Municipal employees in Forest Park don’t have the ability to opt out of their medical benefits in exchange for more take-home pay, according to a set of formal policies spelled out in the village’s handbook. But elected officials admitted this month that select individuals have been allowed to do just that. Meanwhile, other potentially eligible employees were left unaware of the perk.
Though municipal leaders here offered clandestine compensation packages, the practice of providing workers with cash if they don’t enroll in the company’s health insurance plan is not altogether uncommon. However, according to business experts and human resources consultants, there are pros and cons to such deals.
Almost directly across Desplaines Avenue from village hall is the public schools’ headquarters where employees of every rank are kept informed of such an option. Superintendent Lou Cavallo said that, overall, he likes the district’s program.
“It ends up being cheaper for the district,” Cavallo said.
In District 91, employees who are covered under another plan – such as a spouse’s insurance – can turn down the schools’ coverage and instead access a small account that’s used exclusively for medical costs. Through its “non-insured medical” plan, the district will pay up to $2,000 a year for dental work, eyeglasses, co-pays, deductibles or any other expense that’s not covered by that employee’s out-of-district insurance. The balance of the account doesn’t roll over, nor is any remainder paid in cash to the employee.
The program is the same for janitors and administrators, said Cavallo, and is detailed in union contracts and other employee documents.
“Two thousand dollars is a lot cheaper than what we would have to pay to cover that teacher under our own insurance plan,” Cavallo said.
Forest Park Commissioner Marty Tellalian said he’s interested in perhaps adopting a formal policy that would allow the village to offer such compensation on an equal playing field. He recently pushed Mayor Anthony Calderone and others on the council to publicly acknowledge the secret payouts, and chastised the village for withholding details.
The Review has submitted a request for records about the village has administered the payments.
Former village administrator Mike Sturino said he agreed to give an employee cash after that person opted out of the municipality’s coverage. The value of the extra pay was less than what it would have cost to provide insurance, he said. Forest Park could save money by negotiating such agreements more often, Sturino said.
Forest Park had been paying at least one employee a straight dollar-for-dollar trade on its medical coverage when he was hired back in 2005, according to Sturino.
According to Cavallo, so many employees opted out of the district’s insurance in recent years that the schools were dropped by their insurance cooperative. Having fewer employees sign up for coverage also tends to drive up premiums for those who do enroll. After being forced out of the insurance cooperative, Cavallo said administrators considered doing away with the program for non-insured employees, but that the value is too great.
During the last fiscal year, 45 school employees opted for the $2,000 benefit, according to Assistant Superintendent Ed Brophy. That represents about 25 percent of the entire staff. There 170 employees in the district eligible for medical benefits.
Almost $78,000 was paid by the district to cover various medical expenses for those employees. In the year prior, $68,935 was paid through this program.
Brophy estimated the program saves the district more than $150,000 in medical insurance costs on an annual basis.
The municipality has about 112 full-time employees, according to the finance department.
“It’s a very, very small percentage of employers that are using that as one of their tactics to control health care costs,” said Jay Shattuck, executive director of the Employment Law Council for the Illinois Chamber of Commerce.
According to Shattuck, the private sector is even less likely to offer additional compensation if an employee declines to sign up for certain benefits. When it does happen, he said, it’s usually because there is a large company in the area that can afford to absorb the dependents of its employees.
Bob Cartwright is president and CEO of Intelligent Compensation, a human resources consulting firm in Texas that works with the Society for Human Resource Management in Virginia. His company works with manufacturers, nonprofits, government and a host of other industries across the country. The determining factors in setting compensation, he said, will always be negotiations and supply and demand.
“It depends on circumstance,” Cartwright said of being able to boost your salary as a trade for benefits. Particularly in larger markets or competitive industries, an employee may be able to negotiate such a deal, he said. But it’s not typical and it’s most likely to occur in “upper-range economies.”
Should a husband and wife be employed by the same company, said Cartwright, it would be even less likely that the employer would pay a higher salary to either party while the other takes advantage of the insurance coverage.
During a July 13 council meeting, the mayor indicated that recently approved revisions to the employee handbook had been drafted by Sturino prior to his departure from the village late last year. Sturino confirmed that he did outline new policies for the council to adopt, and said he attempted to put into the books a standardized method for negotiating these types of compensations packages.
The revised employee handbook adopted by the council this month makes no mention of offering workers more in salary if they choose not to enroll in the village’s insurance program.