North Little Rock will pay $770,730 more in 2015 to cover the full cost of health insurance premiums for its city employees to help offset higher deductibles for workers and their families, the North Little Rock City Council approved Monday evening.
The city is changing health insurance providers from QualChoice to United Healthcare, with the latter offering the 13 percent rise in the city's cost. That increase was the lowest received out of 40 different proposals submitted in a bid process through the city's insurance broker, Stephens Insurance, city Finance Director Karen Scott told the council.
Of the other four finalists, Scott said, two offered an increase in the city's benefits package of $1.3 million -- one being from QualChoice -- and another would have cost the city $1.9 million more.
Council members approved the switch to United Healthcare, 7-0. Alderman Bruce Foutch was absent.
North Little Rock pays 100 percent of its employees' health insurance premiums and 75 percent for their family members -- $67.75 per two-week pay period for those premiums -- who are enrolled in the city plan. North Little Rock has 850 full-time employees. The city's total cost will be $6.87 million.
But Mayor Joe Smith said employees have been told that the full payment by the city could end next year.
"My goal was to get this price tag low enough that we could afford to absorb it this year," said Smith, noting that pay raises won't be in the new budget. "If these costs continue to rise, our employees will have to begin to participate."
The City Council also unanimously approved $500 bonuses, effective in December, for 246 full-time, nonuniformed employees who aren't scheduled for a step-pay increase this year. City employees last received an across-the-board pay raise in July 2012, getting 3 percent increases.
Scott said that an early projected increase to continue with the same QualChoice plan was 37.2 percent, before the company submitted revised changes. That increase would have meant a $2.27 million additional cost to the city. The city bids insurance coverage in odd years but went ahead and requested Stephens Insurance to obtain bids this year. North Little Rock has used QualChoice since 2008.
"It was not our year to bid out, but we thought it would be the prudent thing to do," Scott said.
Employees also were polled about what changes would create the least burden on their family budgets, she said.
The major changes with the new plan are an increase in deductibles from $500 to $1,000 and out-of-pocket maximums rising from $4,000 to $6,600. The share of cost workers pay after their deductibles are reached will stay the same.
"We wanted to share with employees early that we were looking at a significant change in their insurance," Scott said. "At the end of June, only 311 [employees] had met their deductible. We truly felt like raising the deductible to $1,000 would be the least painful."
Another change was dropping vision insurance that Smith said "very few" employees used.
"The amount for us to continue vision insurance is about as much as a police car would cost," Smith said. "I'd rather have the police car."
Metro on 10/28/2014