Editor’s Note: This story has been updated.
Above: Mayor Pro Tem Dr. David Bonner, left, and Dumas City Commissioner Steve Bodnar in a file photo.
The city of Dumas will have to adjust its definition of a full-time employee for health insurance purposes, but it will receive a rebate for not having any claims that exceeded the $65,000 cap.
Kelly Dunavin, senior account manager with Insurance Management Services, told the City Commission on Sept. 8 the total planning costs of its insurance plan is down 7.5 percent, and it will receive a $17,000 check for not exceeding the cap. The city’s fiscal year ends Sept. 30, but there haven’t been any claims over the cap to date. The city’s health plan covers costs up to $65,000, but anything over that goes to a reinsurer. Dunavin also told the commissioners the city will have to change its full time hours to 30 in order to comply with the Affordable Care Act.
Mayor Pro Tem Dr. David Bonner asked Dunavin about the costs of providing insurance coverage to retirees.
“We have some employees that have asked if they retire early as opposed to working until they’re 65 could we change our health insurance benefit plan where they could stay on the plan and then pay for their premiums,” Bonner said.
Dunavin said retiree plans are “hard to fund for”, but there are a “handful of groups that offer retiree coverage.” She didn’t have the information at the meeting to give the commissioners an accurate estimate for retiree coverage, but she later supplied the city with a projection.
“After running the data through our actuarial product we use, it is estimated that the total plan cost would go up around $146,000,” Dunavin wrote in the proposal. “Please know this is strictly an estimate. The increase could be lower, or it could potentially be much higher. … There is a lot of unknown when a plan is self-funded and adding a new class of eligible participants.
Dunavin said each retiree would have to submit a medial application that “could put the plan at risk.”
“Under ACA, you cannot refuse someone coverage under a group health plan based on a medical questionnaire,” Dunavin wrote. “Therefore, if someone’s medical application comes back with a high cost diagnosis, the carrier could laser (her emphasis) that individual. The city could have to allow that retiree to come onto the plan, but would have to self-fund all of the claims without the $65,000 cap that is in place for everyone else.”
She explained laser as “excluding individuals or setting a unique, higher specific deductible level for individuals who are expected to have large claims, increasing customer liability.”
Dunavin also wrote that “even if a retiree pays the full COBRA rate for coverage, their claims could far exceed that amount.”
“For example, if one of the retirees gets diagnosed with cancer and incurs $100,000 in claims, they have paid in around $6,000 in premiums and have cost the plan a lot more than that,” Dunavin wrote.
The city has 13 employees who are eligible to retire, Human Resources Director Brenda Koehn said. Bonner is the only commissioner who is on the city’s health plan.