City Switches Employees, Retirees to State Health Plans

City employees and retirees receiving health insurance from Blue Cross must find new options and all current and former workers should expect higher out-of-pocket costs for medical care when the city moves next year to plans offered by the state’s Group Insurance Commission (GIC).

The city is predicted to save $3 million by moving to state plans instead of staying with medical coverage sold by the non-profit Massachusetts Interlocal Insurance Association. A coalition of city employees approved a “mitigation agreement,” however, Thursday where unions will share $750,000 of the expected savings—actually reduced increases—as Mayor James J. Fiorentini exercised his right to move the city to subsidized state health plans.

“The impetus is to save money. The city could have modified its old plan, but (the mayor) is setting himself up to spend less than if he had done nothing,” said Anthony Parolisi, second vice president of the Haverhill Education Association. Parolisi represented the union on a Public Employee Committee of the different municipal unions.

Blue Cross is not among seven health insurance plans offered by the state. The law that allows Fiorentini to switch to state health plans without union consent also requires the city share 25 percent of projected savings with everyone who is covered, Parolisi explained. In order to move the city away from private medical insurance, Fiorentini had to demonstrate the city would save at least 5 percent.

“The overwhelming consensus was not to move…We lobbied the mayor to see if (the existing provider) could match the savings we are looking for, but the quotes we got were looking at a possible 18 percent increase. With GIC-subsidized rates, the projection is a 6 or 7 percent increase. There’s more predictability about it,” Parolisi said. Fiorentini told the unions of his decision at the end of September.

Because co-pays and deductibles will increase for employees and retirees, the employee committee reached a three-agreement with the city to place $475,000 into a health reimbursement arrangement, the union representative said. Those covered may draw from the fund when out-of-pocket costs exceed $2,000 in a year, he explained. Parolisi cited in-patient hospitalization co-pays as an example of increased costs. Currently, those insured pay $700 out of pocket, but will pay $1,500 under state plans.

Should reimbursements exceed the money set aside, another $275,000 may be added to the account. If the extra money is not needed, it can be paid out to those covered, Parolisi said.

City workers and retirees must choose new health insurance plans during open enrollment this spring. Plans take effect next July 1.

3 thoughts on “City Switches Employees, Retirees to State Health Plans

  1. I’ve never heard of money being set aside in the private sector.
    Interesting to see who is commenting and against this is none other than the teachers union.
    Mistah Mayor should call for an auditor to go through his books, I know it’s the holiday spirit and we can all have a wish list…

  2. Why is the city setting aside ANY money into a health reimbursement fund for city workers? It’s not “their” money, it’s taxpayer money!! Since the hack mayor is now just giving out taxpayer funds does this mean Haverhill citizens not working for the city can utilize this fund too?

    If this doesn’t confirm mayor failurentini is in the bag for city employee unions nothing will.

    • This should have been done years ago, but the school committee negotiated a new contract and signed it before it should have happened. Now the city must look into the retirement programs and establish programs same as the private sectors with the employee being the major contributor.