OCEAN CITY – A generally healthy city workforce has led to a significant rebate to the town from its health care plan provider, and resort officials this week agreed to return some of the savings to the employees.
During Tuesday’s work session, the council learned the town and its employees had paid more in premiums and fees to its health care plan provider, CareFirst, than claims employees had made during the course of the year.
In some years, the number and amount of health care claims made by employees on the plan exceeds the level of premiums paid by the workforce and the contribution by the town.
In other years, the town and its employees pay more into the health care plan than claims made by the workforce and CareFirst pays the town a rebate. Human Resources Director Katie Callan explained that was the case this year.
“In April, we were notified that premiums and fees paid to CareFirst exceeded the claims generated by our members,” she said. “Therefore, the town will be receiving a settlement refund from CareFirst in the amount of over $672,000.”
Callan explained because of the significant refund, staff was recommending giving employees a two pay period holiday from paying health care premiums from a portion of the $672,000-plus refund from CareFirst.
“Due to these savings being driven primarily by employee utilization of the plan, we propose sharing a small portion of the overall refund with employees as a thank you for being conscientious consumers of health care,” she said. “The cost for the two-day premium holiday would be around $120,000.”
Callan said the proposed health care premium holidays would fall on two pay periods in December, including the period ending Dec. 4 and the period ending Dec. 11.
“We thought it would be appropriate to return some of that refund to the employees in the form of a premium holiday,” she said. “That would allow us to give the employees a holiday from paying premiums, and still allow us to keep a healthy fund balance.”
Council John Gehrig agreed and made a motion to approve the health care premium holidays for the employees and the council voted 4-0 to approve it.
“I like it,” he said. “Td just like to say thanks to our employees for being healthy this year.”
The second part of the same equation covered the town’s contribution to the employees’ deductibles in the health care plan. Currently, the town funds the full deductible for employees in the High Deductible Health Plan through a contribution to the employees’ Heath Savings Account (HSA).
The current deductible is $1,400 for single coverage and $2,800 for family coverage. Callan recommended increasing the town’s contribution to the HSA plan by $100 for single coverage, or $1,500, and $200 for a family plan, or $3,000.
Increasing the town’s contribution to the HSA deductibles for employees as presented would cost around $50,000 annually and would be paid from the $672,000-plus refund from CareFirst. The two pay-period premium holiday for employees in the health care plan would cost an estimated $120,000. Combined, the two cost-saving measures for employees would cost around $170,000, which would come out of the town’s $672,000 refund from CareFirst.
“This year, we’re looking at savings of around $672,000,” said Callan. “We can fund the two premium holidays and increase the town’s contribution to the HSA plan and still have significant savings with our health care costs.”
