NEW ALBANY — Required to act before Sept. 1, the New Albany Board of Works renewed medical insurance coverage for city workers Tuesday with an option for employees to engage in a health savings account, or HSA, beginning next year.

The Mayor Doug England administration hinged projected budget numbers for 2011 and 2012 on a majority of workers participating in the HSA option during a presentation to the City Council Thursday.

Seventy-five percent  of city employees including union workers would need to switch to the HSA plan in 2011 and 85 percent by 2012 in order to help spare New Albany’s general fund about $800,000 over the next two years, administration officials said.

New Albany will save about $6,000 annually per city worker that chooses the family plan through the HSA offering said Edward Culpepper Cooper of Maverick Insurance, the city’s insurance agent.

The projected savings plays into the ongoing public safety funding situation, which is predicted to be near $1.8 million shy this year for the fire, police and communications departments.

The administration is asking the council to allot reserve funding to cover the budget shortfalls over the next two years, with the hope a reduction in insurance costs will bring the general fund back into the positive by 2012.

Typically the city’s insurance runs from September to September, but Humana — New Albany’s coverage provider — has agreed to move open enrollment to October and November with an anticipated January start date.

Workers will be covered until that time through the measure passed by the board, and they can either opt for the HSA plan or choose one of the two other options that are similar to current coverage plans for 2011.



How it works

Participants in the HSA plan must meet a $1,500 threshold for a single buyer and a $3,000 deductible for families annually before their coverage kicks-in.

Instead of having bi-weekly premiums taken out of their checks, workers could direct their deductions to their HSA account to cover their yearly deductible.

Once their required contribution is met, the worker would not be responsible for anymore premiums that year.

“People can put money in [their account] and it doesn’t revert back at the end of the year,” Cooper said.

Typically young and healthy people like the plan because they don’t spend much on health care so they start saving money immediately, he continued.

But if they qualify, those that frequently go to the doctor may also be interested in a health savings account because after they meet their deductible they are eligible for up to $5 million in medical coverage, Cooper said.

The money paid by workers toward the HSA plan remains in the account if not spent.

“It’s tax free as long as you don’t withdraw it for some other purpose,” said City Controller and board of works member Kay Garry.

As part of the measure passed by the board of works — which is the city body charged with making the final call on insurance coverage — premiums will not be raised for workers between September and January when the new plans kick-in.  

Garry said the city — which already covers 90 percent of premiums for its workers — will pay about $9,200 to account for the slight cost increase in insurance over that span.

 

The next step

Cooper requested the HSA option not be made available until January so Maverick can educate workers on the plan, especially unions.

He said they’ve already met with the police union and are hoping to schedule a meeting with the fire union ahead of the enrollment period.

Paul Haub, president of the New Albany Fraternal Order of Police Lodge 99, said during Thursday’s council meeting union members needed to research the HSA option before there is a vote on the matter.

“We’ve started our education process with our members,” he said, adding that the overwhelming majority of police union participants would save money by switching to the HSA option.

Cooper followed suit as to what administration officials suggested last week, as he said the city should consider a first year incentive for employees that switch to the HSA plan.

The city could use some of its 2011 savings to partially fund HSA accounts for workers next year as a stimulus to get employees to switch to the coverage, Cooper said.

England attended the meeting and said after the vote the HSA option could make a big difference financially.

“This is a great opportunity for us to take-up some of the deficit the city has been incurring since 2003,” he said. “Hopefully we’ll be back in the black by 2012.”