The Saline City Council unanimously adopted a “hard cap” limit on medical benefits for its employees following a new state law that limits publicly funded health insurance contributions.

The law limits the amount that a public employer may contribute toward health insurance premiums and requires that public employees contribute to their insurance costs.

The new law means the city will pay $5,500 for single coverage, $11,000 for two-person coverage and $15,000 for family coverage, limits that are set annually by the state.

A majority of the city’s active employees have Blue Cross Blue Shield of Michigan’s Simply Blue HSA high deductible PPO health benefit plan. With the “hard cap” the city will save about $39,400 annually; how much more the employees must pay depends on the coverage they have.

However, the city is also looking into other plan options, which might lower costs for employees who opt for a different plan. “Due to current wage freezes and not knowing what exactly the fiscal yare '13 budget will bring regarding employee wages, I believe we need to be very cognizant of how much of the burden we place on the employees’ shoulders,” City Manager Todd Campbell said in a memo to City Council.

Another option was an 80/20 plan in which the city cannot pay more than 80 percent of an employee’s health insurance cost and the employee pays the remaining 20 percent. Choosing this option would have resulted in savings of about $68,300 for the city but would have been more costly to employees.

The city expects to save an additional $25,000 because of a reduction of 2.5 percent in the renewal of its coverage with Blue Cross Blue Shield of Michigan, according to a letter from Tom Huntzicker of the Kapnick Insurance Group.

Non-union employees will see the change beginning Jan. 1, 2012, while the Teamsters contract expires June 30, 2012. The two police unions' contracts won’t expire until June 30, 2013.

Although there are 60 full-time city employees, 45 participate in city-offered health benefits while 15 opt out and receive an annual amount of $4,000, Campbell said.

Teamsters Local 214 has 25 members, but two are part time and are not eligible for health care benefits. The Saline Police Officers Association has 21 members, but eight are part-time. The Saline Sergeants Association has two members.

Mayor Gretchen Driskell had an excused absence from the meeting.

Lisa Allmendinger is a regional reporter for AnnArbor.com. She can be reached at lisaallmendinger@annarbor.com. For more Saline stories, visit our Saline page.