Insurance Switch May Have Extra Costs for Town

A switch in insurance providers for school employees is expected to save thousands of dollars in the schools, but the town might now be forced to pay a premium.

"In the end game, for the whole town of Westport it may be a great deal," said John Kondub, the town finance director.

The problem is that while the schools are expected to save money, the town may become burdened with extra administrative costs.

On Sept. 1, approximately 900 school employees will be covered by Cigna rather than Anthem Blue Cross.  This switch is expected to save $500,000 in the school budget, according to school administrators.

Although the town and the schools are separate entities with different budgets, Anthem Blue Cross included all employees in their calculations and offered a discount on administrative costs in past years. Now that 900 people are no longer covered by Anthem Blue Cross, the town could see that discount eliminated in the 2011-12 fiscal year. The added cost would have come out of the town's budget and not the schools.

Administrative costs for individual employees are $135 dollars per month, according to Kondub. Factoring in all town employees and retirees brings the annual total to $650,000. There are approximatelty 300 full-time town employees, not including retirees.

If administratives fees increased five percent, "we're looking at an extra $30,000 [annually]," said Kondub.

Town officials are talking with Anthem representatives to see what the cost increase – if any – will be. Kondub said he expects to know soon and that he has been told there is no additional cost in the current fiscal year.

Tom Hamilton, the town's personnel director, is bullish on costs remaining the same next year.

"It's conceivable, but I think the competitive [nature of the] industry will limit that," he said.

School officials defended the switch on Monday in light of criticism from some people in the town that there was little forewarning a switch had been made.

Town employees were unable to join the new health care provider due to the differences in contracts, according to Superintendent of Schools Elliott Landon. He said that school contracts offer more flexibility than town contracts due to differences in the wording of the contracts.

For the town to change insurance providers, contracts would have to be renegotiated and modified.