Butler County studies workers comp for tax savings

Butler County is taking another step in its goal to save taxpayers money on insurance costs by hiring a consultant to see if it is feasible to go self-insured for workers’ compensation coverage.

The county already expects to save about $500,000 this year after the commissioners agreed to a new self-insured health plan and more than $400,000 on property and casualty insurance.

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The commissioners have signed a contract with World Risk Management for $35,000 to study the workers compensation program. County Administrator Charlie Young said the county’s sound financial practices have allowed for the savings.

“We believe there is significant savings to Butler County by moving to a self-insured model,” Young said. “We believe we have reserves now that we did not have a few years ago, that are sufficient to allow us to adopt that model and take the risk associated with being self-insured.”

Human Resources Director Jim Davis said he couldn’t hazard a guess as to what a self-insured model for workers compensation will yield in savings but two years ago, when the commissioners agreed to move to a new group plan for the comp coverage, savings were estimated at $260,000.

The county has already realized a savings of $400,000-plus by moving to a higher deductible for its property and casualty insurance. Davis said while the property and casualty coverage isn’t a bonafide self-insured program, it’s close.

“Although we’re not technically self-insured we did assume a lot of the risk ourselves when we raised our deductible up to $100,000,” he said. “All this is part of the commissioners strategy to lower premium costs and basically pay claims as we go.”

This is also the first year for a self-insured health insurance plan. Davis said it is too early in the year to know the true effects of that move but the county had estimated a $500,000 savings in the wake of years of double-digit premium increases.

The increases came as a result of a couple catastrophic claims — a single claim in 2013 was for $5 million. From June 2013 through May 31, 2014, the county paid $14 million in premiums and the County Employee Benefits Consortium of Ohio (CEBCO) paid out $16.7 million for claims.

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Under the new self-insured plan the county pays an administrative fee and the claims themselves. There is a stop-gap feature so if claims top the $175,000 mark the insurance carrier picks up the costs for anything over that amount. In years past they would get between five to 10 “stop-gap” claims.

Commissioner T.C. Rogers said he feels comfortable with the county’s financial position to be starting programs like the self-insurance plans, that do present a bit of a risk.

“To say taking on more risk, you can look at it that way, but I do the math and I go on how much reserves that need to make the best case, and then we’re covered with the catastrophic claims with the re-insurance,” he said. “I look at it would I do it with my own money and I feel as though we are as safe as an insurance company can be.”

Commissioner Don Dixon said they expect if they go to self insurance for workers’ comp there would be a stop gap element to that coverage as well. The county has about $2.2 million in reserves for the health plan and Dixon said they always have the $6 million rainy day fund they can dip into if need be.

He agreed with Davis it’s too soon to tell if there will be a savings — hence the study — but he expects there will be.

“It’s just another program to try and have a little more control over expenses in the workers comp area,” he said. “It’s been done many ways, but this should save the county some money. “

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