Pending increases in health insurance premiums for some current and former Iola city employees could be more costly than originally expected.
If employees enrolled in family plans have their monthly premiums increase — city council members call for them to double by spring — Iola could lose its “grandfather status” and be forced to implement all new provisions and regulations of a federal health care mandate, referred to as “Obamacare.”
What that means is that Iola’s premiums for all employees likely would rise another 3 to 7 percent in order to cover additional preventive services, explained John Deines, a regional manager for Blue Cross Blue Shield of Kansas.
Municipalities whose employees have maintained the same monthly premiums for employees since the federal health care mandate was signed into law in March 2010 are considered grandfathered and not subject to the new federal regulations.
Deines spoke at length Tuesday with Iola City Council members.
The issue for Iola, Deines said, is the council’s decision in March to approve new rates for employees enrolled in family health insurance plans, as well as retirees. Both groups currently pay less than what had been stipulated in Iola’s employee personnel policy.
Employees enrolled in the city’s family health insurance plan pay $250 a month on top of what the city provides through Iola’s partially self-insured program. Had the city adhered to its personnel policy, family plan premiums would have cost $509.50 in 2011, on top of what the city provides. That pays the equivalent of a single-member insurance plan to all eligible employees.
Retirees, meanwhile, pay $302.50 for single insurance plans or $552.50 for family plans each month, while the handbook says the rates — based on BCBS recommendations — should have been $460.98 and $1,021.45.
The shortages mean the city has brought in at least $605,002.44 less in employee premiums than it would have since 2005 if the personnel policy was followed properly, according to a worksheet provided by Councilman Kendall Callahan.
The city was supposed to set its premiums on recommendations from BCBS, which provides stop-loss coverage to the city for catastrophic claims exceeding $50,000.
While BCBS prescribes rates for employers such as Iola who use partially self-funded plans, they are just that — suggestions, Deines said.
“As long as you pay your bills, we don’t check” on how much is in the city’s insurance pool, Deines said.
Through Iola’s self-funded plan, the city’s and employees go into a pool, from which funds are paid to BCBS when claims are filed. Iola has about $216,000 in its insurance fund.
The insurance presentation came during Tuesday’s work session scheduled by Iola City Administrator Carl Slaugh for council members to decide whether to make further changes in its health insurance plan.
“The council should know its options,” Slaugh said.
The issue is likely to be pushed to the front burner in coming days. While council members originally planned for the premium hikes by next April, they instead will need to be implemented by Nov. 1, when the city renews its health insurance plan for fiscal 2012-13.
