Cookeville City Council Approves Employee Health Insurance Plan Changes

Cookeville City Council approved several changes and updates to its Employee Health Insurance Plan.

After several bad years, City Manager James Mills said it was time to make changes to the plan to save it from getting to a “dangerously low” fund balance. The city approved a plan that increases premiums with the city covering 85 percent and plan-holders contributing 15 percent.

“Which has the least impact on our employees,” Mills said. “If you ask, I recommend we pursue option one. But this is a significant increase for the city. The city will be paying, city-wide including utilities, about an additional $2 million in premiums.”

Mills said the options presented Thursday night will get the city through the next year. After that, Mills said that they might need to revisit the plan again. If insurance trends continue as they are now, Mills said he believes it will be difficult for the city to remain self-funded.

Finance Director Brenda Imel The city currently covers about 550 and almost 1,200 individuals. She said the biggest group impacted will be retirees. New employees hired after the new insurance plan takes effect on January 1st, 2023 will not be eligible for the city’s retiree insurance plan.

“The impact of the total changes using August 2022 participation, the proposed increase in both the medical and dental premiums is estimated to generate about $7.8 million going into the plan, “Imel said. “The city will be contributed about 76-80 percent of that as it has traditionally done in the past. Going back to my cash flows, if you look at FY 22 the total premiums collected were $5,145,000. So if we can get the premiums up to $7.8 million, that should benefit the plan going forward.”

The city also adopted a new Medicare Advantage Plan for eligible retirees, council members, city judges, and city attorneys hired, elected, or appointed after July 1st, 2017. Those individuals would be removed from the city’s insurance plan, but would be able to obtain coverage through a city-sponsored Medicare Advantage Plan.

“The cost for this will be slightly more for those in this group, but we believe the benefits are as good or better than what we currently provide,” Mills said. “For example, the maximum out-of-pocket for prescription drugs in the Medicare Advantage Plan is $1,000, which is better than our current plan.”