Opa-locka city leaders voted last week to approve a new loan program to help employees pay for emergency expenses.
The city is offering the program, LoansAtWork, through a contract with BMG Money Inc. The employee works with the company to set up a loan that would paid off through payroll deductions. The company takes up to 20 percent of the employee’s paycheck and uses those funds to pay off the debt.
For a six-month, $500 loan the average cost for an employee would be about $95 a month, according to the company’s payment estimator. The average interest rate is about 24 percent.
The plan does not require a credit check for employees. And the city, which continues to face financial concerns, will not have to pay for the program.
“There is no cost and liability to the city. We really just operate like a conduit for payroll deductions,” City Manager Kelvin Baker said.
The loan program was created to help employees who face higher out-of-pocket costs under the city’s new health insurance plan.
At a meeting in October the commission passed a resolution asking the city manager to search for a plan with lower deductibles and out-of-pocket costs. The loan program is supposed to help in the meantime.
“We recognized the fact that we needed to search to do better for the employees of the city,” Assistant City Manager David Chiverton said.
The city’s insurance advisor, Charles Citrin, presented a plan for gap insurance through Allstate at the last regular commission meeting. He said that the plan would help employees pay for what their insurance does not cover. Commissioners agreed to meet individually with Citrin to discuss the benefits of the plan, but they preferred the loan program because it helps employees without incurring a cost to the city.
“Sure, the gap program might be a good program, but it’s not on the agenda tonight,” said Commissioner Timothy Holmes at the commission’s April 9 meeting.