On December 19, 2011, The Board of Selectmen voted under Chapter 32B Sections 21-23 to change the Town's Health Care Plan design for Active and Retired Employees. As part of the change, the Town Manager decided to only offer the Mayflower Benchmark plans for PPO and HMO Plans. After several attempts to negotiate Health Care premium split changes through the Collective Bargaining Process, it became abundantly clear to the administration that the only way to achieve meaningful Health Care change was to enact sections 21-23. Acceptance of these sections of 32B allowed
the town to initiate plan design changes for all of the 522 health care members. Over the past twelve years, health care costs rose from $1.8 million to over $4.9 million. This significant increase was financed at a cost of seventy-five percent taxpayer and twenty-five percent employee. The cost increase mentioned above only applies to the town's 75% portion. In some years, premium increases were in the double digits. More and more of our tax dollars were committed to health care increases. Health Care premium increases also had an adverse impact on employees who in many cases received less in salary increases than the premium increases charged by Health Insurance Companies.
The Town's initiative has finally allowed the town to influence the collective bargaining process in a way that resulted in meaningful change which in the future will control costs and utilization, resulting in lower premium increases for employees and less of a financial burden on the taxpayers of Abington. The Health Care changes are outlined in the attached documents in this section. This site is designed to provide employees and retirees along with the taxpayers of this community with a better understanding of what is contained in the plan design changes sector.
Finally, as you will see, the actual changes are more in line with the private sector and other employment organizations in Massachusetts. The days of low co-payments which encourage greater utilization and higher premium increases are long gone. I believe these changes will have a mutual benefit to both the employee and the taxpayers of Abington.
For the first time in several years, health care costs are estimated to be reduced by seven percent. From the actual savings of $457,128, the town will establish a Health Reimbursement Account fund under the legislation of up to 25% of the estimated $457,128.00 in savings. Therefore, the town will set aside in a Health Reimbursement Account for employees $114,282.00 (twenty-five percent of the savings). In addition, the town will pay the cost of a third party administrator to administer the Health Reimbursement Account fund in accordance with the PEC Agreement. For your convenience, the PEC agreement is attached. The net estimated savings to the town is $321,006 including the cost of managing the Health Reimbursement Account fund by a third party administrator, which is estimated at $21,840.00. The Health
Reimbursement Account funds are available to employees and retirees including non-union members. In accordance with the legislation, the Health Reimbursement Account's life expectancy may be one year or until the funds are depleted.
In an effort to save a total of a half million dollars in health care costs (the town savings to date is $321,006), the Town of Abington will move to the GIC as soon as practically possible through the governor's legislation permitting communities to provide notification to the GIC in December for a July 1, 2013 entry.