-City Attorney cites ordinances
-Mayor says potential savings not as large as hoped
-Councilman expresses concern about payment before council approval
The Common Council of the City of Brazil continued its discussion on the 2006 health care plan for city employees during a special session Thursday.
The meeting was convened to examine several options that would reduce medical costs to city employees under the city's new health insurance policy. The council approved an employee health insurance plan through Humana Healthcare at its Dec. 13 session. At $669,565, the Humana plan cost nearly $240,000 less than the amount the council had appropriated for employee health care in 2006.
But the plan carries a $1,000 deductible, twice that of the city's health insurance agreement with previous carrier Anthem Health.
-Supplemental spending accounts for city employees
Mayor Tom Arthur and City Attorney Joe Trout were unable to attend the Dec. 13 meeting, at which council members voted to open an escrow account that would be used as the basis of an HRA (health reimbursement arrangement) account to mitigate the higher deductible facing city employees.
At Thursday's special session, Arthur outlined two options that would ease employee medical costs. He said an HRA would allow city employees to be reimbursed after exceeding the first $500 of their deductible (or the first $1,000 when an employee's family shares the coverage). The account would be opened with the approximate $20,000 savings in commissions to have been paid to the insurance agent who brokered the Humana agreement-- Arthur said the city made an error in its initial calculation of expected commission costs, and the amount was ultimately less than expected.
Arthur also proposed offering employees a flex spending account, which would allow participants to deposit a pre-tax amount from each pay to be spent on anything from prescription costs to day care expenses for their children. Arthur noted that 18 employees would have to open FSAs for the program to be financially viable. Some council members expressed doubt that employees would use the optional FSA.
"I just don't feel like there's that many people that can put that much money in there," said Councilman Bill Lovett.
The council is expected to approve one or both of the plans at its meeting Tuesday.
-The possible hiring of a city benefits consultant
At the Dec. 13 council meeting, Council members considered hiring a benefits consultant to ensure the city's health insurance complied with state and federal guidelines. The consultant would also provide continuing guidance with insurance issues.
Dabren Clark, a group benefits consultant with ONB insurance group, told the council Dec. 13 she could save the city upward of $30,000 in built-in commissions if retained as a consultant for a flat, $20,000 annual fee. She also raised the possibility of opening an HRA account to mitigate the Humana policy's higher deductible.
Arthur was quick to point out that he had worked closely on employee insurance with Brazil insurance agent Larry White, who would be entitled to the commissions Clark sought to eliminate.
Arthur said Thursday that Clark's estimate of $30,000 in commissions was exaggerated. He cited research indicating White would receive $12,800 in commissions, about 2 percent of the city's contract with Humana. Arthur also indicated he would rather work with White, a Brazil resident, than a representative of Terre Haute-based ONB.
"Larry (White) is 40 feet from the back door, rather than 14 miles down the road," he said. "That's my problem with this."
According to City Attorney Joe Trout, city ordinances passed in 1998 prohibit the council from making the decision to hire a consultant. Trout said the purchase of such a service falls under the jurisdiction of the Brazil Board of Works and Public Safety and the mayor.
"We can't lose sight of the fact that the legislative branches and executive branches (of city government) are separate things," he said. "The discussion is all fine and good, but it's all academic."
-A premature payment to Humana
Councilman James Sheese voiced concern that the city tendered its initial payment to Humana for 2006 Dec. 8, five days before the council approved the plan at its Dec. 13 session.
Arthur said the need to secure employee health insurance by the end of the year necessitated the early payment. He also stated he had an agreement with a Humana representative that the check would be returned if the council were to vote down the plan.