A new insurance plan could save the city of Terre Haute well over $1 million over the next two years and lock in monthly costs.
The Terre Haute Board of Public Works and Safety Monday voted to approve a Teamsters Health Plan, instead of renewing a plan through Anthem. The Teamsters plan currently has about 15,000 members. The city has about 550 employees, but about 1,200 people on insurance when including family members.
The new insurance takes effect July 1.
Benefits for city employees includes having health, dental, vision included in the lower premium cost, and short-term disability and life insurance are available.
The Teamsters are also to start a clinic for the city with a full-time doctor, likely within six months, and the premium rates are locked in for two years, said Pat Carney, vice president of employee benefits for ONI Risk Partners, which compared health plans for the city.
“I don’t have another [insurance] carrier that would come in and give me a two-year rate guarantee,” Carney told the board.
The city will still be responsible for paying “run out” claims not paid by Athem, likely through October. That could be $400,000 to $700,000, Carney said.
“It is Year 2 that there are no more run-out claims, and it is a seven-figure savings,” Carnery said after the meeting, adding the city could see over $1 million savings in the second year.
The first year savings, conservatively, will be $400,000 to $600,000, he said.
A single employee contribution will decrease to $113 a month from $277 a month, for an annual savings of $1,961. An employee and children plan will drop to $193 a month from $376 a month, an annual savings of $2,198, while an employee and spouse plan will fall to $208 a month from $468 a month, an annual savings of $3,123.
The largest savings in a family plan, where the employee contribution dips to $275 a month from $770 a month, an annual savings of $5,941.
The calendar year deductible for individual/family goes to $250/$500 from $750/$1,500. The maximum out of pocket for individual/family will dip to $2,250/$4,500 from $4000/$8,000.
The city was partially-self funded and is going to a Teamster health plan that is fully insured. From a budgetary process, it benefits the city for set premiums and rates for two years, along with savings, while Anthem’s renewal rate was to increase more than 6 percent.
“It will be good. This will give us a chance to lock in our rates for two years, which is really phenomenal,” said Terre Haute Mayor Duke Bennett. “You are lowering the cost and locking in what we will pay for the next two years.”
Mike Otum, president of the Terre Haute Firefighters Local 758 union, told the board he was not speaking against the Teamsters health plan, but said it does eliminate Health Savings Account contributions. Otum said more than 60 percent of its union members are on an HSA.
Employees with a reserve can still use an HSA after July 1 to pay health costs, but the city will not make an HSA contribution nor will employees be able to make HSA contributions, said City Attorney Eddie Felling. Employees can also remove the money from their current HSA, Felling said.
Otum said another concern is prescription cost. Employees in the new plan will pay 20 percent of prescription cost, without a cap on that cost.
“If you have astronomical prescription cost, you will continue to pay 20 percent of that cost as long as we are on this plan, so that is a concern I have, not speaking for or against the plan,” Otum told the board.
The city has multiple union agreements that require different premiums payments.