Montpelier city employees find way to cut health care costs
By: Health Insurance
Submitted: 2009-11-23 17:07:22 | Word Count: 660
A group of Montpelier municipal employees have proposed a new health insurance plan that, when fully implemented, would save the city about $200,000 annually. The proposal will be presented to the City Council for approval at tonight's meeting.
"I think it's great," said City Manager William Fraser on Tuesday. The plan would affect about 100 staffers, as well as their families and some retired city workers who buy into the program. "The last couple of years our budgets have had close to $200,000 increases in terms of health care costs."
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Fraser said he met with employees in April, shortly after the fiscal year 2010 budget passed, to talk about the fiscal pressures still ahead for 2011. He asked for their input in helping control costs, and the group decided to focus on health care expenses.
Among those drafting the proposal were representatives of the police, fire and Department of Public Works bargaining units. The group has briefed their co-workers on the basics of the plan.
Under the proposal, coverage would remain with the city's current insurer, Cigna, through the Vermont League of Cities and Towns to avoid the stress and confusion of employees switching to a new company, the employee group said.
But the new proposal calls for a high deductible plan, along with what is known as a Health Reimbursement Account. The premiums would be lower than under the current no-deductible plan, and the city would fund the bulk of the deductibles. Deductibles for a single person would be $2,250 and $4,500 for a family; the maximum out-of-pocket cost for a single person would be $3,500 and $7,000 for a family; and the city's share of the HRA would be up to $3,000 for single employees and $6,000 for family plans.
The monthly premiums under the new plan would be $362.84 for single employees, $616.32 for two people and $906.35 for family coverage. To achieve the savings for the city, couples and families would pay roughly 30 percent of the premium under the new plan (they currently pay 20 percent) and singles would pay about 8 percent (versus the current 5 percent).
"In spite of the increase in the employee percentage, annual premiums for employees will be lower in 2010 than they were in 2009 while, at the same time, allowing the employer to realize a significant savings," the employees who created the proposal said Monday in a memo to Fraser. They asked to meet quarterly to monitor the new plan if it is given final approved.
In passing the information on to the council, Fraser noted that many of the city employees are union workers whose health plans aren't due to expire until the end of 2010 and out into 2012.
"As such, there was no requirement for these employee groups to make any immediate changes," he wrote in a memo to councilors, applauding the employees' willingness to move forward on this money-saving plan.
The proposal will require the approval of certain union employees, who first asked for a guarantee from the council that the city would accept the plan as drafted and allow it to remain in place for two years. If approved, the plan would be implemented on Jan. 1, 2010, allowing an additional six months of cost savings in the current fiscal year.
Fraser said he believes the council will give its blessing to the proposal because it saves the city money and doesn't increase health care expenses for employees – both important objectives. Fraser said he also hopes the employee groups OK the plan.
