Shrewsbury moves to Anthem level-funded health plan, picks Delta dental and vision for next year

Shrewsbury aldermen voted to move forward with a level-funded Anthem health plan and to switch dental and vision coverage to Delta plans, the city’s finance director said, and directed staff to start the contractual process and preparations for employee open enrollment.

The decision came after Dustin Seebel, the city’s finance director, reviewed quotes from UnitedHealthcare, Anthem and others and outlined cost and benefit tradeoffs. “It’s approximately $681,000 per year that we’re paying for this,” Seebel said of current medical premiums. He said a UnitedHealthcare renewal keeping plan design identical would raise annual costs by about $82,000; an alternate United quote with benefit changes would increase costs by about 4.1 percent (roughly $28,000). Seebel recommended Anthem’s level-funded option because it preserves a 70 percent out-of-network coverage after deductible and differed from United’s benefit-cut proposal by “less than $2,000,” while offering access to aggregated claims data.

Seebel said Anthem’s level-funded proposal included an estimated claims “bucket” of about $282,000; if actual claims fall below that bucket, the leftover would be split 50/50 between Anthem and the city. He also noted changes across proposals to emergency-room copays, prescription tiers and out-of-pocket maximums, and described how the changes could affect employees who go out of network. “If we make our employees healthier, the utilization goes down, our rates come down, but we also have happier, healthier employees,” Seebel said.

For dental and vision, Seebel recommended Delta Dental and Delta Vision, citing lower rates and two-year rate guarantees from Delta. He said UnitedHealthcare proposed a 7 percent dental increase, while Delta’s quote was about 2 percent below current premiums and Anthem’s dental quote was about 6.8 percent below. On vision, he said Delta Vision proposed about an 8 percent reduction and a two-year guarantee; Anthem proposed a 6.3 percent increase but with a three-year guarantee.

After the presentation, the board gave a voice vote to accept Seebel’s recommendations and asked staff to begin drafting contracts and preparing materials for employee open enrollment. Seebel told the board the next step is to finalize contracts and bring them back for a formal council vote; he asked for the voice authorization so vendors could begin card issuance and implementation steps. The board’s motion authorized staff to proceed with Anthem’s level-funded health plan, Delta Dental, Delta Vision and existing basic life/AD&D/long-term disability arrangements as described by Seebel.

The board’s discussion included clarifications about the city’s health reimbursement arrangement (HRA) and flexible spending account (FSA). Seebel said the HRA structure remains in place and described the plan’s $5,000 individual deductible arrangement: “the first thousand is covered by the employee, and then the next 4,000 is covered by the city.” He also said the city cannot offer a health savings account (HSA) because the plan does not meet federal HSA high-deductible rules.

Next steps: staff will open vendor contract negotiations and return contracts to the board for formal vote and signature, then begin employee communications and open enrollment.