City sees insurance increase

March 16--MT. VERNON -- The city will pay a 40 percent increase in its health insurance costs for employees and retirees.

"Health insurance is a real challenge for the budget the last two years," said City Manager Mary Ellen Bechtel. "We had a bad claim history ... We have tried to find ways to reduce this. ... We have had major increases in the costs but we keep shopping. This fiscal year, 2016-17, we had a 42 percent increase, and for next year, the 2017-18 fiscal year, we have another 39.7 percent increase."

At this time, the city pays health insurance for its employees with a $1,000 deductible. Employees pay for spouse and family coverage with a family deductible of $2,000.

Employees who were hired prior to May 1, 1987, and those who retired before that date continue to have 100 percent of their health insurance costs paid by the city; those hired after that date have the option to pick up the healthcare costs themselves.

Retiree insurance costs amounted to more than $1 million in 2015-16, with the city paying for 95 retirees. One way the city has tried to see some savings in retiree health insurance costs is moving qualifying retirees to Medicare Plan F.

"Qualifying retirees with Plan A and Plan B policies could get Plan F supplemental insurance and the city purchased those plans for them," Bechtel explained. "We now have 38 retires who are eligible for the Plan F and prescription coverage and paying $688,896 this fiscal year for them."

Had the city not moved those 38 qualifying retirees to Plan F, it would have cost the city $898,560, Bechtel said.

The retirees which have the benefit are not police or fire department retirees, as they have their own pension funds and insurance benefits, Bechtel explained.

The benefit was formalized in 1978, when Kenneth Martin was the mayor and Raymond Botch was the City Manager. According to the minutes from the council meeting on July 17, 1978, the council was presented with a resolution to formalize paying current and future retirees full hospital coverage.

"Councilman (Ray) Baril has investigated the situation and found out that it is City policy, although a promise was never recorded," the minutes state. "Upon his review of information, there was a motion by Baril, 2nd by Roth to pass this resolution and continue payment of this hospital coverage for employees presently receiving coverage for future retiring employees from now on."

Two councilmen were absent for the meeting -- Thackrey and May.

"The mayor disagreed," the minutes state. "He said this will put a burden on taxpayers although he has nothing against people affected, personally. The Mayor fears this will amount to a considerable amount over the next 20 years."

Former Councilman Paul Partridge then spoke to the council.

"Former Councilman Paul Partridge is also a retired Fire Chief and presented petitions regarding this issue and in his remarks disagreed with the mayor," minutes continue. "Mr. Partridge contends expenditures for this coverage will not exceed $8,000 per year and that this is past practice. A disabled city employee, Mr. Harvey Neal, made a statement and Mr. Malcolm Hirons, representing Greater Jefferson County Chamber of Commerce from governmental affairs committee, had remarks in opposition to proposal."

The minutes indicate Roth and Baril voted to pass the resolution and Martin against. However, on July 17, 1978, Martin signed off on the resolution putting it into effect.

"This resolution is hereby adopted paying the insurance premiums for the retired people that we have been paying for in the past and to continue paying the premiums for the people as they retire from the city in the future," the resolution states.

In 1987 -- after Botch left city employment -- the city council negotiated with its employee unions to rescinded paying 100 percent of health insurance premiums for retirees.

"Currently, the city pays 100 percent of the costs of 95 eligible retired and disabled employees who were hired before May 1, 1987, for their health and hospitalization," Bechtel said.

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