HomeMy WebLinkAboutAgenda - 08-30-2011 - 3ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: August 30, 201.1
Action Agenda
Item No. ~_
SUBJECT: Employee Benefits Updates and Preliminary Recommendations
DEPARTMENT: Human Resources .PUBLIC HEARING: (Y/N) No
ATTACHMENT(S):
1. Benefits Report
2. Health Insurance History
3. 2012 Renewal Option Costs Detail for
Active Employees and Pre-65 Retirees
INFORMATION CONTACT:
Katherine Cathey, Interim Human
Resources Director, 245-2553
Diane Shepherd, Benefits Manager, 245-
2558
PURPOSE: To receive information and provide feedback to staff on employee pay and
benefits for FY 2011-12.
BACKGROUND: The County provides employees with a comprehensive benefits plan
including County-paid health, dental and life insurance, an employee assistance program,
flexible compensation plan and paid leave for permanent employees. Additionally, the County
contributes to the Local Governmental Employees' Retirement System and a supplemental
retirement plan.
An overview of current benefits and proposed changes to dental and vision benefits are
discussed in the attached report (Attachment 1). Depending on the type of health plans the
County implements in 2012, modifications to the Flexible Compensation Program Plan Year
may be required to comply with federal legislation because employees are prohibited from
participating in a Flexible Spending Account and Health Savings Account simultaneously.
Staff provided. information relating to FY 2011-12 employee benefits at work sessions on May
10, 2011 and June 9, 2011 and in the County Manager's recommended budget for FY 2011-12.
The FY 2011-12 Approved Budget includes funds for up to a 15.0% ($552,598) premium
increase. Over atwelve-month period, this increase is equivalent to a 3% salary increase for all
permanent employees. The most significant consideration for 2012 health insurance is the loss
of the current coverage with the Health Insurance Risk Pool of the North Carolina Association of
County Commissioners (NCACC) which will end December 31, 2011.
As previously noted, health insurance costs are growing more rapidly than the cost of living.
Staff, in consultation with benefits consultant Mark III, obtained quotes for 2012 health
insurance premiums from three major insurers (CIGNA, UnitedHealthcare, and Blue Cross Blue
Shield) which were presented to the Board at the work sessions earlier this year. While the
z
original quotes were 18% to 31 % higher than current costs, negotiations and re-design of the
plans reduced the costs as shown on Attachment 3.
Attachment- 3 provides details of current and alternate plan designs. A recommendation to
consider and approve final plan design and premium structure will be presented at the Board's
September 8, 2011 regular meeting based on input received during the August 30, 2011 work
session.
FINANCIAL IMPACT: Attachments 1 through 3 include information about the estimated costs
of various pay and benefits options.
RECOMMENDATION(S): The Manager recommends that the Board discuss employee
insurance benefits for FY 2011-12 and provide direction to staff.
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BENEFITS REPORT
The County benefits package helps attract and retain employees as evidenced by comments
from new employees at orientations, exit interviews aa~d surveys. Employees have shown their
willingness to engage in healthy, or healthier, activities to keep health insurance benefits at
current levels and minimize both their costs and County costs. Higher numbers of employees
participated in nutritional challenges and other activities since Open Enrollment of Fall 2010. A
healthier workforce results in greater productivity and employee satisfaction as well as lower
health insurance costs.
Open Enrollment dates are tentatively scheduFed for October 10 -October 21, 2011 with an
effective date of January 1, 2012. Prior to these dates, numerous educational communications
will be sent to empbyees describing the 20.12 plan designs and encouraging them to attend an
enrollment meeting.
The following pages describe recent activities and considerations for 2012.
To is Pa e
Health Insurance A-2
UnitedHealthcare A_7
Wellness Activities 2011 A_g
Su lemental Retirement Benefits A-11
Flexible Com ensation-Plan A-15
Dental Insurance A-17
Vision Benefits A-1 g
Other Insurance Benefits A-21
Em to ee Assistance Pro ram EAP A-22
Decision PointslActions Needed A-23
3
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a-IEALTH INSURANCE
Currently the County offers two fully insured health insurance plans contracted through the
NCACC Health Insurance Trust and administered by CIGNA. Over 90% of employees
participate in the Health Maintenance Organization (HMO) plan, which requires participants to
use a vendor network of physicians and facilities. The second plan is a Preferred Provider
Organization (PPO) that allows both in and out of network services. These two plans are very
similar to each other in benefits. The maximum out-of-pocket cost an employee can incur with
the HMO is $1,000 less than with the PPO. Consequently, most employees select this plan,
particularly if they have individual coverage and anticipate needing any major health care. A
history of employees enrolled in each plan, past rate changes and past_ plan changes- to the
health insurance are on the-following pages.
