Some current and former Iola city employees will soon pay substantially more for health insurance.
A divided City Council approved Monday the rate hike, citing discrepancies in what employees and retirees have paid, and what is required in the city’s employee handbook.
The affected workers are employees enrolled in the city’s family health insurance plans — whose rates are expected to double by April 1, 2013 — and retirees.
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 employee handbook, family plans would have cost employees $509.50 in 2011. 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 recommendations from Blue Cross Blue Shield of Kansas — should have been $460.98 and $1,021.45, respectively.
The shortages mean the city has brought in at least $605,002.44 less in employee premiums than it should have since 2005, according to a worksheet provided by Councilman Kendall Callahan.
The handbook says the policies should adhere to recommendations from BCBS, which provides stop-loss coverage to the city in case a health insurance claim exceeds $50,000.
Instead, the city went by what it deemed reasonable premiums, said former City Administrator Judy Brigham who addressed the council.
Brigham said the self-insured program has allowed the city to contain costs both for employees and Iola’s taxpayers since it was put into place.
“One of the other benefits … is that the City of Iola is able to attract and maintain healthy families in their group, which in turn helps contain costs,” Brigham said.
CALLAHAN refuted Brigham’s contention that the program has been self-sufficient, noting the pool has paid out more than it has received in six of the past eight years, losing an average of $45,000 in those years.
He said the premium hikes shouldn’t be put in place immediately, but should be enacted by next April, prior to the next city council elections.
More troubling, Callahan said, is that neither he nor other council members can find in former city commission meeting records where the figures were established for family plans or retirees. Callahan stopped short of Councilman Ken Rowe’s contention earlier this month that the figures were changed, without authorization, by Human Resources Manager Ken Hunt — an allegation Hunt has denied. But Callahan still called the practice “bad management” and “a debacle.”
“What’s sad about this is the employees didn’t do anything wrong,” Callahan said.
Councilman Joel Wicoff agreed the health insurance premiums should adhere to the city’s policy handbook, but said unilaterally raising rates for some employees would be problematic and force employees with young families to look elsewhere for health insurance coverage. He urged the council to consider other options, such as changing the policy handbook to allow the city to provide more for family plans or retirees.
Callahan noted that bringing in $605,000 less than it should have has hit the city’s budget in other areas. For example, city commissioners transferred in $100,000 from other utility funds in 2010, and the city has been unable to contribute anything into employees’ health savings accounts since 2008 “which is how this is supposed to be set up.”
