NASHUA – The city is encouraging its employees to enroll in a high-deductible health care plan, and officials adopted an ordinance Tuesday night that makes changes to the health plan section of the unaffiliated employees personnel policies.

The city has to start somewhere, and chose to begin with this group of 135 people, because they are not unionized, officials said. The city has more than 3,000 employees – 2,000 working in the school district and around 850 city employees. Human Resources Director Larry Budreau said most of the employees for the city and the school district belong to unions.

“The unaffiliated or the non-union employees are our starting point,” Budreau said during Tuesday’s special Board of Aldermen meeting.

He and Administrative Services Director Kim Kleiner gave a presentation to members of the board to provide explanation on what the revisions ential, while also taking numerous questions from the board. Once again, because of social distancing, many board members joined Tuesday’s meeting remotely.

As has been previously discussed by city officials, the city’s health care costs have increased considerably, with $3.3 million for the current fiscal year. These costs are projected to rise another $3 million next year. The overall increase of more than $6 million represents a 3% tax increase, and is caused by multiple factors including increased claims, increased prescription drug costs, an aging workforce and more.

Officials have to deal with the groups that have contracts that are expiring as a starting point, because they have to start at the beginning of the process. Mayor Jim Donchess said there is a group of unionized employees who seem likely now to agree to this change, with a number of factors that would be included in the agreement, but that it seems that will probably happen.

“This will mean that whoever gets in on this, their weekly contributions will go down significantly,” Donchess said during the meeting. “If this becomes effective for July 1 for the unaffiliated employees, the amount that the unaffiliated employees will have to give into the city will be reduced by, we think, around 15 percent.”

Kleiner said there are other conversations that are happening, and that officials will have active dealins with the 17 other different unions in the city. Kleiner said last fall, the mayor asked how it is known that the health savings account is saving the city money. From there, officials put it out to their health care consultant, Workplace Benefit Solutions, who prepared an analysis. City officials went back and studied the data as well, with a group that has been involved in preparing a recommendation for the mayor including, human resources and the benefits team, several members from financial services, including Chief Financial Officer John Griffin, Budreau and all of the WBS team. Kleiner said they looked at claims and at average claims by employee per plan, while referencing a slide she had pulled up during the presentation showing fiscal year 2019 claims.

“What WBS had come back and indicated to us was that if the city saw all of our subcribers move to the high deductible health plan, we would save an estimated $6.8 million,” Kleiner said.

In fiscal year 2020, the city had 2,136 subscribers, with 745 of those being single, 519 on two-person and 872 are family.

The legislation adopted Tuesday night is Ordinance 20-011. According to the legislation, the changes made are the following: “Effective July 1, 2020, the following changes will be made to the Health Maintenance Organization (HM) Plan:

• $20 co-pay increase to $25.

• $250 individual / $500 2-person or family inpatient / outpatient deductible increase to $1,500 / $3,000.

• Pharmacy copays increase from $5/$15/$35 ($5/$30/$70 mail order) to $10/$30/$50 ($20/$60/$100 mail order).

• The deductibles in the High Deductible Health Plan with Health Savings Account (HDHP w/ H.S.S.) are unchanged. Deductibles remain at $2,000 individual / $4,000 2-person or family. THe City’s contributions to Health Savings Accounts remain at $1,500 individual / $3,000 2-person or family.

• Effective July 1, 2020, the City H.S.A. contribution will be distributed in 2 installments, one on or about July 1 and one on or about October 1, provided however that if an employee is required to pay more towards his / her deductible than the initial 50% contribution, upon presentation of suitable documentation, the City will contribute the remaining 50% before October 1.

• Employees who join the HDHP w/ H.S.A. at any time other than July 1 will receive a pro-rated City contribution of $125 monthly for a single plan and $250 monthly for 2-person or family plan for each full month remaining in that fiscal year.”

“While we realize we are changing that HMO (health maintenance organization), it is not to shift the health care costs onto employees, but it is to encourage the employees to enroll in the high-deductible health plan, because we do believe it is the most cost effective plan and it offers the same quality of health care that our employees deserve,” Kleiner said.

The city does offer a third alternative, a point of service plan, which is considerably more expensive than either of the other two. The whole city has about 120 people enrolled in that, most of whom are retirees.

Kleiner said, out of all of the city’s subscribers, there are 581 people on the high-deductible plan with the HSA. Budreau believes this started back in 2013, with slow growth since. The reason board members needed to act expediently in order to institute the changes is because the enrollment period for unaffiliated employees and all employees is mid-April.

Adam Urquhart may be contacted at 594-1206, or at aurquhart@nashuatelegraph.com.

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