HomeMy WebLinkAboutAgenda - 05-10-2011 - 3ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: May 10, 2011
Action Age 3
Item No.
SUBJECT: Employee and Retiree Health Care Coverage
DEPARTMENT: Human Resources PUBLIC HEARING: (Y/N) No
ATTACHMENT(S): INFORMATION CONTACT:
1. History of Participation and Costs for Katherine Cathey, Interim Human
Employee and Retiree Health Resources Director, 245-2553
Insurance Diane Shepherd, Benefits Manager, 245-
2. Employee Health Care Benefits 2558
Provided by Local Government
Employers
3. April 2011 Employee Survey Results
4. Options for Lowering the Costs of
Employee and Retiree Health Care
5. FY 2010-11 Budgeted Personnel and
Fringe Benefit Cost
PURPOSE: To receive information on employee and retiree health care for 2012 and to
provide feedback to staff regarding options related to employee and retiree health care benefits.
BACKGROUND: Each year the Manager's Recommended Budget includes recommendations
specific to employee and retiree health care. The FY 2011-12 Manager's Recommended
Budget includes funds for up to a 15% increase ($552,598 for six months) in health insurance
premiums for employees and retirees. A 15% increase in premiums equates to a 19% increase
($1,046,704) over the FY 2010-11 budget for employee and retiree health insurance. (The FY
2010-11 budget included funds for paying health insurance premiums at the 2010 rate for the
first half of a fiscal year and premiums at the 2011 rate for the second half of the fiscal year.)
When annualized, the amount budgeted in FY 2011-12 for increases in the County's health
insurance cost is equivalent to a 3% salary increase for all permanent employees.
In September 2010, the County retained the services of a benefits consultants, Mark III, to
assist with the County's entire benefits package, including health insurance. As a specialist in
public sector employers, Mark III has worked with numerous counties and cities to reduce
health insurance costs. Mark III has begun to review potential new carriers for the County and
will assist in designing health insurance plan(s) that meet the needs of County employees.
Based on County employee and retiree claims data, Mark III has predicted a 20-25% increase
for premiums beginning January 1, 2012, regardless of the carrier.
Health insurance costs are growing more rapidly than the cost of living. Attachment 1 provides
a history of health insurance costs for the past five years and the projected cost for 2012. With
these rising costs, the County must have a clear strategy in place to manage the costs
2
appropriately, to aid in developing a healthy and high performing workforce, and to provide
useful information and direction to staff and employees.
Retiree health insurance will become a greater cost to the County as more baby-boomers retire
and live longer. Orange County has a generous retiree health package. As of April 2011, 10%
(more than 80 individuals) of current Orange County employees are eligible to retire. The
current Personnel Ordinance requires the County provide health insurance for post-65 retirees
at the same level as active employees and pre-65 retirees, even though Medicare has gone
through several changes, and costs for excellent Medicare supplements are two-thirds of the
cost of the County Health Plan.
Many other counties and cities require employees to pay for a portion of their health insurance
premiums and do not fund dependent coverage to the extent that Orange County does.
Orange County's benefits exceed the average health insurance benefit in North Carolina in
terms of co-pays and deductibles. Attachment 2 provides a summary of employee health care
benefits from a 2010 survey of local government employers.
Health insurance is an important benefit for employees, and. the prospect of receiving retiree
health insurance is a significant factor for many employees' choice to retire from Orange
County. Employees who left County employment since 2010 and completed an Exit Interview
overwhelmingly indicated the health insurance benefit was excellent (66%) or good (26%).
A recent employee survey was conducted to obtain employee opinions related to health care
coverage. The responses are summarized in Attachment 3. Overall, responses indicate
employees value their health insurance and have made changes in the past year to use the
plan wisely. Many employees indicated they have recently begun using preventive services,
started exercising or taken actions that have long-term positive effects on an individual's overall
health.
Employees have stated there should not be any change to health insurance benefits while
salaries remain at 2009 levels. Many have stayed with the County because they are counting
on the retiree health benefit. The most frequent suggestion related to retiree health benefits
(other than to keep it the same) was to increase the eligibility from ten years to twenty years
service for new hires.
Staff has identified a variety of options that lower the cost of employee and retiree health care.
The options vary significantly and are summarized in Attachment 4. Each option does have
impacts of varying degrees.
FINANCIAL IMPACT: There is no financial impact associated with receiving information and
providing feedback on options related to employee and retiree health care.
RECOMMENDATION(S): The Manager recommends the Board receive information on
employee and retiree health care for 2012 and provide feedback regarding options related to
employee and retiree health care benefits. The FY 2011-12 proposed budget does not include
any specific changes at this time, but does fund the projected increases (up to 15%) in
premiums/costs through June 2012.
