Cookeville Employee Health Insurance Changes Come With Goal Of Maintaining Self-Funding Practice

Major changes coming to Cookeville city employees’ health insurance after several expensive years, with the goal of having the city retain its self-funded insurance.

Finance Director Brenda Imel said after speaking with advisors, it was strongly suggested the city do what it can to be self-funded, rather than go to companies like Cigna or Blue Cross Blue Shield.

“If you have a good year and those premiums exceed what your claims are for that year, nobody makes a profit that money stays in the plan,” Imel said. “And it builds up your reserves so that if you have a bad year and you get a couple of really sick people, have catastrophic claims, and those claims exceed the premium, you’ve got the reserves to cover those premiums.”

Imel said if the city was fully insured by a carrier, it pays the premiums to the company. If the city has a good year, the company makes a profit rather than putting the money towards helping cover the bad years. If the city has a bad year, Imel said the next year the company will raise the premiums.

In efforts to pad the self-funding reserves, the city council approved an increase on premiums. The biggest impact of this will be felt by city employee retirees.  Imel said in this year’s plan, everyone’s premium went up the same amount, but the biggest change came from what percentage the city pays. She said retirees feel that change the most because premiums went up, but the percentage the city pays stays the same.

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. Imel said this helps cover the cost of prescription drugs.

“We have notified all those retirees that are 65 and over to let them know that’s what we’re doing and we’re scheduling meetings,” Imel said. “So a team from Blue Cross Blue Shield, that are experts that are experts in the plan and in medicare, are going to be here to get those retirees enrolled, answers whatever their questions are, guide them through that process and put them more at ease with that transition process.”

Imel said the use of self-funded versus fully-funded insurance by municipalities varies across the board, and is not unique to just Cookeville. Imel said part of this process explored going back to fully-funded, which isn’t out of the picture long-term.