T.F. looks to benefits for cost savings

T.F. looks to benefits for cost savings
BY KENNY WALTER Staff Writer

TINTON FALLS — The Borough Council is considering a cost-saving measure that would compensate borough employees who opt out of health insurance benefits.

The idea, discussed at the Feb. 2 workshopmeeting, is to offer full-time employees currently enrolled in a borough health insurance plan a sum equal to 50 percent of the premium if they opt to receive insurance coverage from another provider. The measure would apply only to employees enrolled as a married person or family plan.

“This was talked about in the prior administration but it was never implemented,” said Mayor Michael Skudera. “It has to be something that will be attractive to the employees, and doing so will save money for the borough.

“If we can put this in, we have the potential of saving some money.”

According to Finance Director Stephen Pfeffer, the cost of health insurance coverage for an employee enrolled in a family plan is $19,006 a year; for a married employee, $17,206; parent and child insurance is $10,643, and for a single person the cost is $7,602.

Borough employees contribute 1 percent of their salary toward the health insurance benefits.

Pfeffer explained that he had tossed around the idea previously with former Business Administrator Bryan Dempsey and Brian Nelson, borough director of law.

“We didn’t have any statistical information, we were just brainstorming this whole thing,” he said.

Nelson said an informal survey of other municipalities revealed that offering employees a payment of 50 percent of the premium would make the offer attractive to them. He added that the most the borough can compensate, by law, is 50 percent of the premium.

There was some discussion among the council members about offering a lower rate, but Pfeffer and Councilwoman NancyAnn Fama argued that a lower rate would make the program unattractive to employees.

“If you want this program to work, my recommendation is 50 percent,” Pfeffer said. “Anything we save is worth saving.”

“Trying this in private industry, I will tell you that if it’s less than 50 percent, your involvement is going to be radically reduced,” Fama said. “I think this is a great idea. I don’t see how you lose. It’s really a win-win situation.”

Fama also said the borough should include employees enrolled as a single payer, to save more.

“Include the singles because that might entice the single to go with their family or a spouse,” she said. “People are reluctant to give it up because they say, ‘It’s not worth it, I have this extra coverage.’ If you make it more appealing to them, then you have the potential of saving $9,000 per employee.”

Council President Duane Morrill suggested that the council consider setting a sum instead of a percentage.

“I’d like to just set an amount, like $8,000,” he said, “whether you’re married or with a family and you can get your insurance somewhere else.”

Skudera said he felt more comfortable with the percentage.

“I think doing a percentage would be easier because the rates could fluctuate from year to year,” he said. “It may sound high, but it will still result in a savings.”

Morrill argued that the rates would not fluctuate in one direction.

“I’d kind of like to set an amount, because if it does fluctuate, I don’t see insurance going down anytime soon,” he said.

Pfeffer explained that employees would be able to opt back into the borough’s insurance coverage.

“We tailored this so if something happens, they can get back in, and they would lose the stipend and we would pick up the premium,” he said.

Pfeffer also explained that no survey has been done to gauge how much money the borough would save.

“This is brand new to us, as far as who we might get to take the program,” he said.

According to Pfeffer, there are 117 fulltime employees and 33 retired employees taking the borough’s health insurance benefits. If the proposed ordinance were adopted, then retired, appointed, elected and part-time employees would not be eligible for the stipend.

Another issue brought up was whether employees who have already opted out of the borough’s insurance plan would be eligible for the stipend.

Pfeffer and Councilman Scott Larkin said they doubt that any employee has already waived their coverage.

Councilman Gary Baldwin said it could be possible.

“There are companies that provide it without the charge,” he said.

Fama disagreed.

“How many people in private industry are paying less than 1 percent back?” she said. “What is the incentive really to not be on this health insurance?”

Nelson said he would check whether or not it is legal to grandfather an employee not taking the insurance into the program.

“Legally, we’d have to look if we can carve that out in the ordinance like we did with the retirees,” he said. “The CFO will conduct an analysis and bring it back to the council. I will determine if it is something we can carve out.”

Pfeffer tried to iron out some of the other issues, including paying the compensation on a monthly basis and whether the employees would still have to contribute 1 percent of their salary.

“We would probably pay it out on a monthly basis,” he said. “They wouldn’t have to pay the 1 percent if they opted out.

“I don’t know how you can hold 1 percent of their salary when they are not paying the premium. Effectively, they get another 1 percent in their net pay.”

Contact Kenny Walter at

kwalter@gmnews.com.