Summary of HMO and PPO Participation and Costs for Employees and Retirees
2007-2012
lan Year
lan Design Changes
of
Employees
Employee
Cost for
Dependents Employee
Coverage
(Exclusive of
Dependent
Subsidy)
County Cost of
Dependent
Subsidy
otal Annual
County Cost
otal Premium
Active HMO 693 $1,304,248 $4 985,223 $1,197,918 $6 183 141 $7,487,389
2012 Active PPO 112 $221 321 $786 741 $239 771 $1,026 512 $1 247 833
15% Retiree HMO 127 $154,612 $919 645 $141 760 $1 061 405 $1 216,017
Projected Retiree PPO 15 $14 229 $105 367 $15 415 $120 782 $135 010
Increase Post-65 129 $0 $484,471 $0 $484 471 $484 471
Total 1 076 $1 694 410 $7 281 447 $1 594 864 $8 876 310 $10 570 720
$1000 allowance for hearing aids Active HMO 693 $1,134,129 $4,334,976 $1,041,668 $5,376,644 $6,510 773
Mental health visits covered at 100% Active PPO 112 $192,453 ~ $684,123 $208,496 $892,619 $1,085,072
2011 Opened dependent status to all children up to Retiree HMO 127 $134,445 $799,691 $123,270 $922,961 $1,057,406
age 26 Retiree PPO 15 $12,373 $91,624 $13,404 $105,028 $117,400
Post-65 129 $0 $459 738 $0 $459 738 $459 738
Total 1 076 $1 473 399 $6 370 152 $1 386 838 $7 756 990 $9 230 389
Provided $0 generics Active HMO 730 $1,160,963 $4 289 184 $1 070 674 $5 359,858 $6 520,821
Increased Physical Therapy visits by 50% Active PPO 102 $127,630 $585 023 $138 267 $723,290 $850 920
2010 Added 100% covered visits to Convenience Retiree HMO 121 $105,384 $716,736 $90,831 $807 567 $912,951
Care Clinics Retiree PPO 13 $3,056 $74,562 $3 310 $77 872 $80 928
Removed student status criteria for children Post-65 109 $0 $385 980 $0 $385,980 $385 980
over 19 Total 1 075 $1 397 033 $6 051 485 $1 303 082 $7 354 567 $8 751 600
Added Health Advisor program Active HMO 743 $1,171 078 $4,248,793 $1,079,464 $5 328 258 $6 499 336
Active PPO 80 $99,532 $446,784 $107 827 $554,611 $654,143
2009 'Right-priced" premiums based on claims & co- Retiree HMO 94 $82,536 $541,558 $75,687 $617,245 $699 781
insurance so HMO became .more costly plan Retiree PPO 11 $2 976 $61 433 $3 223 $64,656 $67 632
Post-65 92 $0 $303,432 $0 $303,432 $303 432
Total 1 020 $1 356 122 $5 602 000 $1 266 202 $6 868 202 $8 224 323
Increased Office Visit co-pays from $10/$20 to Active HMO 752 $1,014,989 $4,016 221 $1 099 565 $5,115 786 $6,130 775
$15/$30 Active PPO 46 $33 424 $280,788 $20,707 $301,495 $334,919
2008 Added Employee/Child tier Retiree HMO 75 $67 814 $400,554 $73 464 $474,018 $541,832
Retiree PPO 13 $4,797 $80,520 $3,081 $83 600 $88,398
Post-65 data is unavailable
Total 886 $1 121 025 $4 778 083 $1 196 817 $5 974 900 $7 095 925
(Participation as of July 2007) Active HMO 741 $1,057 483 $3,606,951 $1,145,614 $4 752 564 $5,810,048
Added 100% covered preventive care Active PPO 36 $28 883 $199,666 $18 292 $217 958 $246,841
2007 Retiree HMO 84 $81,291 $408,885 $88 067 $496 952 $578 243
Retiree PPO 19 $13,117 $105,964 $8,422 $114,386 $127,503
Post-65 data is unavailable
Total 880 $1 180 774 $4 321 466 $1 260 394 $5 581 861 $6 762 635
N
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HMO Participation and Costs for Active Employees
2007-2012
Monthly Annual
lan Year
lan Design Changes
ier
of
Employees
remium
range County
Contribution
Employee
Contribution
(Dependents
Only)
Employee
Cost for
Dependents Employee
Coverage
(Exclusive of
Dependent
Subsidy)
County Cost
of Dependent
Subsidy
otal
Premium
Em to ee 379 $611 $611 $0 $0 $2,779,537 $0 $2,779,537
2012 Em /Child 103 $856 $707 $148 $183,485 $723,521 $150,487 $1,057,493
15% Em /Children 74 $1,180 $868 $311 $276,206 $519,811 $251,387 $1,047,404
Projected Em /S ouse 63 $1,290 $923 $366 $276,904 $442,542 $255,430 $974,876
Increase Famil 74 $1,833 $1,194 $639 $567,653 $519,811 $540 614 $1,628,079
Total 693 $1,304,248 $4,985,223 $1,197,918 $7,487,389
$1000 allowance for hearing aids Em to ee 379 $531 $531 $0 $0 $2,416,989 $0 $2,416,989
Mental health visits covered at 100% Em /Child 103 $744 $615 $129 $159,552 $629,149 $130,858 $919,559
2011 Opened dependent status to all children up to Em /Children 74 $1,026 $755 $270 $240,179 $452,010 $218,597 $910,786
age 26 Em /S ouse 63 $1,121 $803 $319 $240,786 $384,819 $222,113 $847,718
Famil 74 $1,594 $1,038 $556 $493,611 $452,010 $470,099 $1,415 721
Total 693 $1,134,129 $4,334,976 $1,041,668 $6,510,773
Provided $0 generics Em to ee 405 $499 $499 $0 $0 $2,425,140 $0 $2,425,140
