Salem County Board of Chosen Freeholders
92 Market Street. Salem, N.J. 08079

Contact: Rita Shade Simpson, Clerk of the Board/Administrator

February 21, 2002


Salem The Salem County Board of Chosen Freeholders voted unanimously Wednesday to reduce budget costs by ending self-insurance and switching employee health coverage to the State Health Benefits Plan, said Freeholder Director Dave Sparks.

"An analysis of the Countys self-insurance plan and the State Health Benefits Plans shows that the two coverages offer comparable benefits," said Sparks. "However, when it comes to costs, the County would save approximately $500,000 in this years fiscal budget." He said County employees will continue to receive free coverage under the plan.

Sparks said even if State Health Benefit rates increase by 20% in 2003, the County would still save an additional $700,000.

Deputy Director Jack Kugler made the recommendation to the full board after outlining options at Wednesdays meeting. Kugler chairs the recently formed bi-partisan task force charged with examining various areas of government operations.

Driving the decision was a further analysis of the cost of the Countys re-insurance plan. As a self-insured employer, the County is responsible for the first $85,000 of any claim submitted by an employee. The reinsurance policy covers costs above $85,000 up to $1 million.

"The Countys projected increase for reinsurance even if it could be obtained would cost more than $600,000. The market is very tough," said Kugler. "Our insurance consultants tell us that if you cannot get reinsurance protection, you cannot stay in the self-insurance arena."

In FY2001, the Countys combined insurance premium for the health benefits coverage and the reinsurance protection was a total of $5.1 million, which was a >>>>>.% increase over FY2000.

"When the County went to self insurance in 1991, it saved us substantial money," said Sparks. Now, however, self-insurance is not cost-effective in the marketplace."

The State Health Benefits Act of the State of New Jersey is administered by the state.

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