HAVERHILL — About 2,800 city and school workers, as well as retirees and elected officials who receive city health insurance, will share $1.65 million in compensation for Haverhill switching them to new health care plans, officials said.
In addition to receiving compensation checks, the workers will also save on the monthly cost of insurance for themselves and their families.
Haverhill expects to save $3.8 million annually as a result of new health care plans the city recently negotiated with Blue Cross Blue Shield, Mayor James Fiorentini said. By law, workers affected by the switch must receive 25 percent of the city’s savings — $950,000 in this case.
According to a new state health insurance law, communities are allowed to put workers and retirees into the state health care system or a similar plan without their consent. The city’s workers and retirees chose a similar plan over the state plan, the mayor said.
The first batch of checks will be sent to workers and retirees next September, with another round of checks to follow in September 2015, the mayor said. He said he could not estimate how much those checks will be for.
The City Council approved the mayor’s agreement with the city’s unions and retirees this week, and set aside $131,000 to bolster the health care mitigation fund ahead of the payments. Another $600,000 is already in the fund, set aside as mitigation for previous changes to workers’ and retirees’ health care plans that required them to pay more for coverage. The $1.65 million that workers and retirees will share in compensation comes from the $600,000 plus the $131,000 and $950,000 from the city’s health care cost savings.
“All our workers wanted to stay in our Blue Cross-Blue Shield plan rather than join the GIC (state insurance system),” Fiorentini said. “We eventually convinced Blue Cross Blue Shield to give us a new plan that is better than the GIC and also better than the plan they are currently giving us.”
The mayor said Blue Cross Blue Shield was scheduled to increase the city’s insurance rates by 1.1 percent, but as a result of the city’s option to leave the company and join the state insurance system, Blue Cross Blue Shield agreed to lower the city’s rates by 11 percent.
City workers currently pay $423 per month for an HMO plan, the mayor said. Next year, those workers will see their cost for that plan decrease to $389 per month, he said.
School workers pay $450 per month for an HMO plan. The mayor said those workers will see their monthly cost reduced to $389 next year.
For individual plans, city workers will see their monthly cost reduced from $159 to $145 next year, the mayor said. School workers will see the cost of an individual plan go from $169 to $145, he said.
“Most of the $11 million we have saved in the last few years from health care reforms has been the result of shifting more of the cost from the city to our employees,” the mayor said. “But these new savings are actual cost saving for both the city and our employees.”
The new health plans are the result of local-option municipal health care legislation passed by the Legislature two years ago and adopted by Haverhill’s City Council last year. The new law gave the city the right to make unilateral changes to employee coverage following a bargaining window.
The health care law requires that at least 25 percent of any achieved savings must be given back to employees in cash or enhanced benefits such as health and wellness programs. The mayor said city workers and retirees insisted on getting their mitigation in the form of checks.
Under the process set by the new state law, communities present a proposal for so-called plan-design changes or suggest transferring employees into the state’s Group Insurance Commission. Fiorentini said city workers did not want to join the state insurance pool.
“Our unions and retiree representatives stepped up to the plate to help us design a plan that everyone could live with,” the mayor said. “Every single union and retiree representative signed off on the new plan.”