Increased Physical Therapy visits by 50% Em /Child 87 $699 $577 $121 $126,539 $498,990 $103,794 $729,324
2010 Added 100% covered visits to Convenience Em /Children 77 $963 $709 $254 $234,659 $441,635 $213,573 $889,867
Care Clinics Em /S ouse 78 $1,053 $754 $299 $279,910 $447,371 $258,215 $985,496
Removed student status criteria for children Famil 83 $1,497 $975 $522 $519,854 $476,048 $495,092 $1 490 994
over 19 Total 730 $1,160,963 $4,289,184 $1,070,674 $6,520,821
Added Health Advisor program Em to ee 404 $486 $486 $0 $0 $2,355,546 $0 $2,355,546
"Right-priced" premiums based on claims & Em /Child 94 $680 $562 $118 $133,127 $524,971 $109,190 $767,288
2009 co-insurance so HMO became more costly Em /Children 70 $938 $690 $247 $207,707 $390,936 $189,059 $787,702
.plan Em /S ouse 91 $1,025 $734 $291 $317,969 $508,217 $293,333 $1,119,518
Famil 84 $1,458 $949 $508 $512,276 $469,123 $487,882 $1,469,281
Total 743 $1,171,078 $4,248,793 $1,079,464 $6,499,335
Increased Office Visit co-pays from $10/$20 Em to ee 410 $445 $445 $0 $0 $2,189,695 $0 $2,189,695
to $15/$30 Em /Child 83 $623 $538 $85 $85,098 $443,280 $92,190 $620,568
2008 Added Employee/Child tier Em /Children 71 $859 $660 $199 $169,275 $379,191 $183,384 $731,851
Em /S ouse 89 $939 $702 $237 $253,031 $475,324 $274,113 $1,002,468
Famil 99 $1,335 $908 $427 $507,585 $528,731 $549,878 $1,586,194
Total 752 $1,014,989 $4,016,221 $1,099,565 $6,130,775
(Participation as of July 2007) Em to ee 399 $406 $406 $0 $0 $1,942,204 $0 $1,942,204
Added 100% covered preventive care Em /Child Not an O tion
2007 Em /Children 138 $783 $602 $181 $299,868 $671,740 $324,874 $1,296,482
Em /S ouse 94 $856 $640 $216 $243,580 $457,562 $263,884 $965,027
Famil 110 $1,217 $828 $389 $514,034 $535,445 $556,855 $1,606,334
Total 741 $1,057,483 $3,606,951 $1,145,614 $5,810,048
PPO Participation and Costs for Active Employees
2007-2012
Monthly Annual
lan Year
lan Design Changes
ier
of
Employees
remium
Orange
County
Contribution
Employee
Contribution
(Dependents
Only)
Employee
Cost for
Dependents of Employee
Coverage
(Exclusive of
Dependent
Subsidy)
County Cost
of Dependent
Subsidy
otal
Premium
Em to ee 58 $585 $585 $0 $0 $407,420 $0 $407,420
2012 Em /Child 13 $820 $707 $112 $17,531 $91,318 $18,995 $127,844
15% Em /Children 11 $1,130 $868 $261 $34,495 $77,269 $37,368 $149,131
Projected Em /S ouse 11 $1,235 $923 $312 $41,168 $77,269 $44,599 $163,036
Increase Famil 19 $1,756 $1,194 $562 $128,127 $133,465 $138,809 $400,400
Total 112 $221,321 $786,741 $239,771 $1,247,832
$1000 allowance for hearing aids Em to ee 58 $509 $509 $0 $0 $354,278 $0 $354,278
Mental health visits covered at 100% Em /Child 13 $713 $615 $98 $15,244 $79 407 $16,517 $111,169
2011 Opened dependent status to all children up to Em !Children 11 $982 $755 $227 $29,996 $67,191 $32,494 $129,679
age 26 Em /S ouse 11 $1,074 $803 $271 $35 798 $67,191 $38,782 $141,771
Famil 19 $1,527 $1,038 $489 $111,414 $116,057 $120 703 $348,174
Total 112 $192,453 $684,123 $208,496 $1,085,071
Provided $0 generics Em to ee 62 $478 $478 $0 $355,602 $0 $355,602
Increased Physical Therapy visits by 50% Em /Child 10 $669 $577 $92 $11,012 $57,355 $11 930 $80,297
2010 Added 100% covered visits to Convenience Em /Children 9 $922 $709 $213 $23,043 $51,620 $24,963 $99,626
Care Clinics Em /S ouse 9 $1,008 $754 $255 $27,502 $51,620 $29,794 $108,916
Removed student status criteria for children Famil 12 $1,434 $975 $459 $66,073 $68,826 $71,580 $206,479
over 19 Total 102 $127,630 $585,023 $138,267 $850,919
Added Health Advisor program Em to ee 48 $465 $465 $0 $0 $268,070 $0 $268 070
Em /Child 8 $652 $562 $89 $8,579 $44,678 $9,293 $62,550
2009 "Right-priced" premiums based on claims & co Em /Children 4 $898 $690 $208 $9,972 $22,339 $10,803 $43,115
insurance so HMO became more costly plan Em /S ouse 11 $982 $734 $248 $32,731 $61,433 $35,458 $129,621
Famil 9 $1,396 $949 $447 $48,251 $50,263 $52,273 $150,787
Total 80 $99,532 $446,784 $107,827 $654,144
Increased Office Visit co-pays from $10/$20 to Em to ee 38 $522 $522 $0 $0 $238,068 $0 $238,068
$15/$30 Em /Child 2 $731 $538 $193 $4,639 $10,680 $2,223 $17,542
2008 Added Employee/Child tier Em /Children 0 $1,008 $660 $347 $0 $0 $0 $0
Em /S ouse 6 $1,102 $702 $400 $28,785 $32,040 $18,485 $79,309
Famil 0 $1,566 $908 $658 $0 $0 $0 $0
Total 46 $33,424 $280,788 $20,707 $334,920
