City considering insurance changes to lower costs

Sep. 27--Some city officials and city employees are at loggerheads over the need to lower insurance costs.

City Council members discussed the matter at the annual budget meeting. The city administration would like the spouses of city employees to begin using the city's insurance as secondary insurance, rather than primary insurance, beginning Oct. 1, 2020, which is the start of the 2021 fiscal year.

Whether this change, commonly referred to as a "spousal carve-out," will actually be implemented and whether there will be any other changes to insurance will be up to the City Council in the coming months and years. The council passed the FY 2020 budget Monday.

Marsha Sloss, director of human resources for the city, painted a dire picture of the city's insurance situation during the budget hearing. Sloss explained the city is self-insured, meaning it pays for all of its employees' insurance claims.

"Over the past five years I've been with the city, we have continued to see health insurance (costs) increase year after year," Sloss said.

The city has 356 individuals, including 40 retired employees, who use the city's insurance, and the employees pay a 15% share of the overall premium cost, she said.

"When I came onboard, our claims costs were about $4.6 million," she said. "Last year, we peaked at $6 million in our claims costs, and that has not slowed down. One thing we continue to see, and our employees continue to tell us, is we have a very, very good benefits plan that is a very, very minimal cost to the employees."

Employees currently pay $242 monthly for family coverage. Sloss said for many people, it's unheard of to pay so little for health insurance and get the benefits that are offered by the city.

She said people have told her their spouse's insurance is not nearly as good as what the city offers, and it costs a lot more money.

"I tell them there is a reason for that. Because they (businesses and industries offering insurance) see their dollars go up on claims costs, and they don't want to keep paying the money."

City Council President Harold Wales asked why the city's insurance is so much cheaper.

Sloss explained the city has allowed the premium to stay at the current rate and not passed the (claims) increases to the employees.

"The city has done this because we know our employees don't make a lot of money in some departments," she said. "We've always heard that when you are a government worker, you don't come to work for the money, you usually come to work for the benefits. So, the city has allowed the premiums to say at such a low level because we recognize employees are receiving a salary that they are not going to go to Toyota and make. But, what we can give them is a really good benefits package."

She said a large portion of what the city spends on insurance is to cover dependents, including spouses.

"There are 316 active employees who take the city's health insurance," she said. "Sixty-five percent of the cost is dependents. Of the 65%, 40% is spouses," Sloss said.

Having spouses take their own employers plans would help the city reduce insurance costs. She told council members if they are opposed to the spousal change for next year they would have to let her know now because spouses would need to meet certain renewal deadlines for their employers' insurance programs. Or, if the council wants to wait another year, they also need to convey that.

Either way, she said, the city will have to do something to lower insurance costs.

City Clerk Annette Barnes, who is also the city's treasurer, supported Sloss.

"We cannot keep going down this path," she said. "The retiree piece of this continues to grow. We have 40 retirees, and in the next five years there are 70 people who can retire."

Barnes said the city has an actuarial study performed biannually to tell the city how much money it should be setting aside to cover insurance claims. As of now, it should be setting aside $1.8 million a year in order to reduce the unfunded liability of about $7 million for these post-employment health-care costs, she said.

"It's pretty simple, we either have to change something, or downgrade our plan where it's not as rich of a plan, or raise the rates significantly or ultimately this is going to be like Delphi, where it will start effecting people's pensions, because the city cannot keep doing what we've been doing."

Mayor Ronnie Marks told council members city officials have looked at the insurance issue for several years.

"Marsha's looked at it. Annette has looked at it. I've looked at it. We're not trying to impose anything on employees that is not sound financial management for the city of Athens," Marks said. "This is a tough situation, and since I just looked at Facebook, which I've gotten off of and because of all those who want to govern through Facebook, we're going to put a suggestion in front of you -- the legislative body -- and y'all help us make a decision."

___

(c)2019 The News Courier (Athens, Ala.)

Visit The News Courier (Athens, Ala.) at enewscourier.com

Distributed by Tribune Content Agency, LLC.