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Fort Wright Changes Employee Health Care Plans

The City of Ft. Wright is changing its health insurance plan for city employees.

City council voted to go with a health savings account (HSA), or high-deductible plan, for the ten employees who have insurance through the city.

As of January 1, it will be mandatory for all those employees to make the change.

The HSA is not new to Ft. Wright.   

Currently, four employees are in an HSA and six are still on traditional insurance. The HSA accounts were initiated in the city around 2008 or 2009 according to City Administrator Ed Butler. Anyone whose spouse has the insurance through the city currently receives 25 percent of their premium costs as a waiver from the city. Those who have traditional insurance pay $125 every two weeks out of their paychecks.  

But health care costs are going up 12.5 percent next year, and the city picks up the first 5 percent of any increases, so that leaves the employee with 7.5 percent of the rate increase.

Employees who went with an HSA originally had money placed in their accounts to cushion the blow of the changeover.

"In Kentucky, costs have exploded," said Mayor Dave Hatter. "The choices (of insurance) continue to go down. So we thought, what can we do to insulate ourselves? Ed has come up with what I think is a unique solution for everyone."

Butler told council how he compiled numbers from the Northern Kentucky Area Development District and insurance companies, and said that he looked at what other comparable cities were doing to handle the problem of health insurance to formulate his plan.

As of January, the city will place $1,600 in the accounts of its employees who use a single plan, or $2,000 for a two-person plan, and $2,500 for a family plan. The amount is based on the difference in the deductible account between the traditional insurance and the HSA.   

The money is to offset costs that could come in immediately.   

Butler gave the example that someone might be on asthma medicine and go in to fill their prescription that usually costs them $30, but with the HSA instead of the traditional insurance, that cost could be as much as $430, in theory. With the seed money, they can absorb that cost. The employee can then put the money he or she would have paid biweekly for the traditional insurance, minus the 10 percent of the new premium, into the account.

In addition, the city will pay 40 percent as a waiver if the employee's spouse has insurance elsewhere so that the city employee can be on the spouse's insurance.

The point was raised that an employee could get the lump sum, which is supposed to last all year, and then quit their job, and that money would be lost to the city, and both Butler and Hatter said that they realize that is a risk, but it is one they are willing to take at this time.

"We have to educate the people as to what this is," said Butler. "We don't want people to leave. But we want the changeover to be as painless as possible."

Hatter said that with the excessive rate hikes every year, and the uncertainty of what will happen with health care in the federal and state governments, coupled with the rising medical costs, it only makes sense to institute this program that they believe will ultimately be more successful than traditional insurance.   

Fire Chief Steve Schewe was one of the original HSA holders and he said that he was very happy with it.

Butler said if the city would maintain a traditional insurance policy, the city's net cost would be $204,759.70. With the HSA plan, and the employee picking up 10 percent of the cost of the new premiums, the city's net cost would be approximately $205,000, so the two plans are only about $500 apart.  

Other notes:

Jeff Bethell was named public works director. Tim Maloney, the previous director, retired. The city will move quickly to fill Bethell's previous role within the department.

Patricia Wilsey was appointed as a part-time assistant city clerk.  Wednesday's meeting was the last official meeting where Joyce Woods will be the city clerk, as she will retire at the end of the year. Susan Ellis, the former assistant city clerk, will become the city clerk.

Mayor Hatter talked about the replacement of the sign in front of the city building. 

"We have been a city for 75 years, and doom has not come because we didn't have a digital sign," Hatter said jokingly. "But now I think it would be a substantial benefit to the city."

Butler sent out a request for proposals (RFP), and received about a half dozen bids. Wilson Signs was the low bidder, at a cost of $29,800, and council voted to award the contract.

Written by Patricia A. Scheyer, RCN contributor