(Participation as of July 2007) Em to ee 29 $476 $476 $0 $0 $165,592 $0 $165,592
Added 100% covered preventive care Em /Child Not an 0 tion
2007 Em /Children 3 $918 $602 $316 $11,393 $14,603 $7,062 $33,059
Em /S ouse 4 $1,004 $640 $364 $17,489 $19,471 $11,229 $48,189
Famil 0 $1,427 $828 $600 $0 $0 $0 $0
Total 36 $28,883 $199,666 $18,292 $246,840
CJ7
HMO Participation and Costs for Pre-65 Retirees
2007-2012
Monthly Annual
lan Year
lan Design Changes
ier
of
Retirees
remium
Orange
County
Contribution
Retiree
Contribution
(Dependents
Only)
Retiree Cost
for
Dependents Retiree
Coverage
(Exclusive of
Dependent
Subsidy)
County
Cost of
Dependent
Subsidy
otal
Premium
Retiree 89 $611 $611 $0 $0 $652,715 $0 $652,715
2012 Ret/Child 8 $856 $707 $148 $14,251 $56,196 $11,688 $82,135
15% Ret/Children 2 $1,180 $868 $311 $7,465 $14,049 $6,794 $28,308
Projected Ret/S -DP 25 $1,290 $923 $366 $109,883 $175 612 $101,361 $386,855
Increase Ret/Famil 3 $1,833 $1,194 $639 $23,013 $21,073 $21,917 $66,003
Total 127 $154,612 $919,645 $141,760 $1,216,017
$1000 allowance for hearing aids Retiree 89 $531 $531 $0 $0 $567 578 $0 $567,578
Mental health visits covered at 100% Ret/Child 8 $744 $615 $129 ~ $12,392 $48,866 $10,164 $71,422
2011 Opened dependent status to all children up to Ret/Children 2 $1,026 $755 $270 $6,491 $12,216 $5,908 $24,616
age 26 Ret/S -DP 25 $1,121 $803 $319 $95,550 $152,706 $88,140 . $336,396
Ret/Famil 3 $1,594 $1,038 $556 $20,011 $18,325 $19,058 $57,394
Total 127 $134,445 $799,691 $123,270 $1,057,406
Provided $0 generics Retiree 90 $499 $499 $0 $0 $538,920 $0 $538,920
Increased Physical Therapy visits by 50% Ret/Child 5 $699 $577 $121 $7,272 $28,680 $5,963 $41,915
2010 Added 100% covered visits to Convenience Ret/Children 1 $963 $709 $254 $3,048 $5,736 $2,773 $11,557
Care Clinics Ret/S -DP 23 $1,053 $754 $299 $82,538 $131,928 $76,129 $290,595
Removed student status criteria for children Ret/Famil 2 $1,497 $975 $522 $12,527 $11,472 $11,929 $35,928
over 19 Total 121 $105,384 $716,736 $96,794 $918,914
Added Health Advisor program Retiree 68 $486 $486 $0 $0 $396,478 $0 $396,478
"Right-priced" premiums based on claims & Ret/Child 4 $680 $562 $118 $5,665 $22,320 $4,666 $32,651
2009 co-insurance so HMO became more costly Ret/Chifdren 0 $938 $690 $247 $0 $0 $0 $0
plan Ret/S -DP 22 $1,025 $734 $291 $76,872 $122,760 $71,021 $270,653
Ret/Famil 0 $1,458 $949 $508 $0 $0 $0 $0
Total 94 $82,536 $541,558 $75,687 $699,781
Increased Office Visit co-pays from $10/$20 Retiree 51 $445 $445 $0 $0 $272,377 $0 $272,377
to $15/$30 Ret/Child 4 $623 $538 $85 $4,101 $21,363 $4,443 $29,907
2008 Added Employee/Child tier Ret/Children 0 $859 $660 $199 $0 $0 $0 $0
Ret/S -DP 17 $939 $702 $237 $48,332 $90,792 $52,359 $191,483
Ret/Famil 3 $1,335 $908 $427 $15,381 $16,022 $16,663 $48,066
Total 75 $67,814 $400,554 $73,464 $541,833
(Participation as of July 2007) Retiree 56 $406 $406 $0 $272,590 $0 $272,590
Added 100% covered preventive care Ret/Child Not an o tion
2007 Ret/Children 4 $783 $602 $181 $8,692 $19,471 $9,417 $37,579
Ret/S -DP 19 $856 $640 $216 $49,234 $92,486 $53,338 $195,059
Ret/Famil 5 $1,217 $828 $389 $23 365 $24,338 $25,312 $73,015
Total 84 $81,291 $408,885 $88,067 $578,243
rn
PPO Participation and Costs for Pre-65 Retirees
2007-2012
Monthly Annual
lan Year
lan Design Changes
ier
of
Retirees
remium
Orange
County
Contribution
Retiree
Contribution
(Dependents
Only)
Retiree Cost
for
Dependents Retiree
Coverage
(Exclusive of
Dependent
Subsidy)
County Cost
of Dependent
Subsidy
otal
Premium
Retiree 12 $585 $585 $0 $0 $84,294 $0 $84,294
2012 Ret/Child 0 $820 $707 $112 $0 $0 $0 $0
15% Ret/Children 0 $1,130 $868 $261 $0 $0 $0 $0
Projected Ret/S ouse 2 $1,235 $923 $312 $7,485 $14,049 $8,109 $29,643
Increase Famil 1 $1,756 $1,194 $562 $6,744 $7,024 $7,306 $21,074
Total 15 $14,229 $105,367 $15,415 $135,010
$1000 allowance for hearing aids Retiree 12 $509 $509 $0 $0 $73,299 $0 $73,299
Mental health visits covered at 100% Ret/Child 0 $713 $615 $98 $0 $0 $0 $0
2011 Opened dependent status to all children up to Ret/Children 0 $982 $755 $227 $0 $0 $0 $0
age 26 Ret/S ouse 2 $1,074 $803 $271 $6,509 $12,216 $7,051 $25,776
Famil 1 $1,527 $1,038 $489 $5,864 $6,108 $6,353 $18,325
Total 15 $12,373 $91,624 $13,404 $117,400
Provided $0 generics Retiree 12 $478 $478 $0 $68,826 $0 $68,826
