Health Insurance Myth The Town of Reading is generous to employees by offering health insurance.

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1 The Town of Reading is generous to employees by offering health insurance.

2 The Town of Reading is generous to employees by offering health insurance. Health Insurance Fact MGL Chapter 32B sets the requirements the Town must follow in administering health and life insurance programs to eligible employees and retirees and their spouses and dependents. Reading accepted this Chapter on March 4, 1957.

3 Background: MGL Chapter 32B Employees who regularly work 20+ hours/week are eligible for health and life insurance (for school employees it is 20 or more hours/week during the school year); Employees enrolled in the health insurance program who retire (32+ hours/week except 18 hrs/week for teachers) may continue in the program; If a retiree passes away, the surviving spouse may continue in the health insurance program; If an employee is not in the health insurance program at the time of retirement, there are restrictions on when he/she can enroll in the program.

4 Health Insurance is Free for Public Employees and the cost is borne by the taxpayers.

5 Health Insurance is Free for Public Employees and the cost is borne by the taxpayers. Health Insurance Fact Employees and Retirees pay 29% of the premium costs through payroll deductions. In addition, several plan changes have been made in recent years to reduce the cost of premiums and shift additional out-ofpocket expenses to the employees.

6 The Town of Reading should change to the State GIC and save a substantial amount of money.

7 The Town of Reading should change to the State GIC and save a substantial amount of money. Health Insurance Fact FY13 Full Monthly Cost of Comparable PPOs Indiv. Family Medicare Tufts Health Navigator* $626 $1,526 $407 HPHC Independence* $692 $1,689 $407 Reading (MIIA-BCBS) $608 $1,630 $330 * Consultant estimates for FY13 GIC products (+6%)

8 The Town of Reading should change to the State GIC and save a substantial amount of money. Health Insurance Fact FY13 Municipal Share of Comparable PPOs * Indiv. Family Medicare Tufts Health Navigator $546 $1,332 $355 HPHC Independence $603 $1,473 $355 Reading (MIIA-BCBS) $432 $1,157 $234 *GIC communities surveyed last year pay 87.3% of premiums; Reading is 71%

9 Health Insurance Premiums are out of control, and there s nothing we can do.

10 Health Insurance Premiums are out of control, and there s nothing we can do. Health Insurance Fact Several plan design changes have been made in the past seven years with the goal to reduce premium costs by avoiding medically unnecessary expenses or shifting some of the costs to the employees/retirees that are the highest health care users: Reading Premiums (annualized FY06-FY13) HMO +4.0% PPO +0.5% Medex +2.9% Weighted average +2.8%

11 Reading Health Insurance Recent History HMO PPO Medex of total budget FY13(bid) 0% 0% -1.1% 6 mo. 10.8% FY12** +5.9% +3.7% +2.4% 11.3% FY % +10.5% +4.9% 10.0% FY10** -2.0% -22% to -27% +1.9% 9.5% FY09* +3.8% +6.1% -0.1% Mdx2 FY08* +6.4% +6.4% +6.4% Mdx3 10.1% 9.1% FY07(bid) +4.9% +4.9% +2.9% 8.8% Plan design changes (* minor or ** major) to lower premiums. Including the two times out to bid, six of the last seven years have seen significant efforts.

12 Reading Health Insurance Recent History Health Insurance Budget (annualized FY06-FY13) Premiums +2.8% Enrollment +2.0% Budget Cost +4.8% Revenue Growth (excludes free cash) +2.0% Next: two-year trial opt-out period where employees will be paid to instead enroll on a spouse s plan. While not a solution to the insurance cost problem, this practice is becoming common.

13 Health Insurance is a Municipal budget-buster.

14 Health Insurance is a Municipal budget-buster. Health Insurance Fact This myth is true!! In FY13, Reading will spend over 10% of it s budget on health insurance and the national 9% annual premium increase is not affordable given the Town s revenue constraints. However, we are not alone

15 What percent of your FY11 budget is health insurance? February 2011 survey by Stoneham Board of Selectmen Peabody 20% Walpole 12% Beverly 17% Canton 12% Wakefield 16% Newburyport 12% Melrose 14.6% (GIC) Wilmington 10.6% Tewksbury 14% Amesbury 10% Stoneham 13.5% (GIC) Belmont 10% Saugus 13.5% (GIC) North Reading 10% Sudbury 13.2% Reading 10.0% North Andover 12.9% Bedford 7.9% Wayland 12% Ipswich 7.9% The average without Reading was 12.6%, while Reading is only at 10.0%. If Reading were at the average, we would spend another $1.9 million per year.

16 Life Insurance Eligible employees can purchase a $5,000 term life insurance policy for $100.20/year with the Town paying 50% of the cost; Currently the Town s share is under $40,000/year; Employees can purchase additional life insurance for themselves, spouses and dependents, but the Town does not contribute to any of the premiums; Employees enrolled in the life insurance program who retire can continue in the program with some restrictions; The Town continues to pay 50% of the premium for the $5,000 policy for retirees.

17 Other Benefits Dental insurance is available to active eligible employees but the Town does not contribute to the premium; Disability insurance is available to some School employees through the MTA. There is no disability insurance available to Town employees; Town and School employees can contribute to deferred compensation plans (403b and 457) to save for retirement; Paid time off benefits such as sick, vacation, and floating holidays/personal days are available to eligible employees; Some employees are eligible for sick leave buyback, but caps on the amount and eliminating it for new hires after a certain date is common. For example, in one union contract no one hired after is eligible for sick leave buyback.