City Shares Employee Deductible Cost To Lower Healthcare Premiums

Sunset Hills employees went to a $1,000 deductible amount this year for each city employee's healthcare plan, lowering the premiums for health insurance—or at least not raising them.

But after the first $500 of that deductible is paid by the employee, the city picks up the second $500. 

For clarity, premiums are the amount paid periodically by the insured, to maintain a plan. A deductible on a healthcare plan is the amount of medical costs the employee would pay out-of-pocket before the insurance company will begin to pay out for medical treatment. 

City Finance Officer Laura Rider said the funding for the second $500 of the deductible is set aside up front by the city, in what's called a Health Reimbursement Account or HRA—not to be confused with cash accounts that employees in the private sector set aside annually for potential medical expenses. 

While no specific costs were revealed, Alderman Frank Hardy said by taking on this higher deductible, the city government cost to insure its employees rose by 7 percent instead of the anticipated 11 percent.

Sunset Hills has 68 employees with an average age of 48.

Typically, insurance actuary tables show that the younger the insured, the less the insurance company will pay out in claims—the older the group, the more claims. These estimates factor into the cost of all kinds of insurance and keeps insurance companies funded.

Potentially, some city employees may not get beyond the first $500 deductible in a year's time, saving the city on payouts.