Health Insurance Trust Fund
From North Adams Info
The City of North Adams provides health insurance to its employees using a trust fund, with the actual health plan provided by Blue Cross/Blue Shield.
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Union position
According to the North Adams Teacher's Association (website):
- the City's contract with the three unions requires that the City pay 70% of employee health insurance costs, and the employees pay the remaining 30%.
- the City sets the estimate ("working rate") of health care costs for the upcoming year, and charges employees 30% of this.
- the City pays the actual costs of health care throughout the year
- in recent years, the actual costs have come out to be less than the estimate
- the difference has not accumulated in the Health Insurance Trust Fund, or been refunded to employees.
Mayor's position
From an article in the North Adams Transcript: [1]
Barrett, who leaves office on Jan. 4, 2010, following the inauguration of mayor-elect Richard J. Alcombright, said he’s been continuously disappointed by union leaders, who he alleges have been presenting erroneous information to their membership and the public for months on end.
"My administration has been accused of underfunding the medical insurance trust fund for months now," he said. "If there were any problems in the last 26 years, then where is the attorney general? Where is the district attorney? We took over the trust fund from the Lamb administration and there has never been a problem, unlike Pittsfield that went into receivership and Williamstown that paid out close to $1 million in funds."
At the beginning of the month, the North Adams Teachers Union provided the North Adams School Committee with documentation which they say proves the city has paid less than its 70 percent of premium costs over the last five years -- totaling about $2 million in payments.
"The unions haven’t understood the process since day one," Barrett said. "Insurance isn’t a black and white issue. We’ve never transferred one penny out of this account. Our books are clear. What they don’t understand is that the city doesn’t have to put one penny into this fund. All it has to do is ensure that all the bills are paid."
A worksheet provided by the city, detailing payments into the insurance trust for the last seven years, shows both sides contributing more or less than their share in any given year. According to the worksheet, the city overpaid the insurance trust in fiscal 2003, 2004, 2005 and 2009.
"The city actually contributed an extra $38,987 this year, if we go by the way they calculate things," he said. "If anything, they have ‘overpaid’ the system by $149,917 over the last seven years. In the years where the unions come out contributing more, the premiums are off-set the following year by the surplus. It’s the same way any corporation runs its insurance system."
Undisputed facts
The unions base their analysis on the City's numbers, and they do not dispute the amounts paid each year by the City and employees.
Different Analyses
The City has produced a spreadsheet to support its claim that it has paid nearly the required 70% from FY2003 to FY2009, inclusive.
The main difference between the two approaches is that the City compares annual contributions to the expenses incurred in that year, whereas the union prefers to compare to the expenses actually paid during the year. Since the incurred and paid expenses are not identical (for instance, a claim submitted at the end of one year will be paid in the next), the percentages paid by the city and employees do not add to 100% of incurred costs.
Using the unions' premise that the 30/70 split should be calculated as fractions of the actual payments for each year, the City has underpaid by $496,085.93 from FY03 to FY09, and the unions have overpaid by the same amount. -$496,085.93
Using the City's premise that the 30/70 split should be calculated as fractions of the incurred costs in each year, the City has underpaid by $149,917.16 and the unions have overpaid by $644,443.98.