Increased Physical Therapy visits by 50% Ret/Child 0 $669 $577 $92 $0 $0 $0 $0
2010 Added 100% covered visits to Convenience Ret/Children 0 $922 $709 $213 $0 $0 $0 $0
Care Clinics Ret/S ouse 1 $1,008 $754 $255 $3,056 $5,736 $3,310 $12,102
Removed student status criteria for children Ret/Famil 0 $1,434 $975 $459 $0 $0 $0 $0
over 19 Total 13 $3,056 $74,562 $3,310 $80,928
Added Health Advisor program Retiree 10 $465 $465 $0 $0 $55,848 $0 $55,848
Ret/Child 0 $652 $562 $89 $0 $0 $0 $0
2009 "Right-priced" premiums based on claims & co Ret/Children 0 $898 $690 $208 $0 $0 $0 $0
insurance so HMO became more costly plan Ret/S ouse 1 $982 $734 $248 $2,976 $5,585 $3,223 $11,784
Ret/Famil 0 $1,396 $949 $447 $0 $0 $0 $0
Total 11 $2,976 $61,433 $3,223 $67,632
Increased Office Visit co-pays from $10/$20 to Retiree 12 $522 $522 $0 $0 $75,180 $0 $75,180
$15/$30 Ret/Child 0 $731 $538 $193 $0 $0 $0 $0
2008 Added Employee/Child tier Ret/Children 0 $1,008 $660 $347 $0 $0 $0 $0
Ret/S ouse 1 $1,102 $702 $400 $4,797 $5,340 $3,081 $13,218
Ret/Famil 0 $1,566 $908 $658 $0 $0 $0 $0
Total 13 $4,797 $80,520 $3,081 $88,398
(Participation as of July 2007) Retiree 16 $476 $476 $0 $0 $91,361 $0 $91,361
Added 100% covered preventive care Retiree/Child Not an o tion
2007 Retiree/Children 0 $918 $602 $316 $0 $0 $0 $0
Ret/S ouse 3 $1,004 $640 $364 $13,117 $14,603 $8,422 $36,142
Ret/Famil 0 .$1,427 $828 $600 $0 $0 $0 $0
Total 19 $13,117 $105,964 $8,422 $127,503
..-i
Post-65 Health Care Participation and Costs
2009-2012
Blue Cross Blue S hield Plan Rates (M edicare Part B Supplement & Part D)
eve etirees ont y remium nnua ost
Plan 12 3 $585 $21,061
2012 65
66-69 31
31 $247
$91,884
$272 $100,998
70-74 28 $320
$107,436
75+ 34 $377 $153,612
Su lement onl 2 $395 $9,480
Total 129 $484,471
Effective July 1, 2010, changed from Plan 12 3 $509 $18,324
2011 Plan J to Plan F for cost savings of 65 31 $238 $88,443
approximately $24,000. The rates were 66-69 31 $259 $96,255
then based on age as of July 1, 2010, 70-74 28 $309 $103,824
and employees moved from an entry age 75+ 34 $352 $143,412
level to an attained age level, Sup lement onl 2 $395 $9,480
Total 129 $459,738
Plan 12 3 $499 $17,964
2010 65
66-69 83
16 $283 $281,868
$294 $56,448
70-74 3 $308 $11, 088
75+ 1 $351 $4,212
Sup lement only 3 $400 $14,400
Total 109 385,980
Plan 12 4 $507 $24,336
2009 65
66-69 70
12 $254 $213,360
$266 $38, 304
70-74 2 $285 $6,840
75+ 1 $318 $3,816
Su lement only 3 $466 $16,776
Total 92 $303,432
00
Employee Health Care Benefits Provided by Local Government Employers
Hill Chesson Woody Survey (2010)
Employer ..Cost of Individual
.Health Insurance Employee Paid
Premium for
Individual Coverage
Deductible
RX
Co-Pays
Co-Insurance
Orange County $499/$478 $0 $250/$750 $0-$15-$30 $15/$30 100%/$0
Chapel Hill $479 $0 ~ $0/$0 $10-$25-$40 $20/$40 100%/$0
Raleigh $398 $0 $500/$1500 $10-$25-$50-25% $20/$30 80%/$2000
Hillsborough $480 $0 $400/$800 $5-$20-$40 $10/$20 70%/$1500
OWASA $590 $0 $500/$1000 $10-$20-$35-25% $10/$20 100%/$0
Carrboro $448 $0 $0/$0 $10-$25-$40-25% $15/$30 90%/$1000
Cary $403 $0 $1000/$2000 0-$25-$50-25% $20/$40 80%/$1500
Garner $406 $0 $750/$1500 $10-$40-$55-25% $25/$50 80%/$1000
Durham (City) $413, $372, $357 $32.84-$91.77 $300-$1000/$900-$3000 Varies (all areOC re costly than $15-$20/$30-$40 100%/$0
Apex $426 $0 $250/$500 $10-$25-$40 $15/$30 90%/$1500
Holly Springs $358 $0 $1750/$5250 $10-$35-$50 $25/$50 80%/$2000
Fuquay-Varina $475, $423 $22.44 for lower
deductible Ian $500/$1000 Varies, $10-$50 (3 tiers) $20-$25/$30-$50 80-90%/$1000-$3000
Wake Forest $480 $0 $500/$1500 $10-$25-$40-25% $25/$50 80%/$3000
Wake County $414, $462 $11,$22 $500/$1000 80%, 85% n/a 80%/$2500
Granville Count
y $397 $25 without wellness
artici ation
$750/$2250 $10-$25-$40-25% (min $50,
max $100
$20/$30
80%/$2000
Morrisville $391 $0 $250/$500 $10-$20-$35-25% $20/$40 100%/$0
Pinehurst $425 $0 $500/$1000 $10-$30-$45 $25/$50 80%/$3000
w
,~}-µn~J,,...~ 3
Employee Survey Results
April 2011
An internet survey was created through the website Survey Monkey to allow employees
to provide their opinions about health care. Survey Monkey is a confidential tool that is
easy to use. The survey was distributed to employees by email in late April 2011. Hard
copies were made available to all department directors for distribution to employees
who did not have email or internet access.
