Shopping for health insurance pays off for city

SALEM-Shopping around for health insurance paid off for Salem city government this year, with a potential savings of more than $110,000 under a new plan, through lower premiums and discounts.

“We were rather pleased at that, that the annual cost would not go up but would go down,” Mayor John Berlin said this past week.

The new 15-month Anthem plan through Paychex Insurance Agency took effect Aug. 1 and had been agreed upon by all four unions representing city employees in the police, fire, service and utilities departments.

Berlin explained the process of seeking new coverage began after the city received notice on April 16 that renewal of the then-current plan with Medical Mutual was going to cost 39.5 percent more than the previous year. The plan was set to expire July 31.

City Auditor Betty Brothers had budgeted for a 7 percent increase, so they were shocked at the nearly 40 percent increase being proposed.

That would have increased the annual cost from $946,556 to $1,320,639 for the same plan and that was not acceptable.

The city started looking for other plans through different insurance agencies, which Berlin said took some time because they had to go through a permission process with Medical Mutual in order for other agencies to be able to get quotes from them. In the end, the 15-month Anthem plan won out.

“We were quite happy. Each agency had offers that were attractive, but this one seemed to be the most reasonable,” he said.

Under the Anthem plan, the cost is expected to total $992,942, dependent on the health of the employees related to how much the city has to pay for the shared corridor or deductibles. That takes into consideration an annual premium cost of $836,762, which is a decrease of 11.6 percent from the previous plan, administrative costs of $7,742 and an expected shared corridor or deductible cost of $148,438 for the city.

Employees will pay more for their deductible, but most will pay less for their premiums. The city also saved by bundling the dental and vision with the health insurance. Employees pay 11 percent of the health insurance premium, with the city paying up to $30 per month for the dental insurance premium and 100 percent of the vision premium. The health insurance premium for singles increased from $373.47 per month to $376.97 per month, with the employee paying $41.47 per month. For an employee plus spouse, the monthly premium decreased from $840.33 to $828.56, with $91.14 paid by the employee.

For an employee plus children, the monthly premium dropped from $728.29 to $636.32, with $70 paid by the employee.

For a family plan, the monthly premium dropped from $1,381.90 to $1,163.69, with $128.01 paid by the employee.

Deductibles for employees increased from $200 to $250 for singles and from $400 to $500 for families. After that the city pays, but the shared corridor or deductible ceilings decreased from $3,000 and $6,000 to $2,250 and $4,500. After those amounts, the insurance pays.

“We reduced the exposure the city would have on the deductible side,” Berlin said.

The city also received a 1 percent discount by joining the Salem Area Chamber of Commerce.

“We certainly have done due diligence with respect to the insurance plan for employees of the city,” Berlin said.

The plan covers 81 city employees, with 18 single, 17 employee plus spouse, seven employee plus children and 39 family plans.

He’s hoping the savings they see on paper will translate to reality, noting that it’s hard to predict what’s going to happen from year to year with the health of employees. Last year the city paid $148,438 for the shared corridor or deductibles and the previous year $144,818.

Regardless of what happens, Berlin said the plan gives the city a cushion between what was paid last year and what the city expects to pay for the next 15 months, plus the fact that the city budgeted for $1,180,000 for health insurance costs for the calendar year.

Also related to health, the city continued a deal with employees to pay towards memberships to the Salem Community Center. The city negotiated to pay half the cost, but employees have to demonstrate that they’re using the facility at least once a week or up to 52 visits in a year.