Holcomb sees rising insurance costs for employees

Nov. 11--HOLCOMB -- Holcomb city employees soon may see an increase in their insurance premiums after insurance costs to the city were estimated at Wednesday's city council meeting to surpass the budgeted amount by more than 20 percent by year's end.

Holcomb City Administrator Robin Lujan brought the issue to the council's attention because the health and life insurance line item of the general fund had previously been capped at $120,000. The estimated cost for 2017 is $151,385, about 32 percent higher than 2016's cost of $102,494.

Lujan said the overage is not a budget violation and can be easily absorbed by the city's general fund. She explained that the overage occurred because one city employee moved from a single insurance plan to a family plan, another employee was hired who opted for a family plan, and a previous employee on a single plan was replaced by a new employee who opted for a family plan.

Lujan said the city's cost increases by about $920 a month when an employee switches from a single to a family plan. She noted in a city memo that the gradual changes account for an increase of approximately $3,389.52 a month for the majority of 2017.

The city's annual insurance costs have remained roughly level since at least 2012, ranging from more than $96,000 to just more than $106,000.

Councilman Brian Rupp suggested implementing a cap on the amount of money that can be spent on employee insurance that would "level the playing field" between single and family insurance plans, to the effect that employees are receiving roughly equal overall compensation.

"I just feel like if A and B are doing the same job, I think their benefits should be similar, too, because I think that goes into your total compensation," Rupp said, noting that the overage wouldn't "fly with an independent business."

When Mayor Gary Newman asked if burdening employees with an additional $900 in monthly insurance costs would be affordable, Lujan responded, "No."

"After sitting in this room and doing interviews for prospective employees, I can tell you that the benefits for working at the city is what draws people to public service," Lujan said. "If you start cutting those, coupled with the wages that we already pay that are lower, you're circumventing what you're trying to do. You're trying to attract those good employees here or keep good employees."

Councilman Jerry Quint noted that the best years for low insurance expenditures by the city were due to fewer employees.

"We were down employees," he said. "You put a cap on it at $120,000, and that's covering what you have now and you add another employee -- you busted it, instantly."

"I wouldn't set a cap to the point where if we add an employee we're going to bust it," Rupp said.

"Well, that's pretty much what we did, though," Quint responded.

"We did," confirmed the other members of the council in unison.

Coinsurance rates for Holcomb city employees are currently 90/10, and Newman suggested eventually lowering family plan rates to 85/15.

"As a business owner, and that's what the city is, by law we have to provide them that insurance," Newman said. "It's a tough one. Our hands are kind of tied. Instead of capping it, I think we look at perhaps changing the percentages and putting a little more on the employee, if we're going to cap it. It's inflation. It's the cost of everything, and someone has to burden some of that cost. We're burdening more of that cost year over year as rates increase and we're keeping it at 90/10."

The council took no action on the matter.

Contact Mark Minton at [email protected].

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