Both current health insurance plans provide excellent benefits in the event of illness or accident,
but offer little incentive for employees to improve their health and avoid illness. Strategies
undertaken by the County, e.g. incentive programs to improve employee health, are discussed
in the Wellness Section below. Changing health- insurance companies and plan designs
provides the County- an opportunity to encourage healthy behaviors that can lead to lower long-
term health insurance costs. Details of any new plan will vary slightly from the NCACC plans,
regard-less of insurance provider.
Initial insurance provider quotes for renewal of the current PPO and HMO- plans ranged from
117.86% to 131.0% of current premiums. Proposed alternate plans for a PPO and .Health
Savings Account ranged -from 104.58% to 115.63% of current premiums, with- significant
changes to the current plan designs. The Board approved a funding level of 115% of 2011
premiums-for the health insurance renewal for FY 2011-12.
In determining-the tjrpes of plans that would be most appropriate for County employees, staff
considered how each combination of plan designs would:
1. Meet the FY 2011-12 budge#;
2. Minimize impact on employees with and without dependents;
3. Offer employees a choice of two plans;
4. Enable the County to pay the- same individual anal dependent share regard-less of plans;
and
5. Minimize future increases so health insurance can remain sustainable and provide
continuity of coverage.
The- following options for achieving a 15.0% increase in County. costs for employee health care
in FY 2011-12 were included in the Manager's budget recommendation:
• Provide two plan options: one similar to the current traditional plans and the other a Health
Savings Account/High Deductible Plan, often referred to as an HSA. HSA's provide
coverage for current expenses and allow the option to save for future expenses with
portable, tax-advantaged funds. 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. The HSA option has reduced costs in other counties, but this type of plan is
different from the traditional plans and would require extensive employee education.
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• Create a Basic Plan and aBuy-Up Plan. A Basic Plan would provide a lower level of
benefits at no cost fo employees. Employees who prefer a higher level of benefits 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.
• 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 a-n HMO plan. The-Single Plan could be either an HMO or PPO plan.
In pursuing additional information from insurance carriers, staff did not focus-on this option
because of the lack of choice for- employees, and because of the higher cost of dependent
coverage:
• -Offer only a high deductible plan, utilizing a Health Savings Account to handle most
employee out of pocket costs, as an option. Staff did not focus on-this plan because of the
lack of choice. for employees and- because the-concept--of a high deductible plan is difficult
for some employees to comprehend and financially difficult for others.
The chart below provides additional information regarding the two types of plans described
above. The Point of Service plan (POS) is a traditional health insurance plan; the -l=lealth
Savings Account/High Deductible Plan is considered a consume-driven-health plan because it
requires more consumer involvement to use the benefits most cost-effectively. Both plans offer
advantages and disadvantages to employees, depending on the individual or family health care
needs.
Comparison of Traditional Plans and Health Savi-ngs Account-
Traditional Plans: -Health Savings Account/
Preferred Provider High Deductible Health
Organization/ Point of Plan
Service Plan/Health
Maintenance Organization (HSA)
PPO/POS/HMO
100% covered Yes Yes
reventive care
Co-Pays for Office Yes No
Visits and
Prescri tions
Deductible Yes, for services that are Yes, for all services and
NOT office visits or higher than the Traditional
rescfi tions Plan deductible
County contributes to No Yes, through the Health
deductible Savin s Account
Flexible Spending Both medical and Only achild/dependent
Account child/dependent care care FSA would be
available
Co-Insurance (after, Yes, only for services Yes, up to a maximum out
the deductible is met that are NOT office visits of ocket limit
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or prescriptions, up to a
maximum out of pocket
limit
Maximum Out of Yes Yes
Pocket
Out of network Yes, for PPO/POS plans Yes
roviders available onl
The plan f-ending to he discussed August 30 provides the same County contribution regardless
of the plan an employee selects, within each option. A representative from Mark III will present
the plans and discuss UnitedHealth-care.
