The City of Industry plans to switch its health care provider in hopes of saving $1.5 million per year on medical costs.
Earlier this week, Transparent California listed Industry as paying one of the highest amounts in the state for its employees, with roughly a third of its employees receiving about $70,000 in annual benefits in 2015.
City Manager Paul Philips said the city will move from AETNA to a program offered by CalPERS.
“I think we’ll get a little bit better service in the sense that the co-pays will be lower and they cover more extensively than the AETNA program we’re in now,” Philips said.
A company hired by the city to review its benefit programs found that Industry’s medical premiums were “well above the market” when compared to cities in the surrounding area. Their analysis determined the city could pay less and also get more robust coverage, according to a staff report.
The city reimburses its employees and retirees for out of pocket expenses. A city report indicated part of the savings would come from increasing the coverage to decrease the amount the city paid for reimbursements for co-pays and deductibles.
Part of the shift includes opening Health Reimbursement Arrangement Trusts for each employee. The city will put $4,000 in each account at the start of the year to use at pharmacies and medical facilities, according to the staff report.
The city’s current health insurance through AETNA caps out of pocket expenses at $4,000 per individual and $8,000 per family.
In 2014, Industry paid $57,773 — $4,800 a month — for health, vision and dental insurance for a dozen employees each, according to data provided by Transparent California. By 2015, the top end of Industry’s payouts increased by $12,000, with 11 employees receiving $69,524 — $5,800 a month — in health benefits.
The sharp increase surprised the staff at Transparent California so much the group’s executive director Robert Fellner emailed the city to verify there wasn’t a mistake, but the city’s staff responded that they found no errors.
Philips said he expects those individual costs will decrease under the new health plan.
“We think we’ve done a good job in exploring every opportunity and also being fiduciarily responsible in what we’re doing,” Philips said.