Employee health insurance could cost town $700K more under current plan
by Kara Lopp
In an attempt to save taxpayers about $700,000, Matthews is considering an unconventional move among municipalities to provide health insurance for its employees – make them buy their own.
The proposal calls for employees to work with Mint Hill-based E2beneflex, an insurance broker, to purchase their own health insurance. The town would reimburse employees up to a set amount, perhaps as much as $10,000. Employees also could opt to include flexible spending or health savings accounts.
Employees would be required to prove insurance coverage before their premiums are reimbursed. If the town stays with its current plan, coverage costs would increase from 20 to 55 percent, or about $608,000 to $700,000, with the town passing along 20 percent increases to employees for dependent coverage. Health insurance costs increased about 20 percent last year for the town. Among the town’s 130 full-time employees, 128 use the town’s insurance plan. Employees have absorbed continued higher insurance costs while receiving no salary increases since the 2008-09 budget, spokeswoman Annette Privette Keller said.
Town commissioners discussed the option during a Monday, June 4, budget workshop and instructed staff to pursue the option and bring back finalized plan options – including a maximum amount the town should reimburse each employee for insurance coverage – to its 7 p.m. Monday, June 11 meeting when a public hearing is planned on the proposed $21,954,727 budget. Commissioners are expected to vote on the proposal June 25. Residents can review the recommended budget online at www.matthewsnc.com.
Mint Hill already held its budget workshops and plans a public hearing at 7 p.m. Thursday, June 14.
Matthews has hired a brokerage attorney to review the health insurance option.
Town Manager Hazen Blodgett said the attorney is necessary because while this is a common practice in the private sector, staff can’t find any municipalities in North Carolina who follow this model and the town wants to ensure it meets all legal requirements for providing employees with health-care coverage. E2beneflex owner Tom Hamilton says there are a few local governments nationwide who have moved to this type of health-care coverage.
“We are just like every other employer in the U.S., private or government – rising health-care costs are significantly impacting our budget,” Blodgett said. “This plan could save the town approximately $700,000 while giving employees the flexibility of independently choosing the insurance coverage that is right for them. We think that with the new federal health-care program this will become the more common type of health-care coverage companies will select to offer their employees.”
If an employee is denied coverage by a traditional company, they’ll receive coverage by N.C. Inclusive Health, a state law requirement for government employees. Hamilton said there would be no additional cost to the employees if the town uses his firm. He’s paid from third party fees and by the insurance carriers employees choose.
Commissioners said Monday they like the money-saving option despite a potential federal penalty in 2014 of $2,000 per employee for not providing a group health insurance program. All employers will have to make that decision as the new legislation goes into effect. The penalty would be assessed under President Obama’s health-care reform plan currently under review by the U.S. Supreme Court. Even if the town is fined, taxpayers would still come out ahead, Mayor Jim Taylor said. If commissioners approve, the new option could begin in August.
“We really don’t have any other financial choice,” he said. “Health care is driving everyone batty. I think in the long run it’s going to be a good deal for the town and good for the employees once they understand it.”
Upcoming projects around town
During the Monday meeting commissioners also reviewed their Capital Improvement Plan, or CIP, which details capital projects and debt payments expected for the next five years. Town staff is recommending $300,000 be budgeted for the projects in the plan, which total $793,874. The difference will be taken from the town’s fund balance, or savings account, as needed, Blodgett said.
The following projects are included in the 2012-13 plan:
• $119,000 to continue payments for federally mandated police/fire radio switch from analog to digital and replacing two radio dispatch consoles.
• $20,000 to create pocket parks/green areas.
• $30,000 to continue payments for new fire engine for Idlewild Volunteer Fire Department.
• $50,000 to build a sidewalk on Sam Newell Road.
• $85,000 to buy a mini track-hoe for public works department.
• $53,875 for continued payments for 35 sets of new self-contained breathing apparatus for firefighters.
• $30,000 of $50,000 needed to update IT equipment, including a new telephone system.
• $42,000 to replace playground equipment at Sardis Park.