456 employees responded, with 50 hard copies from departments such as Public Works
and Solid Waste.
1. What level of health insurance coverage do you currently have?
Response Options Survey
Res ondents Actual
None .9% 1
Individual 49.3% 54%
Individual + 1 Child 15% 14%
Individual/Children 9.3% 10%
Individual/Spouse 10.4% 9%
Famil 15.2% 12%
2. What is your current salary, before deductions?
Response Options Survey
Res ondents Actual
$32,000 or less 19.4% 17.1
$32,001-$50,000 49.2% 55.7%
$50,001 or hi her 31.3% 27.1
3. How do current Orange county health care benefits compare to the benefits
offered by other employers?
Response Options Response
Better 36.9%
Similar 31.1
Worse 3.1
Don't know 28.9%
10
Employee Survey Results
April 2011
4. Please rank the current health benefit features by importance to you (and your
covered dependents if applicable). One (1) is most important and seven (7) is
least important.
Res onse Options Rank
No remium for Emplo ee Onl covers e 1
Office Visit Co-pays of $15/primary care & $30/s ecialist 2
$0 Co-pa for Generic Prescri tions 3
$250/Year Deductible 4
10% or less cost for hospitalizations, surgeries, diagnostic tests,
etc. (plus $250 deductible 5
$15/$30 Co- a s for Brand Name Prescription 6
5. Costs for health insurance have more than doubled since 2002. The following
are additional steps that can be taken to manage costs. Indicate all that you
would support as an effort to keep all premiums as low as possible.
Res onse Options Response
Conduct an audit to ensure only eligible dependents are
enrolled 68.1
Require smokers, who don't take steps to quit, to pay higher
costs for health covers e 62.1
Require employees to participate in wellness activities to
receive the hi hest available level of coverage 49.3%
Require use of mail order for 90 da or Ion er) prescri tions 43.4%
Offer onl one Ian, similar to the current lans 35.0%
Establish a longer waiting period before new employees are
eli ible for covers e. 23.3%
Split the cost of an increase in monthly premiums between the
County and the emplo ees 22.9%
Reduce the 52% subsidy for dependent coverage 16.1
Eliminate the subsid for dependent covers e 5.7%
Other (please speci 14.8%
A sampling of comments under this question included:
I want to keep coverage the same or have that option and individuals should not
automatically have to pay the same increase in premium especially when you
compare what it is costing the county for individual coverage versus what the county
pays in benefits for the different types of family coverage (usually around $5, 500
more in benefits to employees with family coverage). The individual is already
getting a lot less in terms of benefits. County employees cannot afford paying any
significant % of this type of increase with the taxes we pay in this county and the
drastic increase in cost of living that we are experiencing without any cost of living or
in line increases in the last 2 years.
11
Employee Survey Results
April 2811
The NCACC is no longer an option but that doesn't mean we can't work with other
counties in the area to develop our own cooperative agreement with as many
counties as possible if we're going to be penalized like this for contracting on our
own.
6. Which of the following would you prefer?
Res onse O tions Response
Increase employee paid premiums, including the Employee Only
premium, to keep the benefits similar to today's coverage level. This 59%
could require em loyees to contribute to all .premiums.
Reduce the benefits and keep costs similar to today's premiums. 41
7. Orange County is considering a new type of health plan that combines a pre-
tax Health Savings Account (HSA) with a high deductible for all non-preventive
care services. Preventive care is covered at 100%. The monthly premiums are
less with this plan than our current plans. The County contributes to the HSA
and the employee uses the HSA to pay for some of his or her health care
expenses. If the HSA funds aren't all used, the contributions carry over from
year to year, and belong to the employee when employment ends. There are
many details, but the examples below show how the plan would work for most
employees.
This question was asked to start the education process regarding Health Savings
Accounts. 65% of employees identified with one of the examples. The comments
indicated that many did not understand the Health Savings Account aspect and
focused on the "high deductible" component.
Response Options Response
Receives only preventive care. Because preventive care is 24%
covered at 100%, would not have to pa for any coverage.
Sees a specialist every month and takes several prescriptions 17%
daily for a chronic condition; would pay more for health care in the
beginning of each year, but after meeting the annual cost limit,
there would be no co-pays for prescriptions or doctor visits. Yearly
out of pocket costs would be lower than with the current plan and
the count premiums would be less than a traditional Ian.
Occasionally sees a doctor for services that aren't preventive, but 24%
has no chronic conditions. Might have higher costs than with one
of our current plans.
None of the above. 20.5%
Other 14.5%
12
Employee Survey Results
April 2011
The main comment under "Other" was: "Not enough information to choose"
Many comments showed the respondent did not understand that the County
contributed to an account that would be used to offset the high deductible.
8. Because the cost of medical claims directly impacts the cost of premiums,
being healthy and using health care wisely can help keep the County health
benefits affordable for all. Please indicate which of the following actions you,
or your dependents, have taken.
