Gwinnett County expects to save $5.2 million on health insurance and other employee benefits next year after a private consultant negotiated the latest benefits costs on the county’s behalf.
Following the lead of Cobb County, other governments and the private sector, Gwinnett hired Aon Consulting to negotiate the benefits. The potential savings take some pressure off a county struggling to balance its budget heading into 2012.
“We’re just looking at how we do everything,” Human Resources Director Kenneth Poe said. “For this organization, benefits are a huge, huge expense.”
Gwinnett expects to spend about $55.8 million on employee and retiree medical, life insurance and related benefits this year. That’s down from $60.9 million in 2009.
More than 3,900 employees and 1,140 retirees receive those benefits. In the past two years Gwinnett has shifted more of the benefit cost to them by increasing insurance co-payments and deductibles; on average, they pay about 20 percent of the benefits costs.
Although the county has relied on private consultants’ advice in the past, it still negotiated its own insurance contracts. This year, it turned negotiations over to Aon Consulting, which specializes in negotiating and administering benefits.
Elsewhere around metro Atlanta, Cobb Human Resources Director Tony Hagler said a consultant helped that county save about $400,000 on life and long-term disability insurance this year by advising it to postpone bids until after a planned reduction in the county workforce, which lowered the number of employees covered.
“I think it’s been very valuable for Cobb County,” Hagler said. “It’s good to have that expertise in the industry.”
The City of Atlanta also uses a consultant to help negotiate and design healthcare benefits. DeKalb County uses a consultant for advice on benefits.
Gwinnett’s Poe said other governments across the country have used insurance brokers to negotiate contracts, and said the practice is common in private industry.
Aon Consulting wrote requests for proposals from insurance companies, helped review the proposals submitted, asked questions and negotiated the final contracts in conjunction with the county human resources and purchasing departments.
“They know the industry,” Poe said. “They know how to better negotiate on the various terms of the contract.”
The consultant’s services will cost Gwinnett nothing. Aon negotiated its fees with the insurance companies that will provide the county health benefits. Poe said county officials won’t learn how much the company earned from the insurance companies until early next year.
Last week the Board of Commissioners approved five contracts with insurers worth a combined $48.5 million. The companies will provide a variety of health, pharmacy, prescription drug, life, accident and disability insurance. Gwinnett expects to spend $5.2 million less on those contracts than it would have if the terms of the contracts were unchanged from this year.
Poe said Gwinnett doesn’t have a final cost for employee and retiree health benefits for 2012, so the exact impact on taxpayers is unclear. One factor yet to be determined: whether the county will raise the employees’ share of the cost again. But Poe said the benefits employees receive will remain largely unchanged.
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