Whitefish Bay was able to save at least $622,000 over the next two years by changing the way it contracts with health insurance providers.
Typically, the village acquires its benefits through the state's Employee Trust Fund. Most employees choose WEA Trust, which offers the lowest-priced plan. After conducting an analysis, the village's insurance broker determined it was able to save money by eliminating the state as a middle man and contracting directly with WEA Trust.
The Whitefish Bay Village Board voted in approval of the two-year insurance plan at its Monday night meeting. Although it's a two-year plan, the contract will be signed one year at a time.
The WEA Trust Plan comes in $347,000 under the price offered through the Employee Trust Fund. The village saved at least another $275,000, due to a price lock not to exceed a 9 percent increase in 2014. The village could save more money if insurance premiums increase less than 9 percent in 2014.
"If you chose the lowest-price provider through the state plan for next year, it is WEA Trust. We're just buying it direct. We're buying the exact same plan. Same deductible, same everything," said Village Manager Patrick DeGrave. "We're saving that much money just by cutting out the state as the administrator of the plan."
Under the new insurance arrangement, employees would no longer be able to choose an insurance plan through another provider, such as United Healthcare. Without Act 10, the village would've had to negotiate with unions over health insurance.
"We'll work with the unions, just like we have over the last three months," DeGrave. "We let them know what we are doing."
Because Whitefish Bay's budget was already published and sent to the state, the $347,000 was not shaved from the tax levy, but will be put in the bank for future use. Next year, any savings left over from the insurance modification will be available for a potential tax cut.
The savings maneuver was overseen by Hayes Company, whom DeGrave has worked with in the past. Because of his relationship with the firm, DeGrave said the firm was willing to forego a direct fee and instead collect a small percentage of the premium percentages — which insurance brokers do anyway.
"I don't have the time or expertise to go shop insurance," he explained. "That's why you go to a broker. That's how they earn their money."
Village employees will pay 9 percent of their monthly premiums, which are $564 for a single plan and $1,277 for a family plan. DeGrave said he will meet with employees on Nov. 29 to answer their questions about the switch.