Health insurance benefits make up a huge chunk of all municipal budgets. The Village of Seneca Falls pays the full cost of health insurance benefits for its full-time employees; retirees must pay a percentage of the cost.
Be that as it may, there are ways to contain the cost of municipal employee health insurance plans. The New York State Comptroller's Office provides some suggestions on their website. One of the suggestions is to offer "payments in lieu of health insurance" to employees who have access to health insurance from another source, usually through a spouse. These payments can provide a cost saving to taxpayers, especially when the payments are less than the full cost of the insurance plans provided by the municipality.
The Village of Seneca Falls offers this alternative to eligible union employees.
The Comptroller's Office states that a municipality can authorize offering employees a "payment in lieu of health insurance" in one of two ways - by passing a local law to provide it or by including it in a collective bargaining agreement. Seneca Falls Village union members have this language in their contracts.
Here is what the NYS Comptroller says about how municipalities may authorize payments in lieu of health insurance:
Payments in Lieu of Health Insurance Coverage
Because many employees have health insurance coverage available from a second source, such as benefits under a spouse's plan, offering the option of a cash payment in lieu of health insurance coverage can be beneficial to both your local government's budget and to the employee. Employers realize a savings by paying employees an amount less than the cost of health insurance premiums, and employees increase their income. These payments may be authorized by local law, or pursuant to a collective bargaining agreement.
To qualify for the payment, employees must demonstrate that coverage is available from another source. Employees will want to compare their current plan with the alternate one to weigh the benefits and risks of switching plans. The municipality may also wish to contact the IRS concerning the income tax consequences it sees as a result of a payment in lieu of health insurance benefit.
The Village of Seneca Falls also offers payments in lieu of health insurance to its non-union employees. However, the Board authorized such payments by a simple resolution as part of adoption of its personnel policies on April 3, 2006, and not by a local law. Local laws, of course, require that the Board hold a public hearing.
Given the importance of this issue and the potential savings for Village taxpayers it would be prudent for the Board to review their program and ensure that it is properly authorized. If the simple Board resolution including these payments in the Village's Personnel Policy is inadequate to properly authorize them then a local law should be drafted, a public hearing on the draft law should be held, and if the Board deems it acceptable it could be passed.
First, though, there should be open discussion in advance regarding how many employees are eligible overall (both union and non-union), any alternatives regarding actual percentage of payments to be offered, and the potential savings to taxpayers.
One of the required duties of the Village Administrator is to review all Village insurances and make recommendations to the Board regarding alternatives. Have there been any reports regarding insurance coverages made to the Village Board?
