Clarksville to see increase in costs for employee health insurance

April 13--CLARKSVILLE -- The town of Clarksville will soon be faced with a projected increase of between around $100,000 and $300,000 in the next year for costs it pays related to its employees' health insurance, but exactly what the rise will be has yet to be decided.

Talks of changing what town employees pay for health insurance to offset higher claim costs are also in the works. Right now they pay $1 per year for benefits.

A bipartisan committee comprised of town employees and residents failed to reach a decision Thursday on which of the stop-loss companies it would recommend the town will go with in this next plan period, which would begin June 1.

Employee insurance is self-funded by the town -- department heads transfer a certain amount per employee into the general insurance fund and any benefit claims are drawn from that. A "stop-loss" company is extra insurance policy for the town, in the case of unpredictable losses due to employee claims.

Sandy Halstead, senior sales executive of employee benefits with Assured Partners, is part of a team that acts as the town's agent of record. She shopped around more than a dozen stop-loss companies for quotes.

The committee focused on two potential plans -- renewing with the current company, HHC Life, with a projected increase of 6.5 percent, or $312,102, or go with Crum & Forster. The second option quoted a projected increase of 2.3 percent, or $109,907, and also includes an automatic $40,000 in fixed costs. There was concern among some committee members that the lower rate could spike after the initial year. Halstead said the town can always revisit and search for a new company next year if that happens.

There was a motion to go with HHC, but failed to pass when the vote was split 3-3 among the members in attendance.

The question will now be put before the Clarksville Town Council within the next month.

In the last several years, employee medical claims have been greater than what the town projected, but still fell about 20 percent short of reaching the limit at which the company would kick in payments to the town.

The rise in claims may be a factor in the rise in what the town would pay moving forward. But Halstead said some increase each year is typical.

"It's kind of the state of health care that costs go up every year," she said. "It's rare to see a decrease unless you're changing benefits."

Aaron Stonecipher, who serves on the committee as a resident but also hold a town council seat, said the self-funding is not the typical approach to employee insurance among employers.

"What the town does is unique from the traditional model," he said. "Traditional model is you're going to pay an [insurance company] your premium and they're going to cover your bills after a certain deductible. We do it all in-house."

And the town has been doing insurance this way for more than 20 years -- an obvious benefit to employees.

"It's a dollar a year and it's an amazing benefit," Stonecipher said. "And I've been told -- by former employees -- that this amazing benefit was used to retain our talent here in lieu of major salary increases."

But if claim costs continue to rise, town leaders could entertain changes to the plans -- either altering or reducing benefits or having employees pay a monthly fee for the insurance.

In the recently-renewed police and fire union contracts, there is new language that says the police and firefighters would accept a $10 to $20 fee per month for their insurance plans if there is reasonable evidence to suggest that the claims could continue to rise. According to town precedence, if that happened, it would extend to all town employees.

At the beginning of 2018, the town health fund held around $3 million, Kevin Baity, town manager and non-voting chair of the committee, said. At the same time in 2017, it had $4 million. There were $4.4 million in expense claims in 2017, with $3.5 million coming in to cover employees. Although not depleted, this created a shortfall of around $900,000.

"So if we continue on the trend of having increased costs but not increasing the amount we're putting in, it will go broke," Baity said.

"And then if the fund goes broke, you can't keep providing the insurance at the level you're providing it. That's the reason for the whole discussion of we've got to change the level of which it's being funded or we have to start looking at changing the benefits of the plan."

The committee did unanimously approve a two-year plan with Delta Dental, its current provider, at a 2 percent decrease, or $2,914 per year.

Aprile Rickert is the crime and courts reporter at the News and Tribune. Contact her via email at aprile.rickert@newsandtribune.com or by phone at 812-206-2115. Follow her on Twitter: @Aperoll27.

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