February 21, 2024

Chicopee’s insurance error costs the city less than 1% of the health benefits budget

CHICOPEE – An error that left the city paying health and dental benefits to employees and retirees who died or resigned cost the city about $150,000 a year or less and was a “perfect storm” of problems in some sections it caused.

Mayor John L. Vieau joined the city’s insurance brokers, the new chief human resources officer and the benefits specialist Monday to unveil the preliminary results of a month-long study examining how benefits continue to be paid to employees, retirees and their dependents after them. they were no longer eligible.

Some questions remain unanswered, such as exactly how much money was improperly spent and how many former employees, retirees and their dependents slipped through the cracks, officials said.

But Stephen Zajchowski, who started as chief human resources executive two weeks ago, said he is already implementing new procedures to give the city additional checks and balances to prevent the problem from happening again.

Vieau said the problem was essentially created by high turnover in the treasurer’s department and the human resources department, which went through multiple directors over the past half-dozen years, leaving both stretched multiple times.

“This also resulted in new staff not being fully briefed on some workflows and procedures, creating the perfect storm for human error in inter-departmental communications on employee terminations and death notices retirees,” Vieau said.

The error was first discovered last fall by Auditor Sharyn Riley, who discovered problems with the dental insurance premiums and then learned that benefit premium payments were not being reconciled as regularly as they should have been. Further investigation revealed even bigger problems with health insurance, he said.

The dental benefits study has been completed, and officials found that benefits were paid for 54 people who were dead or ineligible to receive them over two to three years, said Marc Criscitelli, vice president of HUB International.

The number of improperly paid health insurance benefits is probably slightly higher but is not yet known. Criscitelli said he is confident the amount paid is less than 1% of the annual budget for insurance, which is about $15 million in the fiscal year 2024 budget.

This happens in other communities, especially in cities that are paying benefits for 3,000 to 4,000 employees, he said.

Tracking benefits is complicated, because the city, which has about 2,800 employees, must track multiple employees, including those who work for the schools and are on another retirement plan. It gets even more complicated for retirees and their dependents, because few people notify the city if someone dies, Vieau said.

“It could go back as far as five or six years. Most of the errors occurred in the last two (or three) years, (20) 20, 2021 and 2022,” said Kathy Breton, assistant vice president of employee benefits for HUB International.

Vieau said he is not blaming the staff for the errors and thanked the two employees in charge of benefits, Karen Gay, the benefits manager, and Jane Steffes, who agreed to remain retired expected, for their work to sort out the paperwork. and correct the errors.

No one benefited from the errors, and there is no criminal investigation into the incident. The city is working with HUB International to try to recover some of the money improperly paid in insurance premiums, Vieau said.

He said, however, that it took longer than it should have to correct the errors, because a former head of human resources, who resigned to take another job about two months ago, stopped the study.

“After doing more research, we found out that the former (chief human resources officer) that happened, I believe in February, hindered the reconciliation of our insurance broker,” Vieau said. “HUB told us it was interested in bringing in another third party to look at this reconciliation process, and it didn’t materialize until May or June.”

The city hired an auditor from the private company Employers Association of the NorthEast to review all the books and make sure they are only paying health insurance premiums to the people who should be receiving benefits.

The mayor also criticized the four city councilors who proposed cutting the health benefits line by about $15 million in the fiscal year 2024 budget, which began July 1, saying they risked leaving employees and their families without benefits. .

He said none of the councilors have contacted him to ask for information about the errors.

Although he did not name her, Vieau also asked City Councilwoman Delmarina Lopez, who released the information about the health and dental insurance premiums shortly after she announced she was running for mayor against View.

“Certain elected officials chose to make inflammatory comments aimed at exploiting the situation for political purposes. They made allegations of corruption and illegal activity, which are unfounded,” Vieau said.

However, Lopez said residents have the right to know how public funds are being spent and that information about errors should be released as soon as possible, not months after the problems were discovered.

“I believe we need to provide information to the public about how their tax dollars are being mismanaged,” Lopez said in a written statement. “If this administration knew about this mismanagement of funds months ago, our taxpayers and the City Council knew immediately.

“This lack of transparency is unacceptable, and our city officials must be held accountable. Keeping secrets is not the leadership our city of Chicopee needs,” she said.

She also defended her decision not to vote on the budget, saying she had questions and felt it was inappropriate to “vote blindly” without clear answers from department heads about the city’s spending plan.

During Monday’s announcement, Zajchowski said part of his four-part plan to prevent the same errors from happening again includes reviewing health insurance enrollments with employees and retirees to make any corrections and family cases updated, and asking all department heads to report any staff changes. to human resources every month.

The city is also working with HUB International to upgrade its computer system, so it can largely eliminate manual paperwork, which has caused some of the errors.

Vieau said he will ask the City Council to fund an additional human resources benefits specialist position, at a cost of $45,000 to $50,000, saying it is too much for one person to do all the work for 2,800 employees, retirees and their families.

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