Dependent Coverage
The County currently pays the cost of coverage for employees and retirees for both the HMO
and PPO plans. The County also subsidizes the premium cost for the- emp_loyee's and retiree's
dependent coverage at 52%, based on the lower priced plan (currently- the PPO plan).
Continuation of the subsidy at this level maintains a "family friendly" feature of employment with
Orange County.
In a survey of employees completed in May 2011, -only 16% of respondents felt the subsidy
should- be changed. Approximately 47% of employees and 30% of retirees currently have
dependent coverage.-
Funding Options
Staffipresent three options for health insurance with-UnitedHealthcare on the following -pages.
• Option 1 is a -renewal of the current traditional plans and exceeds the FY 2011-12 health
insurance budget.
Option 2- offers a choice between a traditional plan (HMO) and a Health Savings
Account/High Deductible Health Plan. Because.the HMO plan design is the same as-the
current plan, employees with dependent coverage would see a significant increase in
premiums for the HMO over 2011 premiums. The HSA plan generally has lower
premiums. Option 2 is slightly less than the budgeted increase for FY 2011-12
• Option 3 also offers a choice between a traditional plan (POS) and a Health. Savings
Account/High Deductible Health Plan. The plan design for the POS plan is modified from-
the current PPO plan. Because Option 3 is less than the budgeted increase for FY 2011-
12.it offers a more sustainable plan for current. and future years. Dependent coverage is
not as costly for employees with- dependents as Option 2 and provides a choice between
a plan with slightly higher premiums in the PPO or lower premiums in the HSA compared
to 2011.
Self-Funding
In addition to reviewing alternative plan designs, staff continues to discuss self-funding options.
This option has not been considered for FY 2011-12, as 2012 will be a transitional year as the
County learns the true costs of health coverage for County employees. Once 2012 claims data
and costs can be realistically compared, self-funding will be a more viable alternative. Staff will
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again review self-funding for 2013 as a method of reducing and controlling costs. If and when a
self-funded plan is implemented, aCounty-operated employee clinic would potentially offer
increased- cost reductions and productivity. With an employee clinic offering a no-cost option to
employees for minor illnesses, on the job injuries, -and preventive care, employees could save
time, and both the County and employees could reduce health care expenses. After a new
Health Director is hired, discussions about the feasibility and development of an employee clinic
will be initiated by Human Resources staff.
Comparison of -Plan Designs
The charts below summarize the differences among the three plan design options.
CURRENT TRADITIONAL PLANS
PPO HMO
ln-Network In-Network Onl
Primary Care
Ph sician Visits
$15_
~ $15
Specialist -Physician
Visits
$30
$30
Preventive Care - 100% 100%
Deductible $250 $250
Deductible -Family
-Maximum
_ $750
$750
Coinsurance Limit $1,000 $0
Coinsurance !~imit -
Famil Max
$3,000
$0
In-patient Hospital
Services
90% after Ded.
100% after Ded.
Out-patient Hospital
Services
90% after Ded.
100% after Ded.
Emer enc Room $150 $150
Pharmac $8/$25/$45 -$8/$25/$45
Lifetime Maximum Unlimited Unlimited
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COMPARISON OF 2012 P-~AN OPTIONS
Traditional Plans Consumer-Driven
Plan
POS HMO HSA
In-Networl~ In=Network
Onl Includes $1-,235 HSA
contribution
Prima Care Ph sician V=isits $20 $15 80% after Ded.
S ecialist Ph sician Visits $40 $30 80% after Ded.
Preventive Care 100% 100% 100%
Deductible $750 $250 $1,500
Deductible - Famil Maximum $2,250 $750 $3,000
Coinsurance L-imit $1,000 $0 $2;000
Coinsurance Limit - Famil Max $3,000 $0 $2-,000
In- anent Hospital Se=rvices 80% after
Ded. 100% after
Ded.
80% after Ded._ .
Out-patient Hos ital Services $0% after
Ded. 100% after
-Ded.
80% after- Ded.
Emer enc Room $200 $150 80%-after Ded.
