City Chooses Hard Cap On Employee Insurance Costs

Hoping to keep the city qualified for what little remains of statutory revenue sharing and to cut costs, Council voted to implement a new hard cap on health insurance costs relating to city employees.

The hard cap option was seen by council members as being more fair to employees, who will like absorb much of the $40,000 in savings the city will achieve.

“I think this is a softer transition from what we already offer. One good thing in Senate Bill 7 is that we will have the opportunity to review the process annually,” said Brian Marl, who was acting Mayor in the absence of Gretchen Driskell Monday.

Public Act 152, designed to limit expenditures on the health benefits of public employees, required council to choose between a hard cap and an option that would require employees to pay 20 percent of their insurance costs. Council also had the option of opting out of the Public Act 152 requirements with a two-thirds vote.

By choosing a hard cap, the city will not be able to pay more of the annual costs for medical benefit plans than a total amount equal to:

• $5,500 per employee with single coverage.

• $11,000 per employee with individual and spouse coverage.

• $15,000 per employee with family coverage

Insurance costs over and above the cap will be the responsibility of the employees.

The hard cap affects non-union employees Jan. 1. The policy will effect Teamsters members on July 1, 2012, at the expiration of the contract, and unionized police staff July 1, 2013, at the expiration of the two police union contracts.

The new plan is expected to save $39,396 for the city in 2012. The 80/20 option would have saved $68,329, but council members said they were trying to avoid downloading too many costs on employees at once.

The city will have the opportunity to reopen the decision again next year.

Finance Director Lee Bourgoin said it may be the employees interests to move to an 80/20 cost sharing approach, pointing out that if insurance costs were to rise substantially hire than the cap, employees would have to pay more.

Non-union city staff have been working under a wage freeze.

Council voted 6-0 to adopt the new benefit plan. Prior to the meeting, city council held a 70-minute work session on the issue with Tom Huntzicker, of Kapnick Insurance Group.