Ypsilanti Township could see $600,000 in employee health care savings

Employees agreed to a higher deductible in exchange for lower premiums, but the township is covering those deductibles with a pool of money. If someone exceeds their deductible, then the insurer, Blue Cross/Blue Shield, covers the rest.

Officials say they are “self-insuring” their employees and their families up to $12,000, while they previously paid closer to $20,000 per family. Individuals are covered by the township up to $4,800, while the township previously paid $9,200 per individual.

The township is finding the savings while maintaining the same level of insurance, and employees won't have to pay copays either.

Ypsilanti Township has around 100 current employees or retirees under 65 and approximately another 100 retired. It will see an estimated $400,000 in savings from the current employees pool and another $200,000 from the retirees.

But the savings are only estimates because the insurance is user-based. Most individuals don’t use more than $4,800 in insurance each year and most families don’t user more than $12,000, so the savings could be greater if everyone uses less. But if someone uses more than their deductible, then the savings could be less in 2013.

A worse case scenario is if someone has a terminal illness or costly medical issue. Because there is the potential to not realize any savings the following year, Clerk Karen Lovejoy-Roe said the Township is setting aside their first year of savings instead of immediately spending it.

Once the township sees what kind of savings it is going to realize and establishes an adequate insurance fund, it will begin spending the savings. Roe said around 40 municipalities statewide have switched to this system and the $600,000 in savings are a conservative estimate. She said based on data from how the plan has worked in other municipalities, the township will likely see greater savings.

The township’s union heads, Trustee Mike Martin, Lovejoy Roe and Human Resources Director Karen Wallin worked with representatives from Marwil and Associates to establish the plan.

"It’s a win-win, and it’s rare you get to say that,” Lovejoy-Roe said. “It is a new way of thinking about and paying for health care, but it met the goals of the health care committee … which were to keep costs down for both the township and employees, to provide good health care benefits and to meet the new state legislation.”

Martin said officials have guarded optimism that the new plan will realize the anticipated savings.

"I think it’s an exciting prospect that we can maintain the health insurance coverage of the township's hardworking employees while saving potentially hundreds of thousands through an innovative insurance plan," he said.