Pharmac
$7/$30/$50
$8/$25/$45 Ded./$10/$30/$50 up
to co-insurance
maximum
ifetime Maximum Unlimit ed
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UnitedHealthcare (Ul IC)
UnitedHealthcare provided the County with t
presentation by UHC emphasized its extensive
consultative services, the SimplyEngaged ~
management to improve- health care quality, C;
its web, mobile, and print communications.
ie lowest renewal rates for 2012. A recent
network of providers, comprehensive reporting,
Fellness benefits and rewards, health care
ire Coor-diva#ion to identify at-risk patients, and
UHC monitors 53 conditions through medical claims, lab results, pharmacy data, and health
assessments to identify risks -earlier and ensure members receive treatmen# in line with
evidence-based treatmen# guidelines. UHC- works with both the member and the provider to
deliver education and appropriate care such as medication, testing, and treatment
Comparison with NCACC County Health Plan
The NCACC combined three separate components of health care coverage into-one package.
Medical claims are currently administered by CIGNA, prescription claims -are administered by
Caremark, and chronic conditions are managed by Alere (formerly Accordant). If UHC becomes
the County's new carrier, all three components would be handled by UHC.
The UHC provider -network includes 95% of the current CIGNA-providers utilized by employees.
One provider identified- as not being in th-e UHC network is the NC Specialty Hospital in
Durham, and they -have been accepting the network rates paid by UHC. UHC would work wi#h
providers to promote network membership.
Comparison with Other ]usurers
The American- Medical Association's National Health Insurer Report Card (NHIRC) provides
physicians-and the general public a reliable and- defensible source of critical metrics concerning
the timeliness and accuracy of claims processing by health insurance companies. The better an
insurer's efficiency, the less costly is the claims processing component. The full National Health
Insurer Report Card can be reviewed at this link:
http://www.ama-assn.org/ama/pub/physician-resources/solutions-managing-your-
practice/coding-billing-insurance/heal-claims-process/national-health-insurer-report-card.page
Eight insurers were surveyed using data from nationally mandated Health Insurance Portability
and Accountability Act of 1996 (HIPAA) electronic standard transactions and data reported by
the commercial payers: Aetna, CIGNA, Anthem, Health Care Services Corporation, Human,
Regency, Medicare and UHC. In summary, the survey provides data related to the claims paid
within specific timeframes, how many payments are made by paper vs. electronic checks, the
number of claims denied, and other factors. The Report Card indicates that UHC is extremely
competitive with the other insurers.
In 2011, UHC improved its rate of claim denials due to requirements for prior authorization in
2011 by 50%, for a significant increase in efficiency. It is in compliance with HIPAA regulations
for mandated reporting requirements.
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Metric UHC Rank
of 8
Median time period in days between the date the physician claim was
received b -the a er and the date the a er roduced the first ERA 5
Percentage of claims -was the first payment on the claim- received within
45 da s ~
'
Percentage of physician practices that have received EFT payments by
the a er 4
Percentage of physician practices tha± have received EFT payments
from a payer but have also received payments by check from the payer 4
durin the same eriod
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WELLNESS ACTIVITIES 2011
Resear-ch has shown that every dollar spent on wellness activities generates at least $3 in
return. Fewer sick days, increased productivity, and greater ability to deal with stress are all
common results of wellness programs. Investing =in preventive screenings for high blood
pressure and- cholesterol can reduce health care costs. Providing flu clinics with_ no-cost
immunizations and the time to- attend can reduce missed work time due to illness. Offering
greater opportunities for physical activity, tobacco cessation programs, and nutritious eating are
all elements of a wellness program that would cost little compared to the cost of monthly
insurance premiums and los# productivity.
Over the past few years, Orange County partnered with NCACC to enhance the Wellness
Committee activities, including screenings for high blood pressure and blood glucose, exercise
and nutritional challenges. UnitedHealthcare's well-Hess programs include SimplyEng-aged-
which pr-ovides rewards for completing health assessments and participating in online and
telephonic coaching. UnitedHealthcare also funds orrsite biometric screenings, employee
newsletters, payroll stuffers and- promotional posters.
A 2011 survey of employees showed that 62% of respondents exercise regularly and 55%
participated in aCounty-sponsored wellness activity.
