Board of Aldermen 3-31-2020 Page 6
discuss this and break this out, a little easier for everyone to understand.
So the cost right now in Fiscal 20 for a family plan is approximately $30,590.00; 80% of which is borne by the
City or $24,000.00 roughly for 72%. The employee pays annually $6,118.20. With the Fiscal 21 the
employee cost would change. So what happens when you have plan redesign is as deductibles are raised
the cost of the plan decreases. So in this plan for the HMO Plan, if we were to accept the redesign, there
would be about a 15% reduction from the $6,118.00 in cost to $5,181.36 annually. So roughly that is about a
savings of $936.84.
| want to be careful when we talk about the inpatient and the outpatient exposure because this is a deductible
and an employee is only going to incur this if they have an inpatient experience with being hospitalized or an
outpatient surgery, whether that be a day at the hospital or whether it be at a surgical care center. | reached
out because | wanted to have something to put it in perspective, so | reached out to WBS earlier today and |
asked them if they could tell us what percentage of our HMO and POS population had an inpatient claim.
And they responded very quickly as they always do after doing research. They said in Fiscal 19 only 5% of
that population had a hospitalization claim. What they couldn’t nail down for me in this short amount of time
was how many of those employees had an outpatient, that requires a little bit more detail. But they did note
that in Fiscal 20, to date, that is like | said earlier only paid claims through the end of February, we’ve only had
2% that have had an inpatient hospitalization.
So | think that provides a little bit more of a perspective on what percentage of the population might incur that
$3,000.00 deductible. If an employee was to take their new cost and they did have an inpatient experience,
the savings that they are saving in the premiums, their exposure after that premium change would be roughly
$2,000.00, plus any routine copays. Now we want to note again preventative care is always free, that does
not fit into this model. If you are having an annual exam, whether it is on the HMO or the HSA, preventative
care is free, that is 100% covered.
So move over to the HSA which is what we are encouraging our employees to do. Let’s look at that fora
minute. If you go from the current HMO Plan to the new, well it’s our existing HSA but it hasn’t been
memorialized in our literature before as far as the merit plan. If we look at that, it is 19% savings annually
from $6,118.00 to $5,274.00. Again, the City gives you $3,000.00 for a family which is contributed to your
Health Savings Account. There is a $4,000.00 deductible, so the employee’s exposure after the City has
contributed the $3,000.00 is $1,000.00. But let’s look at that savings that they are getting from moving over
from the HMO, which is another $843.00, that exposure now is $156.00.00. True, again, we want to — there’s
other costs. If you were to go to the doctor during the year, all you are going to incur after that, because of
the $4,000.00 deductible is $1,000.00 less the savings for $156.00. So while we realize we are changing that
HMO Plan it is not to shift the healthcare cost on to 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 healthcare that our employees deserve.
Next side — and back to Mr. Budreau.
Larry Budreau, Human Resources Director
Thank you, Kim. We are talking about making a change that would only affect the unaffiliated employees on
July 1°, that’s about 135 people. We do know that the conversation is already being broached at least one
negotiating table this spring. But relative to insuring employees had some opportunity to understand what we
were seeking to do. We invited all employees to have a meeting with Mayor Donchess and that invitation
went out on March 9". We also on March 9", aware of the piece of the Merit Ordinance, Nashua Revised
Ordinance 50-3 Amendments, requires that any changes being presented to the Board by the Mayor, to the
unaffiliated plan should be discussed with City Directors and Department Heads, and providing them a
specific opportunity for comment. We accomplished that by inviting them to an open house in Room 208 with
myself, Larry Budreau and Kim Kleiner.