Response Options Began after
October More than a Not taken
2010 year this action
Used the preventive services (at no
or low cost) available through the 55 301 61
County dental and health insurance.
Exercised re ularl 3 times a week . 93 263 62
Lost weight or maintained a healthy
wei ht. 78 287 56
Didn't use tobacco roducts. 34 307 59
Wore my seatbelt 100% of the time in 32 390 14
a vehicle.
9. Over the past year, indicate if you needed the health care services listed or
how often you used the service.
Never Could
have Used it Used it
Response Options needed
used it some of every
this ,
b
ed the times time
service not possible possible
Mail order for prescription
medications. 232 123 27 49
Generic prescriptions (no co- 49 11 35 342
a ).
Went to Emergency Room
when not a life-threatening 339 45 39 3
situation.
Minute Clinic (no co-pay 312 33 48 35
required).
Had duplicate diagnostic tests
for the same condition. 368 33 22 4
13
Employee Survey Results
April 2011
10.Choose one of the following, based on your current needs:
Response O tions Response
A plan with higher co-pays and deductibles but employees would 20
6%
not pa a remium for em to ee covera e. .
A plan with benefits similar or equal to the current benefits that
requires employees to pay a portion of the employee premium cost, 30.8%
not to exceed 10% of the total cost.
A plan available to employees who complete biometric screenings
(cholesterol, blood pressure, etc.) at a reduced rate than those who
do not. This option would likely include some increases in co-pays 24.0%
and/or deductible, but not as great an increase as in first of these
choices.
A plan with an employer contribution to a health savings account
.that the employee uses for health services, with 100% coverage for 16.5%
preventive benefits and a hi her deductible for all other services.
Other (pleases eci 8.1
A sampling of comments under this question included:
1 recognize the County's financial situation and interest in providing quality care at a
reduce rate. It is hard to select the "lesser of the evils" when things are tight at
home. At this point, a rate increase will come from my grocery money. A substantial
increase may require my taking an additional job or seeking a new position another
organization.
I understand that it is very difficult to negotiate with insurance companies to provide
a plan for employees each year. However it would seem that the manager and
BOCC would recognize how much the employees have given since 2009 and how
many of us have taken on additional duties to fill in gaps for vacancies and/or
eliminated positions. To ask us employees with dependant coverage to take another
pay decrease is disheartening.
Don't get sick. seriously that is my plan. i cannot afford any more costs in any area
of my life, i can barely keep my head above water as it is and it is a STRUGGLE. if
costs go up i will have to drop coverage. I only go to a medical provider when 1
absolutely have to...that should be taken into account...how about your first three
visits each year are exempt from copays and the ones after that are increased?
There should be some "discount" based on actual use or non-use of services, those
who use more should pay more of the costs seems fair.
Perhaps number 2, because paying up front, but with good benefits would help us in
an emergency. I DO NOT like the options that penalize people who have high
cholesterol/blood pressure, etc. Currently we are all healthy in my family, but l feel
like that option unfairly blames the victim. Perhaps people have inherited a problem
and it is not due to their lifestyle habits.
14
Employee Survey Results
April 2011
If l had my choice Orange County should work with Durham City and County, Wake
City and County, Hillsborough, Chapel Hill and Carrboro and agree to accept the
best plan coverage and price as an conglomerate and have bids submitted for there
health coverage. I believe this could work. if I had to choose from above it would be
choices 3 or 4 but there is not enough information to feel comfortable about my
decision.
11. Orange County provides lifetime health coverage for retirees who have 10
years of service with Orange County. How important is this benefit to you?
Response Options Response % Response
Count
It's the most important benefit for me. 75% 332
Other benefits are more im octant. 17% 75
It makes no difference to me because 1 don't expect g% 35
to retire from Orange County.
Total 442
Comments included:
Increase the eligibility from ten years of service to fifteen or twenty years of service.
(9 respondents)
My most important benefit is my salary. Change for incoming new employees so
they can gauge the total OC benefit package with other potential employers.
It is one of the main reasons l and many other county employees have stayed with
the County over the years. It is the most important and valuable benefit that anybody
who retires with the county and is vested receives. It has been promised for those
that have been working for the county long enough to be vested and needs to be
honored by the county. The county needs to consider requiring employees to work at
least 15 years to be vested and there is nothing unreasonable about that when you
consider the investment.
15
~t ~
Options for Lowering the Costs of
Employee and Retiree Health Care
The FY 2011-12 Manager's Recommended Budget includes funds for up to a 15.0
percent increase ($552,598) in the County's health insurance cost. Staff has identified
the following options for addressing the projected increase. Additional information will
be presented to the Board in the fall, at the time of the annual renewal process.
Options for Employee Health Insurance Coverage
1. Create a Basic Plan and aBuy-Up Plan -The Basic Plan. would .provide a lower
level of benefits at no cost to employees. Employees who prefer a higher level of
benefits, and wish to pay for that coverage, would pay a higher premium for aBuy-
Up Plan. The cost to the County would remain the same because employees who
choose the Buy-Up Plan will assume the additional costs for this higher level of
coverage.
2. Create a Single Plan with reduced benefits compared to the .County's existing health
plans. The cost to the County and to the employee would remain neutral but
employees would have more limited coverage compared to the current health plans
and could not choose between a PPO and an HMO plan. The Single Plan could be
either an HMO or PPO plan.
3. Develop a high deductible plan, utilizing a Health Savings Account (HSA) to handle
employee out of pocket costs, as an option. HSA's provide coverage for current
expenses and allow the option to save for future expenses with portable, tax-
advantaged funds. This option has shown to reduce costs in other counties, but is
very different from the traditional plans and would require extensive employee
education.