Highly discounted membership- rates for the Orange County Sportsplex continue to be a popular
wellness benefit for employees. Currently 21.8 employees ace members, a 17% increase over
2010's membership of 155.
Wellness activities listed below all took place since November 2010.
Biometrics and Flu Clinics
Two Flu Clinics were held in late 2010, with WakeMed conducting biometric screening
at one event. Over 200 employees were immunized. Flu Clinics will again be held at
several County locations in Fall 2011.
2. Nutrition Challenge
The NCACC and Orange County co-sponsored afour-week nutrition challenge, Colorful
Choices, in which participants were encouraged to increase the amount of fruit and
vegetables they ate. Employees in most departments participated, with a total of 131
registrants and 109 participants who logged their fruit and vegetable consumption.
Those who recorded the highest in#ake were awarded incentives from the NCACC and
Orange County.
3. Sportsplex Membership
Notices were sent to employees in January 2011, reminding them of the Sportsplex
discount. There are now 218 members, approximately 17% more members than in
2010. The Sportsplex rates and schedules are on tt~e County's Wellness Web page.
4. Wellness Grant
The County applied for a Wellness Grant from the NCACC. As one of 3 successful
applicants, the County was awarded $5,000 in June 2011. Components of the grant
include:
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a. Employee Appreciation and- Wellness Lunch in June 2011. Approximately 200
employees attended and over 150 participated in activities such as tai chi and yoga,
bean bag toss, bocce ball, disc golf, recipe sharing and others. Orange County
Sportsplex representatives attended and. taught two Zumba mini-classes and an
NCACC representative showed employees strength building exercises with stretch
bands, among other activities. A second event will be held in conjunction with a Fall
Flu- Clinic.
b. Mini-Grants: $2,500 of the NCACC grant funds were designated for employee
"mini-grants" not to exceed $250 each. Three grant applications Mave already been
approved. -Each encourages weight management and exercise for different County
departments.
c. Orange SLICE Superstars Recognition Program: Incentives will be awarded to
employees nominated and selected as Orange SLICE Superstars. Nominated
individuals must Successfully Live and Inspire County Employees (SLICE), and will
be_ selected by a subcommittee of the Wellness Committee.
5. V1/alking Deys
Employees led walks on three Fridays- in the Spring- at various locations in Hillsborough
-and Chapel Hill, including Ayr Mount, Occorteechee Historic Speedway, and
Moorefield's. Additional walks are planned for the Fall.
6. Nutritional Counseling
The County Health Department publicized its -nutritional counseling to employees in
February 2011. Since then, approximately 20 employees have taken advantage of this
service which was billed to the County Health Plan. A marketing campaign is being
developed to encourage employee participation.
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SUPPLEMENTAL RETIREMENT CONTRIBUTIONS
Orange County-contributes $715 per year ($27.50 per pay period) to either a 401(k) or 457(b)
Supplemental Retirement Account for each -permanent employee. Employees -can designate
one of three Plans-Pruden#ial 401(k), ICMA-RC 457, or ~iationwide 457 for the County's
contribution and may elect to make a payroll deduction -up to legal limits. The $715 per
employee is approximately $543,000 over tw-elve months.
The County contribution was suspended between July 1; .2009 and January 1, 2011. The chart
below shows the increase in employee con#ributions from September 2010 (during the
suspension of the contribution) and August 2011-.
Total Annual Employee
Contribution to All- Plans
2010 $772,872
20.11- $903;310
A recent employee survey asked for input relating to the relative value of the 401(k) in light of
rising -health care costs. When asked what the County should do with the $715 contribution to a
supplemental retirement plan, responses were divided nearly evenly among the choices. One-
third wanted the $715 contribution to continue towards a supplemental retirement benefit;
another one-third wanted it to go towards health insurance, and the remaining one-third wanted
the health insurance plan to be developed without loss of the $715.
When given a .choice- between (a) continuing-to receive the $715 supplemental retirement
benefit and (b) using- the $715 to defray their own employee health care premiums, employees
would choose to continue receiving the $715 towards their supplemental retirement benefit, as
shown below.
