Wasilla considers new plan for employee health insurance

June 10, 2005

DARRELL L. BREESE/Frontiersman reporter

WASILLA - The city of Wasilla's administration examined a new plan for employee health insurance at a special meeting of the City Council on Monday.

The plan contains both good news and bad news for the 102 city employees. The bad news is that the annual deductible under the new plan will increase from $250 to $1,000.

"I know that will scare a lot of our employees when they first see the big deductible," Council Member Mark Ewing said of the increase. "I hope they can get past it so they can see the upside."

The good news for the employees, however, is that the city is setting up supplemental health reserve accounts that will pick up $750 of the new deductible. And for Wasilla taxpayers, the good news is that the city is offering this new insurance plan at a savings of nearly $30,000 from what was budgeted for health insurance.

According to Ted Leonard, director of finance for the city of Wasilla, this plan will keep the out-of-pocket cost down for employees and save money for the city and the taxpayers.

"We began to review our insurance plan, seeking a way to keep the premiums down for our employees," Leonard said. "The higher deductible we have with the Blue Cross portion results in lower premiums and allows us to set up a quasi-self-insured program with the HRA accounts."

The new plan includes regular coverage with Blue Cross and a supplemental HRA account for each employee totaling $1,750.

Leonard is forecasting it will cost the city $716,000 for the Blue Cross premiums and $203,000 to establish the HRA accounts for each insured employee.

"The HRA continues to benefit the employee after the deductible by paying half of their co-pay for the next $10,000 in claims," Leonard said. "There is a certain amount of risk for the city with the HRA plan," he continued. "If the employees are hit by a plague of illness and injury, it could cost us. But we are hoping that the front-end benefits of this plan will help keep them healthy."

Additionally, the city hopes to distribute a portion of the individual HRAs to the employees at the end of the year as an incentive to healthy living.

"We don't intend to discourage individuals from seeking medical attention," Leonard said. "But we do want to offer an incentive to limit unnecessary claims."

The City Council will decide whether to adopt this new plan during its Monday meeting. Between now and then, Leonard will be explaining the program to the various departments.

Darrell Breese may be reached at 352-2267 or darrell.breese@frontiersman.com.