4. Provide two plan options: one similar to current plans and the other a Health Savings
Account/High Deductible Plan (HSA). The premium cost to employees would be the
same in both plans, allowing employees to choose a plan that meets their needs
without regard for premium cost.
5. Increase premiums for employees while keeping coverage as close to the current
plans as possible. Employees would be required to assume. some of the cost of an
increase in premiums. At a 15% overall percent increase in premiums, splitting the
increase 50-50 with the County would add $40 per month to the current employee
contribution, and more for employees with dependent coverage (up to a $160 per
month increase for employees with family coverage).
6. Additional considerations that would reduce overall costs include:
• Reducing the amount of the dependent subsidy, currently at 52% of the lower
priced plan.
• Increasing the waiting period for new employees.
• Requiring participation in wellness activities, including biometric screenings.
• Instituting a differential for smokers.
• Requiring use of mail order for maintenance medications.
16
Options for Lowering the Costs of
Employee and Retiree Health Care
Options for Retiree Health Care
(Not all options can be implemented for current retirees or active employees.)
1. Revise eligibility for retiree health coverage for future hires.
a. Change eligibility to a minimum of 20 years service (10 years service for disability
retirement).
b. Develop amulti-level program (e.g., 30 years service - 100% of premium paid by
County, 20 years service - 75% of premium paid by County, 10 years service -
50% of premium paid by County).
2. Revise eligibility for Commissioners (currently available to Commissioners who
serve 2 terms).
3. Eliminate retiree health insurance and replace with a Retiree Health Savings
Account. This type of plan allows the County and the employee to contribute funds
to a separate account to be used for future health care costs. A vesting period would
require participation for a specified number of years before the retiree would receive
100% of the funds contributed.
4. Create a reimbursement process and eliminate the billing arrangement with Blue
Cross Blue Shield. Set the maximum amount to be reimbursed.
a. Beginning July 1, 2011, newly eligible retirees would select a Part D plan and be
reimbursed for coverage every 6 months.
b. Beginning January 2012, each post-65 retiree would select the most
appropriate Part D based on individual need. HR and Department on Aging staff
and volunteers would coordinate to meet with retirees and determine the most
appropriate option based on their individual needs.
5. Reduce the amount of coverage provided for Medicare supplements from 100% to a
flat dollar amount and reimburse that amount. Retirees would be able to select the
Medicare supplement (with assistance from the Department on Aging) that best
meets their needs. The County would set a limit, such as $250 per month
(potentially to be adjusted for inflation), for a Medicare supplement.
6. Reduce the amount of coverage provided for Medicare Part D (prescription
coverage) from 100% of the Enhanced Blue Cross Blue Shield Plan to a flat dollar
amount and reimburse that amount. Retirees would be able to select the Medicare
Part D prescription coverage that best meets their needs. The County would set a
limit, such as $100 per month (potentially to be adjusted for inflation), for Medicare
prescription coverage.
17
7. Eliminate all post-65 retiree benefits for new hires.
,,,~„~-5
ORANGE COUNTY
2010-11 BUDGETED PERSONNEL AND FRINGE BENEFIT COST
10 GENERAL FUND
BUDGET WITHOUT BUDGET WITH
RETIREES HEALTH RETIREES HEALTH
SALARIES AND WAGES
510000 PERMANENT SALARIES ..................................................................... 34,584,732 34,584,732
510100 OVERTIME ............................................................................................ 598,397 598,397
510102 HOLIDAY PAY ...................................................................................... 443,170 443,170
510200 LONGEVITY .......................................................................................... 349,259 349,259
511000 NON-PERMANENT PERSONNNEL ...................................................... 859,864 859,864
511002 SEASONAL ............................................................................................ 321,025 321,025
513000 BOARD RENUMERATION .....................:.............................................. 103,502 103,502
514000 JURY PERSONNEL ............................................................................. 9,000 9,000
515000 CONTRACT PERSONNEL .................................................................... 283,968 283,968
TOTAL SALARIES AND WAGES ................................................................... 37,552,917 37,552,917
FRINGE BENEFITS
512000 SEPARATION ALLOWANCE ............................................................... 192,572 192,572
520000 SOCIAL SECURITY .............................................................................. 2,314,760 2,314,760
520001 MEDICARE ........................................................................................... 543,638 543,638
520100 MEDICAL INSURANCE ........................................................................ 5,517,136 5,517,136
520101 MED INS PMT IN LIEU ............:............................................................ 4,600 4,600
520150 DENTAL INSURANCE .......................................................................... 227,688 227,688
520160 LIFE INSURANCE ................................................................................ 87,510 87,510
520200 RETIREMENT ....................................................................................... 2,330,096 2,330,096
520220 457 DEFERRED COMP ........................................................................ 4,585 4,585
520300 LAW ENFORCEMENT 401(K) ............................................................. 190,394 190,394
520305 NON-SWORN 401(K) ............................................................................ 193 193
720064 HEALTH INSURANCE INCREASE ...................................................... 210,553 210,553
720015 RETIREES HEALTH .............................................................................. - 1,352,193
TOTAL FRINGE BENEFITS ............................................................................ 11,623,725 12,975,918
49,176,642 50,528,835
FRINGE BENEFITS AS A PERCENTAGE OF SALARIES AND WAGES 30.95% 34.55%
TOTAL SALARIES AND FRINGES AS A PERCENTAGE OF GF BUDGET 27.16% 27.91%
TOTAL SALARIES AND FRINGES AS A PERCENTAGE OF GF BUDGET
WITHOUT EDUCATION RELATED EXPENSES 47.33% 48.63%
18