The new group health benefits contract, tabbed at $6 million, eliminates the city’s current health reimbursement plan and alters the manner in which prescription medications are paid for under a new employee health savings arrangement.
“This does represent a departure from our current-fully insured status,” said Human Resources Director Dan Roach.
“We are recommending a move to transition to a partially self-insured status with an administrative services arrangement with Blue Cross/Blue Shield of Georgia.”
Doing away with the health reimbursement arrangement, Roach said, will cut costs and create a “more streamlined approach” to benefits.
Under the reimbursement plan, employees could receive prescription medications without paying a co-pay. Under the savings plan, Roach said employees will pay 100 percent of the “first dollar” medication costs until an adjustment is made.
Roach said pharmacy co-pays will help greatly reduce any “disruptions” stemming from the elimination of the reimbursement plan.
He said moving to the savings plan will result in lower premiums and a higher city contribution to savings for most employees.
“For all intents and purposes, this change is simply financial arrangement,” Roach said. “Employees will still have an insurance card, they’ll still go to the doctor and they’ll still receive the care that they need.”
The partially self-insured model, he said, is the best way for the city to bend the “cost curve back in our favor.”
The insurance changes, Roach said, are all within the city’s current 2015 budget.
The expected claims basis under the new insurance plan is $5.4 million — about a 10 percent increase in current group benefits expenditures — with ancillary benefits coverage estimated at approximately $640,000.
Roach said the city is accepting greater, but not unlimited, risk under the new benefits model.
“If we have a claim that exceeds $150,000, the specific reinsurance will kick in,” he said. “Then, we’re protected on the aggregate, I believe, at roughly $5.6 million.”
Roach said he expects the city to move towards an 80/20 percent premium sharing ratio by the 2018 fiscal year. He also proposed increasing a tobacco use surcharge from $35 per pay period to $50.
He said city staff have much work ahead of them, particularly in getting greater wellness program buy-in from employees.
“If we are really going to manage claims, we need everybody to be onboard and focused on our wellness program,” Roach said. “We have high-level, consumer-driven health insurance … we need to do a better job of educating our employees about how to shop for health care.”