Deerfield budgets for higher health care costs in coming year
With next year’s budget in the formation stage and the benefits of 360 employees etched in contractual stone, Deerfield Beach’s city manager wants to revamp the health insurance plan for city employees.
Because the city plan is self-funded, the premiums and co-pays charged of employees, plus the city contribution, must cover the expenses incurred by plan members.
In the next year, however, the city is budgeting an increase in the budget line for employee health insurance in anticipation of an increase in health insurance claims of $1.057 million. At the same time, property values – and property tax revenues – have dropped 27 percent from their peak four years ago.
To resolve the dilemma in a way palatable to taxpayers and plan members alike, Deerfield Beach’s city manager, Burgess Hanson, has hired a risk analysis manager, Will Reed.
Reed said the city health plan is a type of “Cadillac Plan” and subject to the Affordable Care Act’s 40 percent excise tax effective in 2018.
According to one analyst, the 40 percent tax is expected to effect as many as 75 percent of health plans if they are not restructured, which is what Reed was hired to do.
“The city was grandfathered in under the Affordable Care Act but now we [are losing] our status and therefore we have to follow all the rules,” such as covering wellness visits and preventative care, Reed said.
Reed proposed replacing the plan in January 2016 with a three-tiered plan offering varying levels of coverage at varying prices. Recognizing that it is hard medicine to swallow, Reed plans sessions with employees beginning this month to lay out a solid, statistical argument supporting the change.
Under the three-tiered plan, the cost of providing health care will now be shared more equally with employees.
Changes begin in January, when office visit copays will increase from $10 to $25. Specialists copays will rise from $20 to $60. The maximum out-of-pocket for a family will double, from $1,500 to $3,000.
“That’s a significant increase for the employees,” said District 4 Commissioner Bill Ganz. “It is a tremendous change.”
“We have tried to be as gentle as we can,” Reed said. “But the numbers are so large, we don’t really have a choice.”
The city has set public hearings on the proposed budget for 6:45 p.m. on September 3 and September 15. Both are at city hall, 150 N.E. Second Avenue. For information, see www.deerfield-beach.com, or call 954-480-4200.