The Town and the School District will share in a $745,000 savings in the first year of a new insurance agreement with the municipal unions.

Town Manager Richard Montuori negotiated the four-year deal with a committee representing all of the town's unions. It takes effect July 1.

The town will continue to pay 75 percent of employees' premium for health insurance (Blue Cross/Blue Shield), 80 percent of the premium for dental insurance and 50 percent of the premium for life insurance. However, there are several changes in the new agreement that contribute to the savings.

• Employees working 20 hours a week or more are eligible for coverage, up from 17.4 hours a week.
• Elected town officials working less than 20 hours a week for the town are no longer included with the unions in the agreement. And after a vote of the Board of Selectmen last week, they are no longer eligible for coverage. This will remove eight people from the plan.
• Employees will continue to have the option of being part of an HMO plan or a PPO plan but the conditions of those plans have been changed to lower the premiums.
• The town will start to provide OBRA extended benefits for Medex recipients with the town covering 90 percent of the premium and the retiree 10 percent.

According to Montuori, current employees have the choice of joining the old HMO, the new HMO or the new PPO. New employees will choose between the new HMO and the new PPO. He said the new plans mirror what the state offers its employees.

Retired employees will be allowed to remain in their PPO, which allows patients to see "out of plan" doctors and doesn't require referrals from primary care physicians.

Montuori said that while there are other towns that allow elected officials to participate in the municipal insurance program, it is unusual to have them included in the insurance agreement with the unions.

"I have no idea why they were in there but they were. Now, they've been removed," he said.

The changes to the insurance plans being made in Tewksbury and many other communities in the Commonwealth, were made possible through a bill passed by the Legislature and signed by Gov. Patrick, giving municipalities more flexibility in how they provide insurance.

One provision under the law, explained Montuori, is that the towns must share at least 25 percent of the costs savings from the first year with the employees. This can come either through lower premiums or by creating a mitigation fund to help employees with uncovered expenses.

Montuori said Tewksbury will set up a mitigation fund with 15 percent of the savings (roughly $111,750) in the first year of the agreement and another 15 percent in the third year of the agreement. If there is anything left from that fund after the fourth year, it will be used to reduce premiums, said Montuori.

According to Montuori, there are presently 710 active municipal employees plus another 499 MedEx recipients (retirees) on the town health insurance plan. There are 1,071 on the town dental plan.