Ocean City Today
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OC keeps insurance costs stable

By Katie Tabeling | Nov 02, 2017

(Nov. 3, 2017) Ocean City government employees will see no increase in their health insurance costs next year, according to a report given to the City Council on Tuesday.

Other plan adjustments, like an increase in administration fees, the Stop-Loss insurance premium, and a larger contribution to health savings accounts, will still be within the budget of $7.15 million.

Total plan costs are projected at $8.15 million for the calendar year, so the remainder will be covered in the fiscal year 2019 budget.

Roseanne Calzetta of Bolton Partners, the city’s insurance consultant, said CareFirst Insurance originally sought to raise medical and vision plans by 2.2 percent. But Bolton Partners proved that the increase was unwarranted.

“With the self-funding approach, if Ocean City has favorable claim experiences, the premium reverts back to the town. That’s how the rates were kept at the current amount in 2016,” she said during Tuesday’s work session. “To date, it looks that you might be in a good position for 2017.”

Under its self-insured model, local government pays the cost of its employees’ medical claims out of funds set aside from the start of the year. If the year’s claims are less than what was set aside, the leftover funds are earmarked for future expenses.

In comparison, a fully insured plan involves the resort paying CareFirst a flat rate regardless of the actual claims cost.

Ocean City also moved to a self-funded model for its dental plan last year to enhance the annual visit and orthodontia plans.

Employees in the PPO and the HMO plans will see an increase in doctor’s visits copays. The copay will increase from $20 to $30 for primary care, and $30 to $40 for specialty care in both plans.

The copays for emergency room visits will increase from $100 to $150 for all three plans, to discourage employees from making unnecessary ER trips.

Contributions to the health savings accounts will increase from $1,300 to $1,350 for individuals and $2,700 to $2,750 for families. These plans are in the employee’s name and operate like a savings account — the city deposits the money each year for their use.

This plan has no copay, but account owners can pay into it.

Councilman Dennis Dare favored lowering payments to the health savings accounts, as he saw it costing the city more than it could afford.

“If you’re healthy as a horse until you retire, all those payments from the city, it belongs to the plan member,” he said. “It’s not free money. It was put there by the town.”

Councilman John Gehrig disagreed.

“Like the copay, it’s a benefit. If the office visit is $120, you’re paying $30 with the HMO. The remaining $90 is the benefit. With the HSA, you’re paying the $120,” he said. “In that option, benefits can turn into cash.”

Human Resources Director Wayne Evans said the rationale for the accounts is to encourage people to make better decisions, as it will be their money eventually.

“In theory, if I’m contemplating an office visit for urgent care or my doctor, I make a conscious decision to see my primary care giver because it’s $75 less,” he said. “If I remain healthy, I have more money in the account.”

Another change to the insurance plan includes implementing two additional tiers for specialty drugs to help CareFirst negotiate costs. The copay for preferred and non-preferred specialty drugs will be $25 and $45, respectively.

Prescription drugs comprise of 30 percent of city government’s insurance costs. Calzetta also said the city should institute a provision that requires filling prescriptions with generic drugs whenever the FDA approves generic version of a more expensive brand name drug.

The council voted 5-1 to adopt the insurance plan changes and provide one premium-free pay period in 2017, if good fortune holds. Dare dissented, and Councilman Wayne Hartman was absent.

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