The city is making major changes to its employee health insurance policy, including offering different plans and requiring workers to pay medical deductibles for the first time.
The goal is to help contain insurance costs, particularly as the city’s finances are expected to decrease in 2016 and 2017, said Mayor John A. McNally.
The changes were made through the work of a 17-member management-employee health-insurance review committee.
“There are significant changes to health care,” McNally said. “I’m very appreciative of the work done by all of the committee members. People expect us in the public sector to pay more attention to health care costs, and we did. This allows our employees to make decisions that are best for them and their families.”
City council will have a special finance committee meeting and then full council meeting at 4:30 p.m. Wednesday to authorize the board of control to approve the changes for nonunion employees. The board will meet at 9:30 a.m. Thursday to finalize it.
The changes automatically would go into effect for union employees Friday.
If the city didn’t change its current policy with Anthem Blue Cross Blue Shield, the total health insurance cost would have increased by 12 percent during this one-year deal compared with the expiring contract. That would have added $1,357,869 more to the overall expense of the city’s health-care plan. The policy — with the city paying 90 percent of the cost and employees 10 percent — is currently $11,329,126. Anthem initially quoted a cost of $12,686,995 for the one-year renewal.
The new policy will cost, at most, $11,865,468 for the year — an increase of $536,342, 4.7 percent — but if employees go with cheaper options, that amount would decrease.
The new plan includes three tiers, compared with one, for employees. Also, there are three options for family coverage — for an employee’s entire family, employee/spouse and employee/children — instead of the one existing catch-all family plan. The tiers and the family-coverage options range in price with some more expensive than the current plan and others less costly.
Instead of paying nothing toward deductibles, the new plans range from a $250 single/$500 family deductible to a $2,600 single/$5,200 family deductible.
“The additional tiers could save people money, and they can use that money to offset their deductibles,” said Nick D’Alesio, who served on the review committee and is vice president of the city’s water department union. “I have a family, so I will use the more-expensive plan, but I should pay more because my entire family is covered.”
The committee accepted proposals from insurance companies and ultimately decided to stay with Anthem. But the new policy includes deductibles and increases the cost to employees for office visits, specialists and prescription drugs. Also, employee out-of-pocket maximum expenses are higher.
“It was cost-prohibitive to stay at zero deductibles,” said Rebecca Gerson, deputy law director and the review committee’s organizing member. “No one is losing any benefits, but it will cost more for them.”
The plan also includes the option of dental and vision coverage. Monthly dental costs will go down from $26.90 to $24.65, and vision will stay at $6.16.
Anthem provided the city data on employees going into specific plans based on 2014 data. The city has about 720 employees with 657 using the city’s health-insurance plan. Of those, 208 are single, 90 would use the employee/spouse plan, 123 would use the employee/children plan, and 263 would use the full family plan.
“Some of the changes will be a little uncomfortable, but it moves us in the direction of being better consumers,” said John Miller, a review committee member and shop steward for the street department union. “Deductibles are new. The family-tier plan was one area that was tough for me. The new plan will lower the amounts for some, but it will raise my costs. Also, for those making $10 or $11 an hour, [it will cost] a lot if they have a spouse and kids. Generally speaking, it’s a positive thing.”
The expiring plan costs $712.76 a month for single coverage with the employee paying $71.28 of it, and $1,795.14 a month for family coverage with the employee paying $179.51.
The city’s new policy for single medical coverage, including dental and vision, ranges from $738.10 a month for the $250/$500 deductible plan to $644.10 for the $500/$1,000 deductible and $578.26 for a health-savings account.
The monthly premium for full family coverage for the $250/$500 plan increases by 24.5 percent to $2,234.93 with employees paying $223.50 a month. That’s $43.99 a month more than they’re now paying.
Without the tiers, Anthem was going to charge $2,081 a month for family coverage. The company raised the full family coverage premium when it included two other less-expensive family options.
The employer/spouse monthly policy premium with the $250/$500 deductibles as well as dental and vision coverage is $1,466.49, and $1,326.73 for employee/children coverage. Employees using those plans will pay less for health insurance than they do now.
Some unions have $200 monthly maximums for family-insurance coverage. Those caps will be gone from all but two unions in 2016, and the city will negotiate this year with the unions representing police patrol officers and dispatchers to eliminate caps, Gerson said.
Also, a couple of unions get their dental and vision coverage through their international unions that reduces the monthly premiums by about $100 a month.