As of 8/2012011- Number of Continue receiving $715 Use the $715
Respondents as Supplemental towards health
Retirement Benefit reaniums
All Em to ees 372 59% 4't%
21 76% 24%
Enforcement Officers
General Em to es 351 58% 42%
All Employees without 178 65% 35%
De endents
Employees with 182 63% 48%
De endents
* Sworn law enforcement officers would not be able to reduce the state-mandated County
contribution to 401(k).
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-Employees' comments in the survey and at a recent Employee Relations Consortium meeting
make it clear that retirement contributions and health insurance should be considered
separately: Health insurance coverage addresses more immediate needs, while retirement
contributions continue to grow over- time. Over a period of thirty= years, the total value of the
County's $715- annual contribution to employees' supplementaa retirement accounts has the
potential to more than double.
Some comments, taken verbatim, from the survey are:
• There needs to be a paan that doesn't punish those of us that are healthy and don't aver-
use the benefits. The people that take-cane of themselves and only need annual chec~-
ups covered or occassional prescriptions should- not be covering the costs of the
smokers, obese, or other employees that are making active choices NOT to be healthy.
It is_unfair to raise our premiums or co-pays. If there can be several plans to choose from
then there can be a way for the healthy among us to qualify for better coverage.
• The County just reinstated its contribution to employee retirement. In my view this benefit
is always in jeopardy; the county can take it anytime it wants. In-that case, _it's ok to take
it now and apply it to health insurance. This may be a short term solution and not
ad-dress the long term cost to county for health insurance. For long term cost, my choice
would be to put funds towards retirement. 2-Health insurance is a vital perk to employees
esp as we age. In a news program on NPR August 16, many people will not have
enough retirement to- apply to increasing health- costs. In that case, health care and
retirement are a toss up decision. 3-I don't mind paying higher copays for prescriptions
and office visits.
• For myself I would "pay up" for the- better health insurance. But for staff at lower pay_
grades this may not be an option. This seems almost like a caste system where
employees with lower skill sets are not entitled to the same level of care as their higher-
skilled (and higher-paid) counterparts.
• Any changes-would be a lost in pay and/or benefit. County employees have not received
a pay increase in several years and none are foreseen. As all know, the cost of living
continues to increase; this would be another increase cost to employees.
• Reducing health- coverage is really not a good option -perhaps eliminating more
positions is the way to go
• As a single person, I along with many co-workers can absolutely not afford a reduction in
net pay. However, it still seems unfair that those with dependents get a greater "benefit".
I feel as though those of us with no dependents are being asked to sacrifice for those
who do.
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• Any changes would be a lost in-pay and/or benefit. County employees have not received
a pay increase -in several years and none are foreseen. As all know; the cost of living
continues to incr-ease; this would be another increase cost to employees.
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August X011 Benefits Survey Res~anses
3. Orange County~contributes $27.50 per pay period-to a supplemental retirement account for each permanent general
emPlo_yee, and pays the full premium for each permanent employee's health insurance. If health care costs continue
to increase, which action would you prefer the County take?
Answer Options All Employees LEO General Dependents No Depen-
dents
A. Continue the County_'s-contribution-to
a supplemental retirement account for 46.6% 23.8% 33.0% 18.1 % 46.6%
ail ermanent em to ees.
B. Discontinue the County's contribution
to a supplemental retirement account for
all permanent general (Wort-sworn law 29.2% 33.3% 33.3% 37.9% 29.2%
_enforcement) employees. and pLt the
mone towards health insurance.
C. Reduce health care benefits_ 2.2% 0.0% 1.7% 1.1 % 2.2%
D. Offer a choice of plans thatmay
reduce total premiums for the County 21.9% 42.9% 31
9% 42
9% 21
9%
and employees with dependent . . .
covers e.
Answered Question 372 21 351 182 178
4. As an._alternative to the current health insurance plans, Orange County could offer two different plans: One-plan
with redLced benefits.that would not require an employee premium for employee: coverage and-a second plan with
greater benefits, a monthly premium for employee coverage and a higher premium for dependent coverage (a "buy-up"
plan). If you had the following choices involving health insurance and the supplemerrtal retirement contribution, which
would you select?
Answer Options All Employees LEO General Dependents No
Dependents
A. Continue receiving the County's
annual contribution for supplemental 25.8% 33.0% 26.2% 27.5% 25.8%
retirement and choose the LOWER cost
health Ian.
