Focus, Government, and Health Care

City tells state it meets EVIP health coverage mandate

July 12, 2013
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Greg Sundstrom
Greg Sundstrom

Grand Rapids city commissioners recently approved paying $1.5 million in various insurance premiums and confirmed to Lansing officials that its employees’ share of its health-insurance coverage meets the state’s requirement for the Economic Vitality Incentive Program.

The EVIP replaced the statutory revenue-sharing payments the state annually made to municipalities in 2011. Under the program, a city, township and village can receive up to a third of the maximum amount it is eligible for across three categories: accountability and transparency, consolidation of services and employee compensation.

The latter requires that municipal employees pay at least 20 percent of their health insurance premiums for a municipality to quality for an EVIP payment in that category.

The city qualifies in all three but has to provide confirmation each year to the state that its workers are picking up their required share of insurance costs. City officials thought they only had to provide that confirmation when EVIP started and weren’t aware it was an annual event.

City Manager Greg Sundstrom accepted the responsibility for misreading the requirement. “It was me who erred,” he said. Commissioners made that confirmation official before the new fiscal year started July 1.

The city, though, was ahead of the EVIP curve as Grand Rapids employees began paying 20 percent of their premiums in January 2010, a year before EVIP became law. “That’s a credit to our employees,” said Commissioner James White.

According to the Michigan Department of Treasury, the city was projected to receive almost $4.9 million from the EVIP in FY13, which ends on Sept. 30 for the state. The projection awards Grand Rapids $1.63 million in each of the three categories.

Deputy City Manager Eric DeLong said the city should receive at least $4.5 million from the program in FY14. “That money goes into the transformation fund,” he said.

DeLong added, however, that the city got $11 million in statutory revenue sharing in 2010, the year before the state Legislature ended the payment.

Of the $1.5 million commissioners approved for insurance premiums, nearly $675,000 is going to Chubb and the RSUI Group for $500 million worth of property-damage coverage.

Chubb is the primary insurer, and that yearly premium is $580,798. The firm provides damage coverage for the first $300 million. The city’s premium to the RSUI Group is $93,987; the policy covers the second $200 million in damage. The city’s policies have a $250,000 deductible and its property is valued at $1.36 billion.

The city’s managing director of administrative services, Mari Beth Jelks, said the Chubb premium rose by $721 from last year and the RSUI charge went up by $103. The increases were 0.02 percent and 0.11 percent, respectively. She said both were relatively small as the average industry hike for the current year was about 9 percent.

The city’s second-largest premium payment, $616,704, was to the Michigan Municipal Risk Management Authority for general liability coverage.

The policy covers all of the city’s vehicle charges it makes to the Michigan Catastrophic Claims Association, which pays for lifetime medical bills that result from severe auto accidents.

Grand Rapids has 615 licensed vehicles, and the MCCA charges $186 per vehicle. The MMRMA is picking up the $114,390 cost. The city will also receive a net distribution of $282,916 from the authority.

Jelks also said the city was awarded $84,950 in Risk Avoidance Program grants from the authority during the last fiscal year.

MMRMA also includes virtual coverage. The city’s policy covers data breach and privacy liability, data breach loss, electronic media liability and cyber liability insurance coverage. The city’s policy has a $15 million limit. Grand Rapids has been a member of the authority for roughly 30 years.

Other policies city commissioners approved were for crime, excess workers’ compensation coverage, pollution legal liability insurance, and liquor liability for the city-owned Indian Trails Golf Course, which has a liquor license.

The city gets its coverage through the Arthur J. Gallagher Insurance Services of Michigan. CompOne Administrators is the third party administrator for workers’ compensation.

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