OCEAN CITY – The Mayor and City Council returned on Tuesday to a motion made a couple of weeks ago to change health benefit co-shares for new employees in efforts to cut costs.
The current rate for the town’s HMO plan is a 90/10 co-share, and for the PPO plan it is an 85/15 co-share. The proposed plan is to shift the HMO to a 90/10 co-share for the employee and to add a 80/20 co-share for their spouse and children. For the PPO plan, the proposal is an 85/15 co-share for the employee and to add a 75/25 co-share for their spouse and children.
With the current HMO plan, the employee pays an annual cost of $460 and around $1,500 to add their family. The new HMO plan would cost the same for the employee alone but run them about $2,500 to add the family.
The current PPO plan costs the employee an annual cost of close to $900 and around $3,000 for their family. The proposed PPO plan will cost the same for the employee alone, but it will cost them a little over $4,000 to add their family.
Councilman Joe Hall said he felt the proposed change in the rates is a responsible adjustment.
“Both plans are going to be offered to the employee,” Joe Hall said. “The employee has the option, if he wants the higher level, the PPO service, he can pay a little bit more, or he can choose the HMO.”
Joe Hall felt that the two plans were different but it gives the employees the option of what level of service fits their lifestyle.
Councilman Lloyd Martin did the math for the council.
The current HMO plan, the 90/10 co-share, costs the town $1,142.06 a month. If the town were to accept the proposed change in rates, a 90/10 co-share for employees and a 80/20 co-share for dependents, it would cost the town $1,053.52 a month, which comes to a minimal difference when compared to the current plan.
“The town will save $89 [a month] to do this,” Martin said.
Martin also pointed out that health insurance rates increase an average of 11 percent a year.
“We haven’t given employees a pay raise in the last two years…they’re paying their part of the 11 percent,” Martin said
Martin said he does support the health benefit being tweaked, but he doesn’t want to make any changes too fast.
“I want to look at all the plans,” Martin said. “What is it really going to save the town? What kind of employees are we going to attract? …I want to be competitive with other towns.”
Joe Hall responded that there are department heads that need to hire more staff and that the council is not allowing any other hires until it comes to the conclusion on new hire benefits.
“If we can’t come to an agreement, the employee freeze is going to continue,” he said. “I think this is something we can offer to new employees.”
Councilwoman Mary Knight agreed with Martin.
“I don’t think you’re going to get the kind of caliber person…that we are so used to, and our tourists are used to,” she said.
Mayor Rick Meehan felt it was important to continue an examination of different options. He pointed out to the council that cost cutting is not a new battle the council has taken on, but it goes back two and a half years ago to the previous council. During that time, the council reduced the operating budget by over $7 million.
“I think the health insurance is a viable thing to look at because it is a percentage and the costs keep going up, and I think our employees realize that,” Meehan said. “We can work with them and get them to buy into with what we’re trying to do with health insurance but when you do that on top of cutting salaries, it starts to get significant. That changes the lives of these people.”
Joe Hall made a motion in effort to move closer to lifting the hiring freeze. His motion was to accept the proposed rates of a 90/10 co-share for the employee and an 80/20 co-share for the dependent for the HMO and an 85/15 co-share for the employee and a 75/25 co-share for the dependent for the PPO. His motion was seconded by fellow Councilman Brent Ashley, and passed in a vote of 4-3, with Doug Cymek, Mary Knight, and Lloyd Martin in opposition.
“Now you have one more piece of the puzzle to get your new employees,” Joe Hall said to City Manager Dennis Dare.