Cookeville City Council will consider approving transitioning the city from self-insured health insurance to having it fully insured by a third party.
City Manager James Mills said that means the city will utilize an outside firm to operate the city’s health insurance. He said the city has been self-insured since 1998, but rising costs have forced the city to make a stronger financial decision.
“if you remember last year when we were going through all this or had discussions about this, how much of a burden it had become on our staff to administer this plan,” Mills said. “We even considered hiring a new employee or creating a separate new position to do this for us. When you factor all those costs in and what we projected our costs were going to go up, this is significant savings at least for this year.”
Mills said the county made the move to fully-insured several years ago. He said looking at the last five years, the fully insured plan has averaged about a four percent. Switching to fully insured is estimated to save the city almost 15 percent of the cost per year.
Mills said the main concern with going fully insured is the ability to control the costs of insurance. He said up until this point, the city felt it was easier to control those costs.
“Once you’re fully insured it’s whatever the insurance carrier tells you what your premiums are going to be, what your costs are going to be,” Mills said.
The new insurance is set to go into effect July 1st. Mills said employees will have the same insurance with minor changes, such as a reduction in premiums.
“This is not something we recommend lightly,” Mills said. “but for the last four, possibly five years we’ve seen a continuing significant increase in cost to the city. We made some significant improvements that went in place in January, but costs continue to increase.”
