Healthy plans for city workers

NASHUA – City of Nashua workers on average pay between $19 and $53 per week for their health-care coverage, depending on the plan they choose for themselves and their families.

Those contributions fall below the national average that American workers typically pay toward their own health-insurance plans for family plans, but is higher than the national average for single-coverage plans.

Over the past year, a number of city unions have made health-care concessions, agreeing to pay more of their premiums and higher co-pays for doctor visits and prescription drugs.

Still, some aldermen have argued that city workers get a sweet deal in benefits compared to private industry. These aldermen have said they’d like to see more concessions in future contracts.

So, how do city workers’ health-care benefits stack up compared to national averages?


According to statistics provided by the city human resources department, the city annually contributes an average of $4,768.53 per worker for single-plan health insurance, while on average, each worker annually contributes $1,028.23, or about 17 percent of the total cost.

For two-person plans – commonly, a worker and spouse – the city pays on average of $9,537.04 per worker, while the employee on average contributes $2,056.89, or just short of 18 percent of the total cost.

For family plans, the city pays $17,166.67 per insured employee, while city workers on average pay $2,776.04, or about 14 percent of the cost.

In 2008, the average American worker paid $721 for single coverage and $3,499 for family coverage per year, according to the National Coalition on Health Care.

Last year, not including employee contributions, single plans cost employers an average of $5,800 and family plans an average of $13,000, according to the coalition.

That breaks down nationally to workers on average paying about 12 percent of premiums for single-coverage plans and 26 percent for family plans. The coalition doesn’t keep statistics on two-person plans.

The Nashua city workers’ average contribution of 17 percent for single-coverage plans splits the difference between the two types of plans offered to city workers.

One is health maintenance organization plans, or HMOs, which require members to see doctors within a specific network of health-care providers. For HMOs, city employees pay 10 percent of health premiums.

The other is point-of-service, or POS, plans, which give workers more freedom to pick and choose doctors. For those, city employees pay 20 percent of the cost of premiums.

Health-care costs to the city and the amount of employee contributions has been an issue in the city for much of the last few years, as the board of aldermen approved a slate of contracts covering teachers, school secretaries, police officers, firefighters and other employees.

For each of the contracts, workers were required to pay a greater share of their health benefits. Employee contributions to HMOs doubled, from 5 percent to 10 percent, as did contributions to POS plans, from 10 percent to 20 percent.

Employees also contribute $10 co-pays for doctor office visits and $50 co-pays for emergency room visits.

Some aldermen have said they’d like to see the share of employee contributions continue to increase as future contracts are negotiated.

As for the latest round of contracts that doubled contributions, “We still have one contract we’re finalizing, then everybody will be on board,” said Dan Guerrette, the city’s human resources manager.

The last contract is for an American Federation of State, County and Municipal Employee union.

“That was our goal in the last round of contracts, and that’s where we hope to be by July 1,” Guerrette said.

For fiscal 2010, which starts July 1, the city’s cost in health benefits comes out to about 22 percent of what it pays in wages.

For the city’s fiscal 2010 budget, employee health-care benefits are estimated at $25,695,632. Of that total, the school department accounts for $17,804,503, the police department $2,597,828 and the fire department $1,934,881.

“Most of the city health plans are self-insured . . . essentially, the city is like the insurance company,” Guerrette said. “We pay all the bills. We work with Anthem and Harvard as our plan administrators.”

Anthem Blue Cross and Harvard Pilgrim are two giants of the health-insurance industry in New Hampshire.
Anthem and Harvard, not the city, decide which medical procedures are covered and which aren’t.

The city also receives what’s called “stop loss insurance” from those companies. Stop loss covers claims of more than $200,000. If, for example, the city faces a claims case of $1 million, the city would get $800,000 back from stop loss insurance, Guerrette said.

One union for police officers is fully insured, meaning the employees’ claims are paid by the insurance company, not the city.

For all of the other insured employees, “We monitor the claims and we pay the claims on an ongoing basis,” Guerrette said.

“Last year, we had a good year on the claims side. We experienced a reduction of 4 percent. That gave us some good footing. Our claims were lower than the trend in the industry, which is about 10.4 percent.”

Types of plans and percent of employee contributions vary across the state, sometimes with workers in different departments in the same town paying different rates.

Most towns require employees to contribute between 5 percent and 20 percent of health-insurance premium costs.

In Manchester, employees pay 5 percent of premiums for HMOs and 12.5 percent for POS plans.

Because of the complexity of plans and varying costs, it’s difficult to compare one town with another, said Bob Sherman, president of the Nashua Teachers Union.

Sherman has worked through the complexities of health-insurance costs from both sides of the table. Besides shepherding the largest city union, he also sits as a member of the budget committee in the town of Pelham.

Take, for example, the common 80-20 split for point-of-service plans. For employees who pay 20 percent of the premium, what a worker pays varies with the costs of different plans offered.

“For some of the towns, it’s against the more expensive indemnity plans,” Sherman said. “Now, you’ve the apples and oranges situation.”

Because the city is self-insured, it’s exempt from a new state law that allows young adults up to age 26 to be covered under their parents’ health insurance.

Union members have said they’d like to be able to have their children who just graduated from college to be covered under their health-insurance plans, Sherman said.

The city offers health insurance to retirees, but they pay 100 percent of the premium at no cost to the city, Guerrette said.

“We have about 3,000 plan participants, including employees and retirees,” Guerrette said.

That figures out to about 6,500 “covered lives,” meaning employees, spouses and family members, he said.

For retirees younger than 65, “we give them the same plan the employees have, but because they’re paying 100 percent of the premium, that pretty much covers the claims,” Guerrette said.

Retirees older than 65 and COBRA participants also can get insurance through the city, but they also pay 100 percent of their premiums.

COBRA participants are former employees or their dependents who are eligible under federal law to continue their medical coverage in the city’s plan for a specified period.

A lot of private companies have gotten out of offering retirees insurance because it’s so expensive, Guerrette said.

Also, private companies use different modeling. Some have higher-salaried employees pay a higher percentage of their contribution to their premiums, he said.

Budgeting for insurance claims can be tricky, and the city has to consider long-term trends in the insurance industry, Guerrette said.

Toward the end of the year, the human resource department looks at the budget to see how the city is trending and checks with plan administrators to verify data, Guerrette said.

“It gives us a projection of where we think we’re going to end up at the end of the year for claims,” he said.

This past year was a good one for Nashua. The city paid claims totaling $27 million, down 4 percent from the previous year.

“With self-insured plans, you have to be careful,” Guerrette said. “You might have one good year, but next year could be really bad. So you really want to try to set up the system so you have a little bit of growth each year.

“The average increase next year for a premium is 2.4 percent, which is good. That’s nice, but you don’t want to go too low, because you need to protect the continuity of the plan.”

It’s also crucial to have reserves to cover claims if money in a plan falls short.

“That’s a little more challenging than a fully insured plan,” Guerrette said.

In a fully insured plan, the insurance company tells you what it paid out last year and raises the premium accordingly.

For self-insured plans, as long as it’s going reasonably well, you can manage it on your own, Guerrette said.

Patrick Meighan can be reached at 594-6518 or