AVALON – Avalon has been busy crunching the numbers on the state’s recent 21% increase in public employee health benefits. The seemingly impossible goal was to find a way for the borough to avoid the hefty premium increase while still providing the same benefits to employees.
At the Oct. 12 governing body work session, Assistant Business Administrator James Waldron told the council that a path to those seemingly contradictory goals had been identified.
Essentially, Waldron proposed that the borough encourage employees to migrate to a different plan within the overall State Health Benefits program. The new plan would reduce the premium increase to employees and the borough. It does so by increasing the co-pay amounts and deductible requirements.
The borough then proposes to adjust amounts in an employee’s Health Reimbursement Account (HRA) to cover additional co-pay or deductible payments. The benefit to employees would remain at a level equal to what it currently is while reducing the premium burden. “It is a win, win,” for employees and the borough Waldron said.
According to the number crunching, this strategy would lower the impact of the premium change and end up costing the borough an estimated 10% more than it currently pays. A 10% increase in one year is still stiff, but “it’s a lot better than 21% to 24%,” Waldron said.
There is a catch. The borough cannot just migrate from one plan to the other on its own. Each employee must choose the new plan on an individual basis. Waldron said that a letter would go out to employees explaining the new option and encouraging them to select the lower premium plan with the understanding of how the borough would adjust the HRA.
Individual employee health plans must be selected by October 31.
This use of the HRA to offset higher costs in a lower premium plan is just one example of how municipalities are struggling with an unprecedented increase in state health plan premiums. State officials have blamed the increase on the pandemic and health care inflation.
State officials did find a way to avoid the large premium hike for state employees following a deal with five employee unions, but those same officials left counties and municipalities on their own to struggle with the spike in premiums.
Thoughts? Questions? Email vconti@cmcherald.com.
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