Archive for Wednesday, June 25, 2003

Insurance costs worry city employees

June 25, 2003


Jerry Allen is worried.

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The 35-year-old works for the city of Lawrence Neighborhood Resources division. He has a wife and three children for whom he provides health insurance. He's trying not to think about what might happen when the Lawrence City Commission makes a final decision on the city employee health care plan.

"It'll be an adjustment," Allen said. "It's always in the back of your mind, but I'm trying not to worry too much until I know what the exact dollar amounts are."

Representatives of Blue Cross-Blue Shield of Kansas, the company that provides the group health care plan for the city, have told officials to expect an 18 percent increase in premium costs next year. That's up nearly $1 million from this year. And it's an amount city employees probably will have to make up.

"They are looking at the very real possibility of a net loss in take-home pay," said Frank Reeb, the city's director of administrative services.

Commissioners have been presented five alternatives by the city's Health Care Committee. The committee's official recommendation is to make no changes in benefits, deductibles or co-pays. Under the plan, the city would pick up a substantial portion of the premium increases.

The city still would pay 100 percent of premium costs for its employees and most of the cost for family coverage. Employees enrolled in the family plan, such as Allen, would have to pay an extra $17 per month.

Another plan would let funding for retained earnings drop nearly 10 percent. Retained earnings are the amount of money kept in reserve to make sure the group plan can pay out all claims in a given year. A third option would eliminate the city dental plan, at a savings of $300,000.

The worst-case scenario for employees calls for deductibles and co-pays to double for individuals and families. Employees still would have to pay an extra $17 per pay period ($97, up from $80 in 2003). The city would save nearly $600,000.

Based on remarks made at a recent study session, commissioners seem to be favoring another alternative: increasing the city's contribution 10 percent and requiring city employees to make up the rest.

The plan has its advantages and disadvantages. The city would save more than $400,000 and employees wouldn't see any change in their plan. But the employees would notice the difference in their paychecks. This plan would increase the employee contribution to $127 per pay period, almost $100 more per month than in 2003.

Couple that with the expectation of no across-the-board raises, and city paychecks wouldn't go as far as they used to.

"This absolutely could hurt families," said Reeb. "It's something we're watching very closely because it could have a significant impact on morale."

The increases wouldn't make a difference for individuals. Commissioners seem adamant that the city should continue to pay 100 percent of premium costs for individual employees, leaving employees with families to take the biggest hit.

Either way, Allen is anticipating tightening the belt a little more.

"We'll just have to learn to balance our budget a little better," Allen said. "With the economy the way it is, I'm just glad to have a job."

6News reporter Jeff Golimowski can be reached at 832-6342.

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