A new cost-savings proposal could save Grand Traverse County over $800,000 annually – but will triple health insurance costs for a majority of county employees.

County Administrator Tom Menzel sent a memo to staff Wednesday outlining the proposed changes, which will go to county commissioners for approval on April 27. Menzel proposes requiring all county employees to contribute 20 percent to their health insurance plans beginning in 2017.

“The county’s current financial situation leaves us in a position to face a $4.1 million deficit in 2017,” Menzel wrote. “One way we are approaching this challenge is to evaluate our health care program.”

Of the county’s 475 employees, a majority – 242 – contribute just 6 percent to their plans now. Those employees would see their insurance costs more than triple in January, with the monthly premium for a family plan increasing from $74 to $245. Another 138 employees would see their monthly insurance costs doubled.

Menzel says he would have preferred to introduce gradual premium increases over a three-year period, “but due to our dire financial condition…we cannot wait.” State law permits the county to apply the changes to union employees without negotiations, meaning the hikes would be implemented county-wide. The county will offer employees the option to enroll in a new alternate health plan with higher deductibles for those seeking lower monthly payments.

The changes are expected to save the county $620,000 annually.

Menzel will also ask commissioners Wednesday to require defined benefit plan employees to contribute 10 percent toward their pension costs. The 12 employees under the plan have contributed nothing toward those costs to date, Menzel says, where “most people usually pay 5-6 percent for years and years.” The move would save the county between $90,000 and $186,000 annually, and allow Menzel to approach the 76 union employees who also have defined benefit plans to negotiate similar deals.

“Twelve people is not a lot of people, but it’s the benchmark for going into these union negotiations and saying, ‘This is what we’ve done with the non-union employees…you’ve got to do this too going forward,’” Menzel says.

Officials acknowledge the premium hikes have the potential to exacerbate the county’s existing struggles with employee retention, recruitment and morale. “It’s always a concern whenever you have changes to benefit plans,” says Deputy Administrator Jennifer DeHaan. “And we do have employees who are eligible for retirement.” The proposal’s range of potential cost savings reflects the possibility some employees may choose to retire, DeHaan says.

But Menzel notes county employee contributions have been significantly below industry standards for years, one of the many factors that have ballooned the county’s pension debt to a projected $59 million by the end of 2016.

“There’s no one who doesn’t pay 20 percent anymore (for health insurance),” says Menzel. “If these changes had been implemented over the years, we wouldn’t find ourselves having to do it like this now.”

Menzel hopes the changes will put the county in a more favorable position with the Municipal Employees’ Retirement System (MERS), which administers the county’s pension plan. Menzel sent a letter to MERS CEO Chris DeRose Wednesday informing him of the proposed benefit changes, and asking to appear before the MERS board of directors in July.

“I would be prepared to discuss the steps we are taking as an organization to get back to financial stability,” Menzel wrote to DeRose, in the hopes “MERS (would) consider a longer (repayment) schedule that would allow the county to work toward a fully funded pension plan.”