Valpo finding ways to reduce employees' insurance costs

2012-10-08T21:30:00Z Valpo finding ways to reduce employees' insurance costsPhil Wieland phil.wieland@nwi.com, (219) 548-4352 nwitimes.com
October 08, 2012 9:30 pm  • 

VALPARAISO | A public hearing on the city's proposed 2013 budget at Monday's council meeting turned into a presentation of what the administration is doing to try to ease the impact of changes in the employees' health insurance plan.

It started with employee Justin Smith asking why the budget didn't include any cost-of-living increases to counteract at least some of the out-of-pocket expenses projected for employees. Smith said his costs would increase to $9,000 from a salary of $35,000.

Mayor John Costas said the city's income this year was $1.5 million less than it was five years ago despite its growth. Despite the lower income, employees received raises in two of those years and employee health care costs were not increased. That all changed this year when the cost of the self-insurance program was hit harder than anyone could have predicted.

Instead of the $2.5 million budgeted for the program, the city has already paid about $4.5 million, forcing it to dip into its rainy day fund for $1 million. More money is expected to be needed before the end of the year.

Clerk-Treasurer Sharon Swihart said almost $600,000 in extra county economic development income tax revenue was gone before the council could officially appropriate it.

The city received its insurance renewal notice in early August and realized it couldn't afford to remain self-insured with a price tag of $5.7 million. It joined a program created by the Indiana Association of Cities and Towns that will provide better coverage at a much-reduced cost from what would have resulted otherwise.

That's the plan the city has been presenting to its employees, but Costas said that might not be the final word. The administration is working on measures that will lower out-of-pocket expenses to nearly what they are under the old plan by using more of the CEDIT funds and doubling the city's contribution to individual health savings accounts to $2,000.

Additional CEDIT funds will be used to buy down the premiums for employees, and the city is setting up a $50,000 fund for those who hit the maximum coverage to further ease the out-of-pocket impact. The details still are being tweaked ahead of final decisions at year's end.

"We feel there will be some positive change, and that it will be almost the same out-of-pocket as it is now," Costas said. "Insurance is complicated, and everybody will have to be more accountable for their health. I appreciate your frustration, and I think the end product will be a lot better than what the initial offer was."

The estimated $34.1 million budget will be up for council approval at the Oct. 22 meeting.

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