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Village Vision News

Trustees consider changes to healthcare benefits for Village employees

Thursday, March 01, 2012

A 30 percent rise in healthcare premiums has led trustees to consider changing the Village’s longstanding practice of paying 100 percent of healthcare premiums for full-time employees and their dependents. Vision and dental services are included in the overall healthcare package currently provided.

Following intense discussion among five trustees at the Feb. 21 Board meeting (trustee Eric Morr was absent due to illness) and participation from several residents in the audience, trustees voted 3-2 in favor of directing the Village administrator to revise the 2012-13 draft budget to reflect the concept of employees bearing 20 percent of the health insurance premium costs for themselves and their dependents. Twelve employees would be affected by any change, which is expected to be implemented for the new fiscal year beginning May 1, 2012. Trustees also advised Village Administrator Heather Kimmons that long term they envision holding employees completely responsible for the cost of their dependents’ health insurance premiums.

“We’re being more than fair to our employees,” said trustee Bob Rasho, who reminded trustees of additional employee benefits, such as a municipal retirement plan to which the Village contributes 11.79 percent compared to an employee contribution of 4.5 percent.

Opposition to the entire concept came from trustee Steve Hubbard who joined trustee Larry Reed in voting “no” to the motion advanced by Rasho and supported by trustees Marilyn Johnson and Kerstin Trachtenberg. Said Reed prior to the vote: “Everybody agrees we have a problem … it’s just a matter of how we take care of it.” He asked that the amount of healthcare coverage provided by the Village be diminished over a longer period of time and further stated that he had “…no problem with the goal … it’s just should we do it all at once?” Hubbard offered the suggestion to “…offset the cost of healthcare with an increase in [employee] salary.”

Rasho originally suggested a 3 percent merit raise increase to be distributed at the discretion of the Village administrator in his original motion. Following Board consensus to make it a separate motion, it passed in a 4-1 vote with Trustees Reed again casting the sole “no” vote.

Kimmons said healthcare coverage for employees has been “the subject of much angst.” Prior to the Board’s decision, she proposed the Village continue to pay 100 percent coverage for its full-time employees and offer as a” best alternative” what she considered as “still a good deal for our employees” by having employees themselves contribute 25 percent towards any dependent coverage they elect.

“Allow us to budget a 5 percent salary increase across the board … give them [employees] a wage adjustment to make it more livable for them,” Kimmons advocated. She noted that, based upon raw numbers, an employee’s compensation could be affected by as much as 12 percent, while the majority of the 12 employees would tend to see a wage decrease in the 3-4 percent range with the benefit change she had proposed.

The issue of what to do about employee healthcare benefits took precedence as a priority at an earlier Board meeting. At that meeting, trustees reviewed a first draft of the 2012- 13 operating and maintenance budget and noted a proposed 12 percent increase for healthcare benefits as well as a 5 percent raise in employee wages/salaries.

Subsequently, Village Administrator Heather Kimmons learned from the Village’s insurance broker that premium costs with the Village’s current insurer have increased 30 percent. “This is a significant increase and will cause us to have to look at higher deductibles, alternate providers and healthcare savings plans,” she said.

Employee benefits first came under scrutiny a year ago when members of the now defunct Finance Committee expressed surprise that the Village was paying 100 percent of its full-time employees’ healthcare coverage. No changes were made at that time because of the research needed. Kimmons alerted trustees then that a commensurate raise in wages for most employees had to be considered if the benefits were to be reduced. Last September, five key employees had merited salary increases based on their job performances, and soon thereafter department heads conducted other employee evaluations for merit salary increases where deemed appropriate.

In suggesting that up to a 5 percent salary increase be budgeted for the new fiscal year, Kimmons classified that figure as “more than customary” but justified its inclusion by saying “…to avoid creating undue hardship to our employees, [we] should have something extra built in there because of the healthcare costs which employees would now be expected to pay out of pocket.” Mayor Hap Gilbert did not specify the amount, but said he was in favor of a raise for employees while having them pay for some portion of their healthcare insurance.

During that earlier budget discussion, Trustee Eric Morr had suggested a co-pay for using the services. “It puts the burden on the people who use the system,” he said. Trustee Steve Hubbard suggested instituting a high deductible. “The Village puts in X amount … [and] the employee puts in X amount because it’s their health. The first $3,000 goes against the deductible … it rewards people who don’t use it, and it saves quite a bit of money,” Hubbard said.

Kimmons said many counties and municipalities are re-examining employee benefits. She said it is not uncommon to see 100 percent coverage for employees and 50 to 75 percent for their dependents. “We [Forsyth] stand out since we pay 100 percent for dependents,” she said.

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