Council approves insurance change, payment to employees

MARENGO — Changing health insurance companies will save the City of Marengo about $18,000.

Council members voted last week to switch from United Healthcare to Wellmark Blue Cross/Blue Shield after Marengo Financial Manager Ellen O’Rourke explained how it could save the city money.

The City’s bill for United Healthcare coverage was going to increase by $10,000, O’Rourke said. If the city switched to Wellmark, it could save $41,000 in premiums.

But under the new plan, employees would see their out-of-pocket caps increase by $1,500 for individuals and $3,000 for families, said O’Rourke. The city’s contract with the union stipulates that the city can’t change insurance unless the new plan is equal to or better than the United Healthcare plan agreed to.

The increase in the cap keeps the new insurance from qualifying as equal or better, O’Rourke said.

However, the plan would be equal or better if the city paid that difference to the employees, putting the money into their Health Savings Accounts — if they have them — or giving them cash, which would be taxed, if they don’t have HSAs.

“We would still be ahead $18,500,” O’Rourke said.

The deductible for individuals under the current plan is $3,200, said O’Rourke. That would increase by $2,300 if the city keeps the current plan. The deductible for a family would increase by $4,600 for a family now paying $6,400.

But O’Rourke said that deductibles are not as important to insurance companies as is the cap for out-of-pocket expenses.

That would increase from $4,000 for an individual to $5,500 and from $8,000 to $11,000 for a family.

Councilman Travis Schlabach was reluctant to hand out money to employees for insurance. “We’re paying to cover expenses they may not have,” he said.

Schlabach said he doesn’t want the city to get into a position in which it is paying employees every year to cover increases in out-of-pocket expenses. He asked that the city stipulate that this is a one-year deal.

“It has to be,” said O’Rourke. The city and the union have to negotiate a new contract next year.

“All it’s doing at this point is making us right to save $18,000,” said O’Rourke.

“I walked in the room dead set against this,” said Schlabach. He didn’t like the idea of giving employees “free money.”

However, Schlabach voted in favor of the insurance change, as did the other city council members who were present, because “it saves the city money.”

Councilman John Hinshaw was absent from the meeting.