Health Reimbursement Accounts part of proposed city health insurance plan

Talk about it

The new health insurance plan that the city of Hudson is proposing for its employees would require them to pay significantly higher deductibles.

But the city also would contribute money to employee Health Reimbursement Accounts that would cover a major portion of the deductibles.

The City Council at its Oct. 20 meeting voted to withdraw from the state health insurance plan.

The city is instead hoping to enroll its 75 employees in a plan offered by Preferred One, a health benefits management company based in Golden Valley, Minn.

Associated Financial Group, contracted by the city to find a less expensive health insurance plan for city employees, recommended going with Preferred One.

According to an issue sheet given to City Council members, the Preferred One insurance would have a $4,000 deductible for family policies and a $2,000 deductible for single policies.

The amount of money the city would contribute to employees’ HRAs would be determined in negotiations with the unions representing city employees, according to the issue sheet prepared by City Administrator Devin Willi.

The current contracts with the labor unions expire at the end of 2008. They require that any new insurance plan offered to employees be “substantially equivalent” to the state plan.

Willi and Mayor Dean Knudson were optimistic that the Preferred One plan will be found equivalent to the state plan.

“This is a very extensive plan,” Knudson said.

He said many local governments have abandoned the state health insurance plan for less expensive private-sector plans.

With premiums increasing at 6 to 8 percent a year under the state plan, the city can’t afford it any longer, Knudson said.

In 2008, the city paid $1.34 million in premiums for its employees. The premiums for the state plan were expected to increase 10.8 percent, to $1.49 million, in 2009.

The city now pays nearly the entire premium for its employees. Those with the best policies pay a small percent of the premium.

The total premiums for the Preferred One plan in 2009 are expected to be $1.09 million.

The maximum lifetime benefit per family under Preferred One would increase to $3 million from the $2 million limit under the state plan.

Routine health exams, lab work, immunizations, lab tests, cancer screenings, prenatal and child health services, and radiology services would be covered at 100 percent with no deductible as long as employees use Preferred One network providers.

Knudson said Preferred One has a large number of medical providers in western Wisconsin and Minnesota, including Hudson Physicians and Hudson Hospital.

“This is a win-win situation for our employees and the city,” City Council member Alan Burchill, who is in the insurance business, said of the planned move to Preferred One.

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