Beaufort and dozens of other South Carolina municipalities likely will be looking for a new health insurance provider.
The board of the S.C. Local Government Assurance Group voted last month to recommend the organization's dissolution, citing rising health care costs and decreasing membership.
Before it can dissolve, a majority of members must approve the decision by ballot vote, the group's Local Government Assurance Group's director, Harvey Mathias, said Friday.
Members have until Jan. 21 to vote, and Mathias said he anticipates enough support to carry the recommendation.
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Beaufort began purchasing health insurance through Local Government Assurance-- a 30-year-old organization formed by the S.C. Municipal Association -- about two years ago after switching from a state-run plan that officials said offered little preventative care and poor service.
Other nearby communities that purchase insurance through Local Government Assurance include the town of Ridgeland, city of Walterboro and town of Yemassee, according to the company's website.
The board's recommendation came after months of study, evaluation and consideration, Mathias said.
Since June 30, 19 members representing more than 1,100 employees and retirees left Local Government Assurance, Mathias said.
As of last month, the company covered about 4,200 municipal employees and retirees compared with 9,800 in 1996, Mathias said.
"Our cities have been forced to look at where they can try to save some money," Mathias said. "We know for a fact our health care plans are not the lowest. ...Our cities certainly cannot give us any commitment that they will continue to participate in the program."
The company is able to pay out claims through the end of the fiscal year, which ends June 30, Mathias said.
Kimberly Foxworth, Beaufort's human resources director, said she has "nothing but good things to say" about the company's customer service.
Many covered through the city's plan, however, were upset when their premiums increased -- about 25 percent for current employees and 140 percent for retirees under age 65.
A claims history was not available when the city switched about two years ago, so Local Government Assurance agreed to freeze rates for city employees and retirees for 18 months. That period ended last year, and the higher rates, based on claims over that time, were unveiled.
Beaufort had already started a comprehensive review of its plan before the Local Government Assurance board recommended it dissolve.
After the premium increases, Beaufort hired Kelley Benefits Group Inc., an independent health and benefits consulting firm, to examine its existing plan, claims history and likely effect of the new national health care plan.
Beaufort has started phase two of the review. It will request proposals for a new provider in February and review submissions in March, according to an e-mail from Foxworth to city employees.
"We want it to be inclusive, but of course we're going to have to make a business decision," Foxworth said. "Honestly, we want it to be affordable; we want it to work."
Beaufort has asked all employees, spouses and retirees still on the plan and City Council members -- who can get coverage through the city -- to participate in the review.
Findings reported in September indicated the city's participants -- about 279 people -- would be expensive to insure.
From Jan. 1, 2009, to Aug. 31, 2010, S.C. Local Government Assurance Group lost about $509,248 covering Beaufort employees and their families, a managing partner at Kelley Benefits Grouptold council members in September.
The city decided not to issue requests for proposals at that time because its claims and other associated fees cost the insurer more than Beaufort paid in premiums, Foxworth said.
City Manager Scott Dadson said that loss ratio remains a concern, but said the city will work to find the best deal for employees and taxpayers.