As the village of North Riverside tries to find ways to lower operating costs in order to balance future budgets, its board of trustees is poised to change the way the village delivers health insurance coverage to new employees.
Next month, trustees will vote to create two new health insurance plans for any employee hired after July 1, and the village will also offer incentives to existing employees in order to convince them to drop the present plan in favor of one of the new plans.
On Feb. 15, trustees voted unanimously to have Village Attorney Mike Hayes craft an ordinance making the insurance plan change official.
“It’s necessary for the village’s long-term financial health,” said Sue Scarpiniti, the village’s finance director. “We’re trying to turn it into a win-win for both the employees and the village.”
North Riverside self-insures its employees and most of its retirees, who were eligible for lifetime post-retirement health insurance through the village until North Riverside pulled the plug on that perk in recent years. Police were the last to forego the perk, in 2014.
Right now the village offers just one health plan, a Blue Cross Blue Shield PPO that can only be described as magnanimous. The plan requires all village employees (and qualifying retirees) to pay 10 percent (police officers pay 12 percent) of insurance premiums for either single or family coverage.
There is a $100 deductible and $500 maximum out-of-pocket cost annually. Employees may also take advantage of free mail-order prescription drug coverage. The total annual premium for single coverage under the plan is about $11,400, while family coverage premiums amount to about $24,800, said Scarpiniti.
As a result, according to Scarpiniti, the village pays about $2.5 million annually for health insurance costs for its employees and retirees.
After July 1, that plan will no longer be available to new non-union employees. Instead, those new employees will be able to choose from a pair of Blue Cross Blue Shield plans, one the village is calling PPO2 and an HMO plan.
For the village, overall premium expenses are expected to drop by between 8 and 26 percent depending on which of the new plans an employee chooses. For the HMO plan, total premiums are estimated at $8,500 for single coverage and $18,400 for family coverage.
Savings to the village for employees choosing the PPO2 plan will be more modest. Single coverage premiums will be about $10,500, while family coverage will be $23,000 annually.
Employees under the new plans will also have a co-pay for the mail-order prescription drug coverage. There would also be a change in the way in-network and out-of-network costs are covered.
The present insurance plan also covers 90 percent of in-network costs and 70 percent of out-of-network costs. The new plans would cover 80 percent of in-network costs and 60 percent of out-of-network costs, said Scarpiniti.
The village will also start offering employees a flexible spending account, allowing them to set aside money, pre-tax, to use for out-of-pocket health care costs.
“Because the village recognizes there will be additional costs borne by employees, we’ve instituted a flexible spending plan to offset the costs with pre-tax savings,” Scarpiniti said.
While it’s hard to say what the village will end up saving over time, as current employees retire, insurance costs will start to fall for the village.
“As we get more and more employees taking advantage of the new plans, we’ll have a better gauge on savings,” Scarpiniti said.
With all of the village’s union contracts being negotiated in 2016, officials also hope to have the new insurance plan policy written into the new contracts. The village will also seek to have union and non-union employees pay a greater share of insurance premium costs in the future.
While present employees will be able to maintain the PPO1 coverage, officials said that they’ll try to offer incentives to convince employees to migrate to one of the new plans.
Exactly what those incentives will look like is still being worked out, according to Scarpiniti.
Mayor Hubert Hermanek, who as an elected official chose to be insured under the village’s PPO1 plan, said he will switch coverage to a new plan come July 1.
“It’s going to be difficult for people to accept [changing their insurance plans],” Hermanek said, “but I’ll be one of the first to convert. You have to be creative and give people a reason to do it.”
Finally, the village board will also implement another insurance change as of July 1. Right now, any firefighter or police officer injured in the line of duty is eligible to apply via the Public Safety Employee Benefits Act for free health insurance through the village for himself and his family until Medicare age.
Because the village only offers one plan right now, those employees receive the PPO1 coverage if they are deemed eligible by the state. After July 1, those employees will be only eligible to receive coverage under the new HMO plan.