AEMTC premium reductions to save approximately $1.2 million

  • Published
  • By Patrick Ary
  • AEDC/PA
ARNOLD AIR FORCE BASE, Tenn. --  The Air Engineering Metal Trades Council (AEMTC) at Arnold Engineering Development Center has announced it will save its members and their employer, Aerospace Testing Alliance (ATA), hundreds of thousands of dollars in fiscal year 2012.

Trustees for the Aerospace Contractors Trust (ACT) voted Nov. 7 to reduce premiums on AEMTC health insurance for calendar year 2012 and voted a "premium holiday" during the month of December for ATA. Wage employees will save about $170,000 during the last month of the year; the company will save $615,000 in December alone.

"I think this is great news," said AEMTC President Jimmy Nance. "In these tough economic times, it's almost unheard of for insurance premiums to be going down. Most of them are going up."

ATA and the members of the AEMTC, which represents 11 unions at AEDC, fund the insurance plan.

Under a typical, fully-insured plan, ATA would pay a fixed monthly premium no matter what the usage would be. The insurance carrier would assume responsibility for paying claims and related anticipated financial risk. Because it assumed the risk, the carrier would keep any unused money at the end of the year; if there was a shortfall, a premium increase would be in order.

Under the self-funded insurance plan used by ATA and the AEMTC, the wage employee assumes some responsibility and financial risk for their health care expenses. The employer pays a percentage, but ATA and the employees save money because there is no middle man to pay like in a typical insurance plan, thereby saving the plan money.

The ACT board of trustees is comprised of representatives from ATA and AEMTC, with voting weighted equally between both sides. Nashville-based Southern Benefits is the insurance plan administrator, utilizing the Cigna Health Network to negotiate rates with doctors, hospitals and other health care providers. The Cigna Health network rates have also contributed to the overall positive cash flow for the fund.

The premiums reduction is a direct reflection of how the plan has been managed since 2007, according to Nance. Tough decisions were made then to increase premiums and change the benefit structure in order to keep the fund viable.

Since then, a change in carriers and a change in the plan's design have resulted in the trust getting more value for the premiums paid compared to previous health plan providers, according to ATA Labor Relations Manager Tom Quatrini. Changing to Cigna has resulted in better pricing.

These changes led to big savings and the recent decision to give employees a holiday on premiums without changing the benefit structure.

"It's a good deal for the employees, and it's a good deal for ATA and the Air Force," Quatrini said.

ATA General Manager Steve Pearson said the trustees' decision to reduce premiums will benefit more than the employees who take part in the insurance program.

"This action will reduce insurance cost for the employee but will have the added benefit of reducing our charges to the government of about $900,000 in fiscal year 2012, thus freeing up these funds for other center uses," Pearson said. "This action by the ACT Board and the AEMTC is greatly appreciated and helps in our efforts to reduce costs."
"I'd like to thank all the trustees for their hard work in making the right decisions," Nance said. "And a special thanks to Mrs. Annette Painter, the secretary of the ACT. She worked very hard on these issues.

"Our wage folks are very pleased with the announcement of this. We're getting a lot of calls from people who appreciate what has been done."