July 03--COLUMBUS -- City employees will have a bigger paycheck to cover rising health insurance costs under separate proposals presented to Columbus City Council.
Human Resources Director Mike Oglevie outlined the changes Monday night during a Committee of the Whole meeting as the city prepares its budget for fiscal year 2012-13, which begins Oct. 1.
His recommendation is for the city to continue its practice of offering performance-based raises reflective of the inflation rate. This means city employees would be eligible for a 2.7 percent pay increase next fiscal year, based on the March 2012 consumer price index.
Raises of 2.7 and 2.3 percent were approved in 2011 and 2010, respectively.
The council has authorized raises at or above the inflation rate nine of the past 10 years, with the only exception being a 3.5 percent increase in 2008 that was slightly below the 4 percent change in the consumer price index.
According to Oglevie, the city has 155 full-time employees. However, the proposed pay increase would not affect police officers or firefighters, whose unions will negotiate salary changes later this year.
An estimated cost to the city if the 2.7 percent increase is authorized for every eligible employee wasn't available.
The raises will be based on merit, Oglevie said, not automatically awarded to every employee.
Those who do receive the extra pay will need it to cover a proposed 15 percent increase in health insurance premiums for both the city and its employees.
The city's self-funded health insurance plan has lost about 30 percent of its cash reserve over the past year, according to Oglevie, and the reinsurance premium is going up by 10 percent.
A premium increase is necessary to prevent the reserve from being further depleted, he said. It currently sits at $560,000.
"Now it's time to not go in the hole," said Oglevie. "We've got to keep the claims reserve built up."
Oglevie, who called the city's insurance plan "fair" compared to other companies, said the policy took a hit this fiscal year as claims increased and some employees experienced "very significant" problems.
"We had claims that really bit into our reserve," he said, "so now we have to make it up."
The city is self-insured for up to $60,000 per claim before reinsurance begins covering any additional costs. Regional Care Inc. of Scottsbluff serves as the plan's administrator, which processes and approves claims.
Under the plan, the city pays 84 percent of the premium for family coverage and 93 percent for an employee with individual coverage.
The proposed 15 percent premium increase would come after smaller jumps of 5, 8 and 5 percent the past three years.
Councilman Jim Bulkley said these rates are a testament to the plan's affordability during a time when most insurance carriers are raising premiums even higher.
"The key is to try to keep it affordable," he said. "Nobody likes to see the increases, but if you want a program that is going to be there for a few years down the road you better take care of it today."
Oglevie said an effort to educate city employees about healthy living, free testing available at an annual health fair and incentives for exercising have yielded "good results" and could help reduce the number of future insurance claims.
A projected cost to the city if a 15 percent premium is approved was unavailable.
Although no action was taken on either the health insurance or employee pay measure Monday night, they will be included in a 2012-13 budget that is expected to be considered by the city council next month.
(c)2012 the Columbus Telegram (Columbus, Neb.)
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