Council Creates Employee Benefits Trust, Approves Health Insurance Coverage
West U. City Council now has an alter identity as the trustees of the newly formed Employee Benefits Trust, created to save the city taxes on employee insurance benefits.
The Texas insurance Code allows for a single employer entity to create a trust that awards contracts for employee insurance, which can save cities from 1.75 percent to 3 percent in taxes. West U. will save about $35,000 in taxes. Council will act as trustees.
At last night’s council meeting, council voted to create the Employee Benefits Trust, recessed the regular council meeting, convened as the Employee Benefits Trust, voted to award the city’s healthcare contract to United Healthcare, authorized payroll deductions for insurance and the new employee contribution levels. Council than reconvened, and authorized a transfer of funds to the trust. The funds will be transferred monthly to cover the invoices, which will be based on employee enrollment. The first invoice should come in August, for September’s coverage.
United Healthcare’s option 9 plan was approved, which will affect employees insuring their children or families. Several large, ongoing medical claims by West U. employees in the last year decreased the amount of health insurance carriers that submitted proposals for coverage, and increased the cost of those that did. The city received two proposals – one from Aetna and one from the current carrier, United Healthcare. Blue Cross Blue Shield submitted a letter to the city, declining to participate because their rates would be more than 50 percent higher than the current cost.
Currently, city employees can chose to insure themselves as an individual, or their entire family. Individual coverage is covered 100 percent by the city; employee plus family is covered at 80 percent. The new structure will provide for employee, employee plus child, employee plus spouse and employee plus family.
Individual employees would see no change – employees plus family could pay an additional $125 a month for coverage. Council hopes to offset the cost by a $1,500 cost of living salary increase due in September.
The coverage itself will change as well – although city representatives say the out-of-pocket expenses versus deductible will essentially be a wash with the current coverage. The co-pay for visits to specialists would increase from $25 to $40.
Costs are expected to go down next year, as the wave of high-cost claims goes down.