Town anticipates $1 million savings with health care switch to HSA

Town anticipates $1 million savings with health care switch to HSA

Fire, rescue and town employees affected; police contract pending

CUMBERLAND - Over the next three years, taxpayers will save nearly $1 million over the cost of health care premiums for 107 town employees - 17 rescue personnel, 70 participating municipal workers, and 21 on the executive staff - by moving them off traditional Blue Cross and Blue Shield's Healthmate Coast-to-Coast and into a newer kind of plan called Health Savings Account, or HSA.

The HSA plans take effect in January, 2014, but the change was negotiated this year in the three-year contracts for the International Association of Fire Fighters Local 2725, which represents the Rescue Service, and the Cumberland Town Employees Union. Executive staff members aren't unionized.

In shifting to the HSA, the CTEU and the rescue members all received 4 percent retroactive raises for the fiscal year that ended on June 30.

Going forward, they'll see 2 percent raises a year for the next three years.

The amount saved through 2016, $976,410, is the net gain after the cost of benefits and salaries were subtracted.

According to Town Hall numbers, the net savings on Rescue Service health care will be $208,770.

On municipal workers, the net savings is $481,243.

For executive staff, the three years of net savings will be $286,397.

Projected savings on the 21 members of the Town Hall executive staff assumed no upcoming raises.

Still pending is a resolution with the unionized police officers. Finance Director Brian Silvia told The Breeze that $780,000 could be saved over three years if 46 unionized police officers accepted the plan.

Unlike the municipal and rescue estimates, that number is on the high side because it wasn't adjusted to reflect any salary increases.

The savings to Cumberland comes in two ways: Employees are contributing more toward their health care coverage, while Cumberland saves 33.5 percent over the cost of traditional coverage.

Members of both the rescue and municipal unions are now contributing $1,000 a year for single coverage and $2,000 a year for family coverage, although those hired recently are paying in $2,000 for single and $4,000 for family.

The money is banked for them and accessible for health care costs in excess of routine annual checks and testing that comes at no charge. Whatever remains after the year is rolled over and available in ensuing years. Employees must cover costs that exceed their banked money until a deductible is satisfied.

While the change is a big money-saver for the town, Mayor Daniel McKee told the Town Council it will benefit most employees, too. Noting that most employees require no more than the free annual check-ups, he said central to the coverage is a pot of money that if not needed for coverage stays with the employee.