Matthews out of ‘insurance business’

Town employees to buy own health insurance, save taxpayers about $700,000

by Kara Lopp

In an attempt to save taxpayers about $700,000, Matthews is likely the first municipality in North Carolina – and one of only a few nationwide – to make employees buy their own health insurance.

The plan, passed by town commissioners during a special meeting Thursday, June 7, calls for employees to purchase their own health insurance with the town reimbursing each employee on a month-to-month basis up to $10,000 per year. Employees also could opt to include flexible spending or health savings accounts. Employees can work with an insurance broker – the town has been consulting with Mint Hill-based E2beneflex – or do the research themselves. Employees would be required to prove insurance coverage before their premiums are reimbursed. The new plan will begin July 1.

Mayor Jim Taylor said he’s “very proud” Matthews is among the first government entities to try a health insurance approach that’s already being used in the private sector.

“We are blazing the trail,” he said. “Our health coverage has been out of whack for years, with changing plans (and) deductibles. We’ve kind of gone outside the box and we can provide the employee base the opportunity to get a better plan at a lower cost to the town by going outside. Frankly, I can’t imagine small towns and middle-sized towns not following our lead – they’re getting creamed on premiums. I’ll be surprised next year if we’re the only ones (in North Carolina) doing this.”

The new plan, however, could mean a federal penalty in 2014 of $2,000 per employee for not providing a group health insurance program. The penalty would be assessed under President Obama’s health-care reform plan currently under review by the U.S. Supreme Court. Even if the town is fined, taxpayers would still come out ahead, Taylor said.

If the town had stayed with its current plan, coverage costs would have increased from 20 to 55 percent, or about $608,000 to $700,000, with the town passing along 20 percent increases to employees for dependent coverage. Health insurance costs increased about 20 percent last year for the town. Among the town’s 130 full-time employees, 128 use the town’s insurance plan. Employees have absorbed continued higher insurance costs while receiving no salary increases since the 2008-09 budget, spokeswoman Annette Privette Keller said.

Matthews hired a brokerage attorney for about $4,000 to review the health insurance option before last week’s vote. Town Manager Hazen Blodgett said the attorney was necessary because staff couldn’t find any municipalities in North Carolina who follow the model and the town wanted to ensure it met all legal requirements for providing employees with health-care coverage.

If an employee is denied coverage by a traditional company, they’ll receive coverage by N.C. Inclusive Health, a state law requirement for government employees. If employees use E2beneflex as their broker, there’s no additional cost to the employees, officials say. The company is paid from third party fees and by the insurance carriers employees choose.