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Employee health insurance plan for 2013 approved

by Thomas Beeler
Editor of The Granite State News
October 04, 2012
WOLFEBORO — At their Sept. 19 meeting Wolfeboro selectmen approved switching health insurance carriers and adopted a new employee health insurance plan for 2013.

The town's health insurance contract with the Local Government Center (LGC) expires on Dec. 31. As it did the last time a contract came up for renewal or replacement the town formed a Health Insurance Advisory Committee to solicit bids and evaluate offered plans with the help of Beth Smith from Benefit Strategies.

Smith came to the Sept. 19 selectmen's meeting to present the results and make recommendations.

She said the committee reviewed the options presented and preferred plans from SchoolCare over those offered by LGC. This was good news because the town's premium contribution under the LGC plan was $1,273,633 a year while using the same mix of plans from SchoolCare the premium contribution would be reduced to $1,077,219, a saving of $196,414 or 15 percent.

Under the current plan the percentage of the total premium paid by the town was 96 percent for a Matthew Thornton Blue 15 Plan with a $500 deductible and 93 percent for the Matthew Thornton 5 Plan or Blue Choice with no deductibles.

Under the SchoolCare plans serviced by Cigna the town's percentage would be fixed at 93 percent of the Open ∑Access plan, which includes a $250 individual deductible and a $500 family deductible. Employees can choose an HMO or a Point of Service (POS) Plan instead of the Open Access Plan. The two alternatives are equivalent to those offered by LGC.

Smith proposed that the town consider two options to help employees reduce their cost insurance, a Health Reimbursement Arrangement (HRA) or a Flexible Spending Account (FSA).

The HRA would reimburse employees who enrolled in the Open Access Plan for 100 percent of their deductible cost and 50 percent of their co-payments. Those who sign up for the other two plans would not receive the HRA. Smith provided an analysis that assumed 50 percent of all employees would make use of the HRA (a "50 percent loss ratio"), the HRA would cost the town $35,625 plus an administration fee of up to $3,500. This would reduce the town's savings on premiums from $196,414 to $157,289 (from 15 percent to 12.4 percent). Actual costs will depend on how much the HRA is used: the maximum cost at 100 percent participation would double to $71,250.

The FSA would include all employees regardless of plan chosen. The town would pay into each individual's Flexible Spending Account $325 for those with single coverage and $625 for those with two-person or family coverage. Employees could also contribute to their accounts. FSA funds could be used to reimburse out-of-pocket costs for any IRS-allowable medical, dental or vision expense. Administrative costs would be less than the HRA and the town's savings on premiums over the current plan would also be slightly higher $158,574 or 12.5 percent.

Selectman Dave Senecal said the loss ratio/HRA participation in Ossipee is 30 percent, much lower than the 50 percent used in Smith's projections.

Town Manager Dave Owen said that the committee's recommendation was to adopt the FSA rather than the HRA. Owen also pointed out that the percentage of dental insurance paid by the town would also be reduced from 95 percent to 93 percent.

Selectman Sarah Silk moved that the town adopt the committee's recommendation of SchoolCare and an FSA plan. Selectman Dave Bowers seconded the motion, which was approved unanimously.

Town of Brookfield
Varney Smith
Martin Lord & Osman
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