Decatur city employees could soon pay more for their health insurance if the City Council accepts a recommendation by the Personnel Board.
The Personnel Board accepted at its May meeting Human Resources Director Richelle Sandlin’s proposal to change the employee’s share of health insurance premiums from 8% for single coverage and 12% on family coverage to 15% across the board.
The recommendation now goes to the City Council for consideration.
Currently, individual coverage costs city employees $40.50 per month, with $421.50 paid by the city. Family coverage costs the employee $140.50 per month, with the city's share at $1,000.50.
Sandlin said this change would put the city-employee split more in line with neighboring cities like Athens, Madison and Huntsville. However, employees would still pay a smaller percentage than they typically do in the private sector.
Sandlin said the city increased the employees’ health insurance premiums in 2015 “but the city continues to absorb nearly 100% of any cost increase each year. The CFO and I agree we need to talk at some point — we need to talk about a more even cost share rather than these arbitrary percentages.”
The change would reduce the city’s cost for its 340 employees by $200,000, bringing the annual cost to $6.9 million, she said.
Sandlin said the city is continuing to add employee benefits. It recently added cancer coverage for firefighters, and she’s optimistic that it will be moving all full-time employees to Tier 1 in the state retirement system. This would allow all employees to be vested after 10 years, instead of 25 for Tier 2 employees, and increase the city's contribution to retirement from 12.2% to 14.9%.
“We would like to make this change (in health insurance premiums) at the same time as when we give cost-of-living raises, although I’m not sure what will happen this year because of the coronavirus pandemic’s impact on our budget,” Sandlin said. “But to do these things there’s got to be more of an even balance.”
She said it's possible the increased cost to employees would be phased in over more than one year.
Stacy Rose, president of the Decatur Firefighters Association Local 1437, said he’s aware that there’s been talk among city leaders about raising city employees’ share of the premium expenses.
“Nobody is for an increase, nobody likes the additional cost,” Rose said. “The benefits package is a draw. Right now, it’s a decent benefits package but increasing the cost is going to make it hard to retain employees.”
Rose said people take government jobs that pay less than private sector jobs because of the better benefit packages.
Councilman Charles Kirby said it makes sense for the council to consider increasing the employees’ share on health insurance premiums given that a recent city survey showed employees are more interested in increased take-home pay than better benefits.
“We don’t get credit for providing nice benefits, so why shouldn’t we look at increasing their share of the cost?” Kirby said.
Rose said the importance of benefits depends on age and health.
“A lot of employees look at the whole picture, especially as they get older,” Rose said.
In comparison, Athens HR Director Marsha Sloss said her city is at the 85-15 split with employees for health insurance that Sandlin has proposed for Decatur. Sloss said increasing the employee percentage to ease pressure on the city budget is under consideration.
“We discuss changing our percentage every year, and we will continue to discuss it,” Sloss said last week. “But we know it’s not an easy change.”
Sandlin said Madison and Huntsville are also at 85-15.
Hartselle Mayor Randy Garrison said a single employee only pays $20 a month, or 4% of the $494 insurance premium. Coverage for a family of four costs the employee $376, or 31% of the $1,206 premium.
Morgan County Commission spokeswoman Sheryl Marsh said county employees pay 14% of their health insurance premiums. A single employee’s cost is $64 and family cost is $167.
The annual Kaiser Family Foundation Employer Health Benefits Survey found that, in 2019, the average annual premium for single coverage in private business rose 4% to $7,188, and the average annual premium for family coverage rose 5% to $20,576.
The survey found covered workers contributed 18% of the cost for single coverage and 30% of the cost for family coverage, on average, with considerable variation across firms.
The survey also says 57% of private-sector firms offered health benefits to at least some of their workers.