Small Town Economics [Commonwealth Journal, Somerset, Ky.]

Oct. 23—Tuesday's Pulaski County Fiscal Court meeting was pale in comparison to the heated meeting two weeks prior — one that had dealt with the county's health insurance plan. After nearly three hours of back-and-forth discussions in the prior meeting, the fiscal court voted 4-2 to keep their current insurance plan with the local Neikirk Insurance agency.

First District Magistrate Jason Turpen was one of the four votes to retain Neikirk Insurance as the county employees' health insurance provider. Turpen, Mike Strunk, Jimmy Wheeldon, and Mike Wilson voted to go with Neikirk's proposal, Mark Ranshaw and Judge-Executive Marshall Todd voted against it.

Along with Third District Magistrate Jimmy Wheeldon and Judge Todd, Turpen served on the insurance committee prior to the Oct. 10 fiscal court meeting. Not only did the three men spend hours researching the matter, but Turpen stated that he spent a great deal of time researching the different plans, speaking with employees, and speaking with people in the insurance business.

Two weeks after the exhausting Oct. 10 fiscal court meeting, Turpen wanted to explain why he voted the way he did and why he felt the Neikirk Insurance proposal was the best plan for the county's employees.

"I've had some questions about what is going on with the county's health insurance," Turpen stated. "I would like to explain my vote to keep Neikirk as the agent for the county's health insurance. First of all, I would like to say that I am not an expert when it comes to insurance and don't claim to be. All I can tell you is why I voted the way I did.

"A few years ago our loss rate hit 120%," Turpen explained. "So this means the insurance company paid out 120% of what the county paid them. This caused Humana to increase our rates by 24%. Since then, our loss rates have been trending down 89%, and the current loss rate is about 82%. Humana is leaving this sector, and this left Anthem and United Health Insurance in a bidding war to get our group. Neikerk's office went back and forth several times between them to get the price lowered. The committee decided that we wanted to try to go with Anthem because we felt like it was the best plan. Neikirk's office continued to work with the insurance company and got two more price drops after that."

Admittedly, Turpen felt both plans were well presented and both had their unique pros and cons.

"When comparing the KACo/ Peel and Holland/ Mcgregor/ First Insurance plan to the plan presented by Neikerk, there is a large difference in cost," Turpen explained. "The KACo group plan came in at $1,069.82 per employee per month and Neikirk's plan was lower at $1,042.17. This is a difference of $27.65 per employee per month. I think we have about 226 employees on insurance right now.

"That is $6,248.90 per month and $74,986.20 per year more we would be spending on insurance if we went with the KACo's group versus Neikirk's proposal," he continued. "Now there was some talk that if all the HRA (Health Reimbursement Arrangement) funds were not used with KACo's plan, we could get some of that money back. There is also the possibility those funds could be used up and the county would have to pay extra."

Both Todd and Fourth District Magistrate Mark Ranshaw took exception to what they felt were add-on fees being charged to the county last year. And Todd stated that there had been a "wide variance" between what the county's being charged vs. what Humana has charged.

"There was some question on why Neikirk's office was charging a third party-administration fee (TPA)," Turpen explained. "This fee was included in the monthly price and not an additional charge. In KACo's presentation, they said they only charged a $28 per month commission and only admitted to the $5.75 HRA fee when asked by Magistrate (Mike) Strunk, and then said it was a $5 charge vs the actual $5.75 per employee per month. However, when I look at the paperwork that I was given it shows something different. On the paperwork from KACo, there is also a TPA fee included in the price and is not disclosed on how much."

According to Turpen, this (undisclosed TPA fee) is the same thing Neikerk's office was being called "corrupt' for doing" in the Oct. 10 fiscal court meeting, but wasn't questioned on KACo's plan.

In addition to that, Turpen stated that the KACo plan showed having a 4% commission, a $5.75 Mcgregor fee per month per employee charge for the HRA fund, and all KACo plans had another $28 per month per employee commission charge.

"Even without knowing KACo's TPA fee, it appears to me the fees would be much more through the KACo plan," Turpen stated.

According to Turpen's calculations and research, the KACo/ Peel and Holland/ McGregor/ First Insurance plan included: HRA fees of $15,594, 4% commissions of $116,054, KACo commission of $75,936, and KACo TPA fees were undisclosed.

But even on top of the ultimate cost savings to the county, Turpen felt the local Neikirk Insurance firm would be able to better serve the nearby county employee's health insurance needs.

"When dealing with KACo Insurance, there are five companies involved and all are out of town except one," Turpen reasoned. "When dealing with Neikirk's office, the employees deal with his office and the insurance company. When an employee has a problem and calls these large, out-of-town companies, they will just be a number. When an employee has a problem and calls Neikirk's office, there is a good chance they already know them by name.

"Throughout this process, I spoke with several employee's about Neikirk's office," Turpen stated. "The employee that deals with them on a daily basis said they have never had the first problem with his office, and they were always available and helpful. Another employee said they had a situation come up and Neikerk's office bent over backwards to help."

Turpen stated that he had only one phone call with the person being upset with the insurance and that was due to the family plan being unaffordable. Neither KACo's or Neikirk's proposals offered an affordable family plan, according to Turpen.

"During the process we compared state, city, and federal plans," Turpen said. "The county's insurance plan had better benefits. We compared family plans and all of them payed a large percentage of the family plans to make them more affordable. While we would love to offer that, our budget doesn't allow it. We did offer some alternative plans, instead of just one, in order to give the employees that need a family plan more than one option."

Born and raised in the small community of Nancy, Ky., Turpen has learned over the years that bigger is not always better. And he was a little weary of a polished out-of-town insurance pitchman.

"The guy from Peel and Holland had a good (spiel) and made it sound appealing, but don't hold it against me if I'm a little weary of a smooth-talking insurance salesman from (a town) two hours away," Turpen warned. "I have the documents with all this information and if anyone would like to see them I will be happy to show them. I know a couple (fiscal) court members wanted to switch to KACo, and I'm sure they were only doing what they felt was right.

"Although our opinions differ, I was doing the same," Turpen concluded. "In my opinion the KACo, Peel and Holland, McGregor, First Insurance Plan would cost the county more money for less service."

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