The Kansas City Council approved a lawsuit settlement today that paves the way for a consolidated health plan serving both city employees and police.

The settlement also sets the stage for changes to put the police pension funds on a stronger financial footing.

“This is a big deal,” City Councilwoman Jan Marcason said. “It opens the way to further our negotiations on pension reform.”

The Fraternal Order of Police sued the city last year, upset over how the proposed health care consolidation would affect their coverage benefits.

Council members said the settlement, which the police board also approved this week, resolves the police bargaining unit’s concerns. It also calls for the city to release $5 million for police raises that Kansas City had been holding back on until the health care dispute was decided.

Combining police and city employees into one health care pool should help the city continue to negotiate fair premiums and good coverage for all, Councilman John Sharp said.

The agreement also calls for the city to contribute the actuarial required contribution to the police pension funds while also increasing police employee contributions. It recommends slight reductions to the annual retiree cost-of-living increases and a bump in police civilians’ normal retirement age from 65 to 67.

The pension changes must be approved by the Missouri Legislature, but Kansas City officials said having both police and the city on the same page should help garner state support.