B. Continue receiving the County's
annual contribution for supplemental
retirement and pay the employee 38.8% 42.9% 31.6% 25.8% 38:8%
portion of th8 "buy up" health insurance
remium.
C. Use the $715 per year to reduce the
employee portion of the "buy-up"
premium in place of the County
contribution to a supplemental 35.4% 23.8% 42.2% 46.7% 35.4%
retirement account. (This option is not
available for sworn law enforcement
officers.
Answered Question 372 21 351 182 178
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FLEXIBLE COMPENSATION PLAN
The County provides a Section 125 Flexible Compensation Plan administered by Tucker
Administrators, with a plan year from December 1 to November 30 of the following year. This
Plan consists of a) tax sheltering. of health and dental premiums and b) two Flexible Spending
Accounts (a medical-spending account and dependent/child care spending account).
The Spending Accounts enable employees. to contribute money on apre-tax basis to a separate
account. Employees_ and the County save money because no income or Social Security taxes
are deducted from contributions made to the Flexible Spending Account(s)-. Employees may
contribute- a maximum of $3,000 to the Medical Spending Account and up to $5,000 to the
Dependent/Child Care Spending-Account each plan year.
P-anticipation nearly doubled since 2008, due #o the addition of a pre-paid debit card for the
Medical Spending Account-in 2008, ability to enroll during the Plan Year, and more-emphasis
during Open Enrollment.
Number of Participating Employees Per Year
Type of Account 2008 2009 2010 2011
Child Care
Spending 12 12 12 10
Account
Medical Spending
Account 95 138 178 2i4
'`fncludes employees enrolling during Plan Year
Health Care Reform
Effective January 1, 2011, the Patient Protection and Affordable Care Act impacted all medical
spending accounts by requiring prescriptions for over-the-counter medications. Effective
January 1, 2013, the maximum annual allowable contribution will be capped at $2,500.
No Social Security or Medicare taxes are paid on the amounts employees contribute to either
Medical or Dependent Care Spending Accounts. In 2011, the County is expected to save
approximately $20,000 in taxes because of employee contributions.
No other plan design changes are s-uggested for 2012 for the Flexible Compensation Plan as a
result of Health Care Reform.
Potential Changes for 2011-12 Plan Year
Federal tax regulations prohibit employees from participating in both a Flexible Spending
Account and a Health Savings Account at the same time. Currently, the Plan Year for Flexible
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Spending Accounts (FSA) is December 1-November 30, while all other plan years, including
Health insurance, are January 1 to December 31. If the County implements a Health Savings
Account, it will be advantageous -to change the Flexible Spending Account Plan Year to the
same dates as the Health Insurance Plan Year to align the FSA and HSA plan years. The new
FSA Plan Year would be January 1-December 31. To ease the administrative burden of a one-
mo.nth Plan Year, employees who elect an HSA, effective January 1, 2012, would only have
access to remaining funds through the previous FSA plan year's-grace period (up to December
31, 2011). All expenses would need to be incurred prior to December 31, 2011 to remain
compliant with federal laws_
Some of the key differences between the two accounts as shown below:
Comparison of Flexible Spending Account and Health Savinas Account
Medical Flexible Health Savings Account
S endin Account
Use it or lose it Yes No
Coun contributes No Yes
Em Io ee contributes Yes Yes, but not re wired
Day care spending
account available Yes No
Pre-tax benefit Yes Yes
Maximum Total $3
000 $3
100
Contribution Individual , ,
Maximum Total $3
000 $6
250
Contribution Famil , ,
Other Doesn't require High Available only with High
Deductible Medical Plan Deductible Medical Plan
A-16
19
DENTAL INSURANC-E
The County provides aself-insured dental plan through Delta Dental of North Carolina. The
County pays all costs for employee coverage-(claims and an administrative fee to Delta Dental).
Dental claims are paid according to a unique Orange County Table of Allowances (TOA),
however most claims are paid at Delta Dental's standard reimbursemen# rates. Beginning in
2009, the County initiated a plan to gradually increase its reimbursement levels for claims each
year. 2012 will be the final year of this plan. With implementation of the recommended
changes in 2012, a.ll Orange -County dental claims will be paid according to Delta Dental's
standard reimbursement rates, and the County will no longer have a unique TOA.
