Shopping for health insurance pays off for Salem

SALEM – Shopping around for health insurance paid off for Salem city government this year, with a potential savings of more than $110,000 under a new plan, through lower premiums and discounts.

“We were rather pleased at that, that the annual cost would not go up but would go down,” Mayor John Berlin said this past week.

The new 15-month Anthem plan through Paychex Insurance Agency took effect Aug. 1 and had been agreed upon by all four unions representing city employees in the police, fire, service and utilities departments.

Berlin explained the process of seeking new coverage began after the city received notice April 16 that renewal of the then-current plan with Medical Mutual was going to cost 39.5 percent more than the previous year. The plan was set to expire July 31.

City Auditor Betty Brothers had budgeted for a 7 percent increase, so they were shocked at the nearly 40 percent increase being proposed.

That would have increased the annual cost from $946,556 to $1,320,639 for the same plan and that was not acceptable.

The city started looking for other plans through different insurance agencies, which Berlin said took some time because they had to go through a permission process with Medical Mutual in order for other agencies to be able to get quotes from them. In the end, the 15-month Anthem plan won out.

“We were quite happy. Each agency had offers that were attractive, but this one seemed to be the most reasonable,” he said.

Under the Anthem plan, the cost is expected to total $992,942, dependent on the health of the employees related to how much the city has to pay for the shared corridor or deductibles. That takes into consideration an annual premium cost of $836,762, which is a decrease of 11.6 percent from the previous plan, administrative costs of $7,742 and an expected shared corridor or deductible cost of $148,438 for the city.

Employees will pay more for their deductible, but most will pay less for their premiums. The city also saved by bundling the dental and vision with the health insurance. Employees pay 11 percent of the health insurance premium, with the city paying up to $30 per month for the dental insurance premium and 100 percent of the vision premium. The health insurance premium for singles increased from $373.47 per month to $376.97 per month, with the employee paying $41.47 per month. For an employee plus spouse, the monthly premium decreased from $840.33 to $828.56, with $91.14 paid by the employee.

For an employee plus children, the monthly premium dropped from $728.29 to $636.32, with $70 paid by the employee.

For a family plan, the monthly premium dropped from $1,381.90 to $1,163.69, with $128.01 paid by the employee.

Deductibles for employees increased from $200 to $250 for singles and from $400 to $500 for families. After that the city pays.