CASPER, Wyo. — New Casper city employees will no longer have the option of using the city's health plan after they retire.
The decision, made Monday by an informal vote of the City Council, will apply to anyone taking a city job beginning Jan. 1.
The decision was one of several options meant to tackle a projected $20 million liability in the health fund, City Manager Tom Forslund said.
“Retirees will suck out more of your system than they pay in,” Forslund said. “How do you fill that gap?”
Forslund called the measure the least painful of the several options, which included increasing employee premiums, modifying or eliminating benefits, funding the plan with more outside money, or not making any changes.
The approved measure is “the easiest and least painful way to go” because it doesn't affect any of the city's current employees, Forslund said.
Under its self-funded plan, the city pays for medical services required by enrolled employees and generally does not purchase outside insurance. Expenditures in the city's health insurance fund are expected to reach more than $9 million in fiscal year 2011, up considerably from the $5 million the city budgeted in its fiscal year 2006 budget. The fund is supported by money from retiree and city employee contributions, as well as contributions from the city.
For the past 12 months, retirees have withdrawn $1.74 out of the health fund for every dollar they have put in, he said. Current employees have withdrawn $0.79 out for every dollar over the same time.
No estimate was given as to how much money would be saved under the change, only that without it the city would need to increase its funding of the health benefit plan.
Forslund did say the change would allow the city to have a better approximation of future costs since the number of potential retirees using the insurance would now be capped.
Two council members, Maury Daubin and Stefanie Boster, voted against the measure. Daubin expressed skepticism over the projection assumptions that came up with the $20 million figure, comparing the situation with worries the city once had over paying out employee vacation and sick time all at once.
“That's like the perfect storm; it doesn't ever happen,” he said. “Are we the first city to bail this way on employees un-hired?”
Boster said city benefits are traditionally considered a tool to help attract and retain employees.
“I worry about the morale of the un-hired employees,” Boster said.
Contact Joe O'Sullivan at email@example.com or 307-266-0639.