October 16, 2008
Keeping down health costs with employee buyouts
For employers, one way to reduce employee health insurance costs is to get someone else to pay for it--off loading costs to a business, government university or not-for-profit that employs the spouse of an employee.
One technique is to require employees to make large contributions toward health benefits for themselves and their dependents, which discourages employees and dependents from being covered by both spouses insurance policies. Another is to give cash to employees who agree to be covered under a spouse or domestic partner's insurance policy.
Nassau County, hoping to save "millions of dollars," is expanding its buyout program. The Town of Thompson, rapped by a critical audit, plans to adopt one.
Ten years ago, the Town of Thompson was told by state auditors that it should offer insurance buyouts to its employees who have insurance coverage through their spouses. It ignored the advice.
The town, located in Sullivan County, provides insurance coverage for 93 employees and retirees, costing the town monthly premiums ranging from $592 to $1,259. It pays 100 percent of premiums for individuals. The town is expected to pay $1.16 million for insurance this year.
An audit released this week identified at least five employees willing to accept a buyout. Using a buyout incentive of $1,600, the audit calculated the town could have saved $48,500 in 2007 and $51,500 in 2008, a two-year saving of $100,200. Town officials now say they will adopt a buyout plan. (Press release here.)
In Nassau County, only 577 of its 10,000 employees take the buyout. Newsday reports, "Currently, an individual policy costs the county $7,108, and a family plan, $15,105, annually. The respective yearly buyback is $500 and $2,000."
County officials are looking at whether they can increase the participation rate by offering larger cash buyouts.
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