71.6 F
Ocean City

City sees savings from health package changes

If you are in Ocean City this week, you may notice a couple of changes as you drive down Coastal Highway. The speed limit, normally 40 mph through North Ocean City, has been reduced to 30 mph, and Downtown, the speed limit has also been reduced. This is due to the expected, unauthorized H2Oi Pop-Up Rally.  It is reasonable to expect heavier than usual traffic, noise and strict enforcement of vehicle laws during the week and weekend.

Revised plans lead to cost reductions of $100k in FY12

ZACK HOOPES ¦ Staff Writer

(Sept. 28, 2012) In a somewhat obscure — but potentially influential — political windfall this week, the Ocean City government’s insurance contractor revealed Tuesday that the city’s revamped employee health benefit system is doing extremely well in terms of both financial savings and, in its opinion, service to employees.

As it stands now, according to Human Resources Director Wayne Evans and consultant Kay Moran of Bolton Partners, the city’s employee insurance benefits consultant, the city saved $100,000 in insurance premiums for this past fiscal year.

In their presentation to the council, they said the reduced cost is due to measures undertaken in the past several years to offer lower-cost options and incentives to city workers.

“Because of all the things the town voted on to reduce costs without effecting employees too much … all those plan changes really made a big difference in the utility of your program,” Moran said. “We had a good experience with negotiating on the fixed costs. You can’t negotiate on the claims, but you can affect the claim usage … you can put in place programs [to encourage less excess costs.]”

Last spring, the council voted to introduce a high-deductible health plan — as opposed to more expansive PPO plans — that would also come with a city-incentivized Health Savings Account. HSA plans are typically run on calendar years, Moran said, which meant that the city had an 18-month gap before it could renegotiate its rates based on the change.

“When I first did the projections [at the beginning of the fiscal year], the claims experience was not very good. That’s why you had a 10 percent increase,” Moran said. “Six months later, when we were doing the actual renewal, the claims were reduced by a large number because you didn’t have as many large claims and the utilization was lower.”

Next year’s claims projection now stands at 3.9 percent, significantly lower than the projected industry average of eight percent.

The council majority that had pushed through the HSA reform – Jim Hall, Joe Hall, Margaret Pillas, and Brent Ashley – seemed very eager about the progress.

“Because our employees found different parts of the program that suited them … we had a savings,” Pillas said.

“I think it shows that the risk we took in discussing those changes, needed to put us on the good path, are working … even though change increases anxiety, this shows change can be good sometimes,”

Joe Hall said.

Moran said that the changes had been made with a minimum of service cuts, even in the lower-deductable plans. “We added the HMO, which is a lower-cost plan [than the PPO] but is actually a richer benefit as long as you’re in network, because there’s no out-of-network compensation,” she said.

But Councilwoman Mary Knight said that many of the other cost savings that Moran had listed were not attributable to the changes of last spring. Evans had noted that the co-pay reductions for generic prescriptions, and co-pay increases for brand-names — which began five years ago — had resulted in the town being “at the top end of what plans see with generic drug usage.”

“This sheet you gave us with the history [shows] we began this process in 2007… it’s really good that we have our eye on the ball with this,” Knight said.

Council moved to accept Moran’s recommendations for future insurance provisions, and also moved to allocate the $100,000 savings to the general fund in order to cover any future shortfalls in employee health benefits, although city Finance Administrator Martha Bennett said she was unsure if the council could create such an earmark that would be binding on future legislators.

“We want to make sure these funds are funded back to the employees, can’t I just say it’s ‘assigned’ for future medical expenses?” Pillas requested.

Moran also added that Ocean City seems to have dodged the bullet somewhat on national provisions, part of the federal Affordable Care Act, which would tighten health insurance requirements for seasonal employees. Under the first version of the legislation, employees who work for 120 days or more must be provided insurance, or their employer will pay a penalty.

“Even if they were seasonal by your definition, they would not have been seasonal by the government’s definition,” Moran said.

But a recent revision at the end of last month stipulated that employees must also be working an average of 30 hours per week over those 120 days. Moran said she had calculated that the city’s largest un-insured seasonal force — the Ocean City Beach Patrol — would come in just under the average, saving the city a potentially huge headache.

“Say these things change in the next four or five years and the economy is still in a recession, we need to have a plan for that,” Pillas said.

“It’s just important for the town to keep very good records,” Moran cautioned. “This will be an area where the legislature will look if they [employees] work 30.5 hours [the city could face the penalty].”

Assateague Guide

Everything you want to know about the Ocean City boardwalk.
Shop, Eat, Drink, People Watch, Amusements, Bike & Scooter rentals, more...

Follow Oceancity.com

208,023FansLike
29,939FollowersFollow
1,898FollowersFollow
8,819FollowersFollow
329SubscribersSubscribe

Latest articles

Similar articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here


By submitting this form, you are consenting to receive marketing emails from: OceanCity.com, 4 Bay St., Suite D, Berlin, MD, 21811, http://www.oceancity.com. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact