NAUGATUCK — A new contract with the Naugatuck Visiting Nurses Association (VNA) will lower the borough’s health insurance obligations while increasing wages for nurses slightly over the next three years.
A focus on changing the health care benefits for borough employees has been a priority for Mayor Robert Mezzo.
“It’s time to be intelligent over the long term and realize that while we would like to be able to offer lucrative benefits to our employees, the reality is we simply can’t sustain the level of cost of those benefits that we’ve been paying for the better part of a generation,” Mezzo said.
He said the philosophy of the borough’s negotiating team is that while wage freezes make headlines, cuts in health costs make a real difference over the long term.
The three-year contract was approved Tuesday night by the Board of Mayor and Burgesses. The contract is retroactive to July 1.
The new plan is estimated to save the borough about $25,000 over the next three years.
“That’s the equivalent of getting a year and a half worth of wage increases,” Mezzo said.
According to Mezzo, if the town had asked for zero wage increases and kept the health benefits as they were, it would have cost the borough $56,000 more.
Under the new agreement, the borough offers registered nurses and physical therapists two options for health insurance.
The first plan will increase the amount employees contribute to the annual premium from 8 percent to 11.5 percent over the contract. The first plan includes slight increases in co-pays.
Mezzo said the 8 percent employees are contributing now is out of line with equivalent plans in the private sector.
The second plan increases employee contributions towards the premium from 2 percent to 6 percent. This plan offers a health savings account coupled with a higher deductible. In the first year of the contract, the borough will contribute 75 percent of the deductible, which will decrease to 65 percent, then 50 percent over the last two years of the deal. Originally, the borough funded 100 percent of the deductible.
According to Mezzo, the second plan was supposed to save money by giving employees incentive not to use the money in their health accounts, but employers found that if they paid too much, employees didn’t save. With employees contributing to that account, Mezzo said he expects them to save more.
There’s a financial incentive for the bargaining unit’s members to go into the health savings account, which will benefit both the employee and the borough, Mezzo said.
As for wages, they will increase 2.15 percent in the first two years and 2.2 percent in the third year, totaling about $46,000 over the life of the contract.
“We think the modest wage increase, which is actually lower than many of the other agreements that we have, is more than justified by the savings in the health care,” Mezzo said.
Mezzo said the new agreement puts the town in a better position with other bargaining units when inevitable comparisons are made.
“We had a very good spirited and cooperative negotiation with the VNA bargaining unit. I think they understand the times that we live in and they were willing to make some very meaningful changes to their health care plan that will benefit the borough and ultimately benefit the employees,” Mezzo said.
Mezzo said pensions were not part of the discussion since the borough closed the pension plan a year ago as part of an agreement to extend the VNA contract, which was up in 2010, another year. All new hires now go into a defined contribution plan.
Mezzo said the new contract is another step towards achieving long-term fiscal health and sustainability in Naugatuck.
“We’d love the throw a Hail Mary and dramatically change some of the unsustainable benefits that we have offered over many years, but the reality is it’s much more like three yards and a cloud of dust,” Mezzo said.
VNA union representatives could not be reached for comment as of this post.