Milwaukee County considers bigger health-insurance opt‑out payment and spousal surcharge to reduce budget gap

Milwaukee County human resources officials told the County Board's Committee on Personnel on June 10 that increasing the health-insurance opt‑out payment and adding a spousal surcharge could reduce county costs, but the size of any savings depends on how many employees change coverage.

The item was presented by Tony Mays, director of Total Rewards in the Department of Human Resources, who said the county currently pays $500 to employees who decline county coverage and that roughly 2.95'to 3.0 (about 300) employees have taken the opt‑out consistently since 2018. "We currently give $500 for a person that do not receive our benefits. Currently that equates to about a $150,000 a year that we pay for," Mays said. He also said the county pays roughly $15,800 per enrolled employee; multiplying that figure by the roughly 300 opt‑outs produces about $4.7 million in annual premiums the county does not pay for those employees.

Why it matters: County officials said the measures are being examined as part of budget planning during a projected county shortfall. Supervisor comments during the meeting referenced a reported $46 million projected deficit, and multiple supervisors urged consideration of measures they described as "low hanging fruit."

Details and numbers presented - Current opt‑out: $500 annually per employee who declines coverage; roughly 300 employees opt out. Mays said the $500 figure has been consistent and raising it would largely give more money to the same employees unless more people changed behavior. - Employer premium estimate: Mays said the county pays about $15,800 per enrolled employee, and that figure times the opt‑out population is about $4.7 million (the presenter described this as a premium figure, not a claims analysis). - Potential opt‑out increases: The report considered higher opt‑out levels (examples discussed in the presentation included $1,500 to $2,000) and showed a scenario estimating 500 employees opting out if the payment were raised; Mays said that estimate came from the report's scenarios. - Spousal surcharge: Mays described a proposal to assess a monthly surcharge when an employee's spouse has employer‑provided coverage. He gave example surcharge levels ($50, $75, $100, $200 per month) and said the office identified 1,401 spouses on the county plan (1,107 active employees and 294 pre‑retirees in the categories cited). He offered an example that a $50 monthly surcharge could yield an estimated $840,000 in savings, depending on participation and collection.

Limits, cautions and next steps - Participation uncertainty: Joe Lamers of the Office of Strategy, Budget and Performance said the county's current opt‑out rate is about 8% and that while some organizations see opt‑out rates rise toward 15% with higher payments, Milwaukee County's historically generous benefits package likely means the opt‑out rate would not necessarily climb that high. "It appears unlikely that we would reach that 15%," Lamers said in committee remarks. - Spousal surcharge scope: Mays clarified the surcharge would apply only when the spouse has employer‑provided coverage; state programs such as Medicare or Medicaid would not trigger the surcharge. "It cannot be state care. So if you're in Medicare or Medicaid, that does not count," he said. - Equity and hardship concerns: Supervisor Michael Martin raised concerns about people in two‑earner households who depend on a spouse's insurance for essential medical needs, noting the county should consider potential harm if employees lose coverage or face higher costs. - Budget process: Mays said the item was informational and that he is working with Lamers to develop costing options for presentation to the Committee on Personnel and the Committee on Finance as the 2026 budget is prepared.

The discussion was informational; committee members did not vote on a policy change at the meeting. Staff said more detailed analysis and possible survey work would be provided if the board asks for further study.