FAYETTEVILLE -- More than 600 city employees and their families face increased health insurance costs in 2015, but the increases aren't nearly as steep as they were this year.
If Fayetteville aldermen approve a package with Arkansas Blue Cross and Blue Shield next week, health insurance premiums will climb 7.2 percent.
By the Numbers
Health Insurance Premiums
More than 600 Fayetteville employees and their families will pay the following amounts each month in 2015 if the City Council approves a health insurance package with Arkansas Blue Cross and Blue Shield next week. The city pays the remainder of the cost of the policy.
*Traditional Plan*High-Deductible Plan
Individual*$82*$13
Family*$385*$41
Source: City of Fayetteville
City officials said Tuesday they were happy with the package when compared to the 35 percent premium hike in 2014.
"We're actually excited, even though this is a 7.2 percent (increase)," Don Marr, Mayor Lioneld Jordan's chief of staff, told City Council members Tuesday. According to Gallagher Benefits Services, the city's benefits broker, premiums are expected to increase 8.5 percent to 9 percent on average nationwide next year.
Missy Leflar, city human resources director, said the main reasons are medical inflation and fees associated with federal health care reform.
Leflar said Fayetteville's rate increases were kept in check because of the city's low use rate. The rate decreased from about 112 percent last year to about 68 percent through the first six months of 2014.
That means for every dollar the city and its employees paid to Blue Cross and Blue Shield in premiums, the company paid out about 68 cents in claims. Last year, the insurance provider paid roughly $1.12 in claims for every $1 collected in premiums, Leflar explained.
She said insurance companies anticipate an 85 percent use rate. Leflar warned the city's 2014 use rate will likely climb as policyholders surpass their annual deductible and no longer have to pay for medical expenses out of pocket.
"But if we can continue this experience, maybe we'll get a couple of years under our belt where utilization is below that 85 percent threshold, and actually be able to have no increases or lower increases," Marr said.
It costs $387 per month to insure an individual on the city's traditional plan. That will go to $415 once the 7.2 percent premium increase takes effect. Family coverage is $1,025 per month. In 2015, it will cost $1,099.
The city also offers a high deductible health insurance option, which more than 300 employees and their families switched to after the steep hikes this year.
The monthly premium for an individual on the city's high deductible plan is $204 per month in 2014. It will increase to $218 next year. Family coverage is $540 per month now and will increase to $579 in 2015.
The city pays 95 percent of health insurance premiums for employees enrolled in high deductible plans. For traditional coverage, the city bears 80 percent of the cost for individuals and 65 percent for families.
The city's share of premiums will not change in 2015 for traditional coverage, but, for high-deductible plans, the city will pay 94 percent for individuals and 93 percent for families.
The overall cost of the health insurance package for taxpayers will go up about $179,000, or 5.6 percent, from $3.19 million this year to $3.37 million in 2015.
Employees' health insurance benefits will remain unchanged.
A $1,000 deductible for individuals and $2,000 deductible for families will apply for employees enrolled in the traditional plan. The high deductible plan will have a $3,000 deductible for individuals and $6,000 deductible for families.
Employees on traditional plans will still bear 20 percent of the cost of most doctor visits and hospital stays after their deductible is reached. Blue Cross and Blue Shield will still pay 100 percent of those costs for workers on the high deductible plan once their deductible is met.
The State and Public School Life and Health Insurance Board approved plans Tuesday for roughly 46,000 school employees in Arkansas.
Under the most expensive plan, school employees will pay up to $179.38 per month for individual coverage or $814.92 per month for family coverage in 2015. Under the least expensive option, they will pay $11 per month for individuals and $269.50 per month for families.
The deductible for school employees' premium plan is the same as the city's traditional plan. School employees' basic plan features a higher deductible, however, than the city's high deductible plan. And school employees' benefit structure, including doctor's visits, varies from the city's insurance plan.
Human resources directors in Bentonville, Rogers, Springdale and Washington County all said Wednesday they hadn't yet received health insurance bids for 2015.
NW News on 07/31/2014