Affordable Care Act may cost city $46K

BLUE EARTH – The Affordable Care Act could cost the city of Blue Earth about $46,000 a year, according to city administrator Kathy Bailey.

On Monday, Bailey explained to the council how the health care reform could impact city coffers, due to the mandate that employees working more than 30 hours a week be offered health care.

The extra expense could come from five city employees – two police officers and three librarians – who typically work 30 hours a week.

These employees’ schedules must be monitored during what Bailey called a “look-back period.” A look-back period is set by the city, and must be at least three months and less than 12 months long.

If those five employees get more than 30 hours in any week of the look-back period, they will be considered full-time, and the city will have to provide health insurance to them for the next year. Health insurance for all five would add up to $46,000, Bailey calculated.

During that three-month time slot, she said the city must control the part-time employees’ work schedules so the five do not get more than 30 hours a week, which can be done by bringing in other part-timers or having full-time employees work overtime.

She recommended drafting a resolution for the March 18 meeting that will set a three-month look-back period.

Blue Earth is avoiding some regulations and expense that come with the Affordable Care Act, since it is not considered a large employer. Bailey explained that a large employer has 50 or more full-time equivalent employees. Blue Earth has 23 employees that are full-time at 40 hours year-round.

“As long as we remain under 50 employees, we will be exempt from the reporting requirements, reporting of benefits on W-2s, from penalties and will not be required to offer expensive benefits to part-time personnel working less than 30 hours a week,” Bailey said.

The city will have to calculate how many employees it has each year.

In other business, the council raised wastewater rates 3 percent.

“We want to keep a cash balance so we don’t run ourselves too short of operating revenue,” Bailey said.

She explained the projected impact on customers through 2016 with the 3 percent increase.

“The residential per 1,000 gallon rate increased 14 cents, and the base rate 47 cents. A bill for 3,000 gallons would increase from $30 to $30.89,” Bailey said.

“The commercial rate increases 17 cents per thousand gallons used, and 60 cents on the base rate,” she added. “Commercial properties include all business property other than our two industrial users, Kerry and Seneca. The industrial users are covered in the industrial rates and separate contracts that are based on the materials that are being sent to the wastewater plant.”

Handling an old topic, the council accepted a low bid of $36,500 by Blue Earth Environmental of Mankato for demolition and asbestos abatement of the Avalon building on Main Street. Other bids ranged from $42,835 to $89,900.

“Let me reassure the council the low bid is an acceptable one,” Bailey said. “The EDA did review these and were comfortable with that, too.”

Bailey added that she had worked with the firm in the past and found them to be competent and able to complete the contracts.

No date for demolition has been set.

Looking ahead, the council put the fairgrounds land swap with the fair board on the work session agenda for March 18. They will discuss the land swap subcommittee’s findings.