City Council Approves HSA Funding Mechanism

OCEAN CITY – The Mayor and City Council made the easiest and least debatable decision this week concerning town employees’ new option to join a Health Savings Account as part of their benefits.

An ordinance, which becomes effective Jan. 1, 2012, calls for the Town of Ocean City to contribute funds to a Health Savings Account (HSA) for employees who elect to enroll in a high-deductible health plan.

“What we didn’t discuss at the time was how we wanted to allocate those funds to the Health Savings Account,” Human Resources Director Wayne Evans said.

Evans presented three options in doing so. The first is to split the annual contribution into two components. On Jan. 1, fund half of the annual contribution, which is $600 for single coverage or $1,200 for couple or family, as well as pay per period, which would fund the remaining half of the annual contribution over 26 pay periods, which is $23.08 per pay for single coverage or $46.16 per pay for couple or family coverage.

The second option was to pay a full lump sum contribution on Jan. 1 and the third option was to fund the contribution on a per pay period basis. Evans pointed out that a lump sum contribution at the beginning of the plan year provides access to funds for medical expenses that may be incurred before sufficient funds have accumulated in the HSA account.

Councilman Brent Ashley set the motion to pay one lump sum contribution on Jan. 1.

“It gives employees some money to use throughout the year, and I think that is the fairest way to go with a new plan like this,” Ashley said.

Council President Jim Hall added that it is also safe for the employees if they are already experiencing health problems.

The Mayor and City Council voted unanimously to approve Ashley’s motion.

The ordinance concerning the HSA derives from changes in town employee health and benefits with discussions dating back as two years ago.

After months of deliberation and multiple vetoes by the mayor, the ordinance states if an employee elects to participate in the high deductible health plan Ocean City will contribute an amount to the employee HSA which the employee can utilize to satisfy deductible charges and other allowable medical expenses.

Single coverage that requires a $1,200 deductible, couple coverage requires a $2,400 deductible and family coverage includes a $2,400 deductible. The town’s contribution to the HSA will match the amount of the employee deductible.