance agreements neighboring cities have made with their employees showed Santa Monica was alone in continuing to cover 100 percent of premium costs for employees and their families.

City Manager Rod Gould said City Hall’s previous insurer, Aetna, had planned to increase premium costs by 12 and 18 percent for HMOs and PPOs respectively. The new agreement gives employees health coverage through Signa, which Gould said is providing the same level of coverage as previously for only a 5.5 percent cost increase. Meanwhile, annual revenue increases, he said, are projected to be in the 1 to 3 percent range over the next five years.

A survey of nine comparable Southern California cities, including Beverly Hills, Long Beach and Pasadena, showed Santa Monica was the only one whose employees were not required to contribute to their health plans.

With health insurance cost increases exceeding revenue growth, Mayor Bobby Shriver said the new health plan was a needed step toward addressing that gap.

“We have to find ways to contain some portion of employment costs, which are more than 70 percent of the budget,” he said before the vote.

Even with the 5 percent employee contribution, Human Resources Director Donna Peter said Santa Monica’s employees still have a generous health plan.

“Overall, it’s still a good deal for our employees, even among other [municipalities],” she said. “Compared to the private sector, some people would say it’s a great deal.”

The monthly amounts employees will have to chip in will range from $11 per month for a single employee’s HMO plan to about $80 per month for a Fire Department employee who selects the most expensive type of full-family coverage. (The out-of-pocket contributions are less for “miscellaneous” employees than for firefighters because, under an earlier deal with a coalition of non-emergency services employees, City Hall in 2005 agreed to set up a fund to offset eventual employee contributions to health care.)

The Santa Monica Police Officers Association negotiates its health care plan separately from other employee groups and is set to begin talks for a new deal this spring.

While the dollar amounts employees will be required to contribute are modest, Peter said the new medical insurance agreement is a significant change.

“From my perspective, it’s a step toward our employees helping the city start addressing the increase in payroll costs, which is pretty significant over the next few years,” she said.

Lauralee Asch, president of the Coalition of Santa Monica City Employees, which negotiated the new agreement, said members of the organization were satisfied with the new deal.

“I think employees realize that they needed to help the city under the circumstances of the way the economy is,” she said. “Nobody likes to pay, but I think they realize it’s the way it’s got to be.”

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