Employee Dental Insurance is-budgeted- as part of departmental personnel costs. $231,_165
has been budgeted for FY- -2011-12. This amount includes a monthly administrative fee of
$2.80/month per employee and a projected premium to cover -claims. Employees pay the full
cost of any dependent covera~c e.
Since January 2009, the__County has been. systematically increasing claim reimbursements to
emplo_y_ees rather than making- a dramatic shift in reimbursements at one time. Staff reviewed
FY 2010-11 dental claims with the Delta Dental Account Manager and determined- that the
reimbursements for Major Res#orative Services can be increased to the maximum amount- paid
by Delta flentaa. The chart below outlines the changes made each past year, and proposed- for
2012_
Reimbursements for Services Increased to
Year Delta Dental's Maximum Payable Amount
MPA
2009 Dia nostic and Preventive Services
2010 Basic Res#orative Services e. ., fill.in s
2011 Endodontics (root canals),
Periodontics (gum treatment)
Maj-or restorative services (crowns) increased by
15% instead- of MPA
2012 Major restorative services crowns
Additionally, -Delta Dental is applying recent research and best practices guidelines to begin
reimbursement for increased cleanings based on specific conditions, certain implants, and
posterior composite fillings. These are the first changes Delta Dental has added to its coverage
for all its members in over five years. These changes will reduce employees' out of pocket
dental expenses. Employees can also manage their dental costs by using providers within the
Oelta Dental Premier network and they can achieve greater savings with the PPO Plus Premier
networks.
At ,the end of FY 2010-11, the dental plan's fund balance was approximately $246,000. By
making the recommended change to reimbursements, the County can expect an increase of
$40,000-$45,000 in claims over a 12 month period. The administrative fee of $2.55 will
increase to $2.80 per member per month (an increase of $2,400/year) effective January 1,
A-17
20
2012, and the fund will be able to absorb this budgeted increase of $.25 per employee per
month as well- as the-anticipated increase in claims.
Recommended Plan
Changes:
• Increase reimbursement for Major Restorative Services to Delta
Dental. rates (MPA~
• Add recommended Delta Dental enhanced benefits
A-18
21
VISION- BENEFITS
Both current health insurance plans cover an annual routine eye exam for employees with a
$15 co-pay, and specialist visits with- a $30 co-pay.- Routine eye exams with UnitedHealthcare
are subject to a specialist co-pay and are covered every -other year. With a Health Savings
Account/High Deductible plan, all vision exams would be subject to the deductible and- co-
insurance. Under both plans, the UnitedHealthcare benefit would be a- lesser benefit compared
to the current benefit.
As an addition to vision coverage available with the health plans, Mark III has provided three
proposals from -stand-alo-ne vision plans. With Board approval, Orange County would select
one carver, and employees could ctnoose to participate and pay for the coverage on a pre-tax
basis at Open Enrollment.
Numerous employees have requested a -benefit that would include eyeglasses or lenses. As
shown on the following chart, each provider offers this benefit. Communa#y Eye Care offers the
largest number of in-nefinrork providers.
A-19
N
N
Orange Coulnty Government -Vision Prbgram Comparison
Preparedby'Mark 111 EmployeeBene~ts=August 2011
Su erior ision - Hi h. Communi E e Care - Hi h Ameritas/E eMed - Hi h
Plan Desi n In-Network Out-of-Network In-Network Out-of-Network In-Network Out-of-Network
E e Exam Fre uen eve 12 months eve 12 mohths eve 12 months' eve 12 months eve 12 months eve 12 months
Co- a merit fore a exam
P Y y
$10.00 Reimbursed up to
$44/$39
$20.00
$20.00
$0.00
Up to $35
Co- a merit for material $10.00 $10.00 $0.00 $0.00 $0.00 $0.00
Frame fre uen eve 24 months eve 24 months eve 12 months eve 12 months eve 24 months eve 24 months
Frame.aliowance covered up to $150 retail up to $77 Up to $150 allowance Up to $150 allowance*** covered up to $130 retail up to $65
Lens Fre uen eve 12 months eve 12 months eve 12 months eve 12 months eve 12 months eve 12 months
ens Allowance .
.Single Visio Covered in Full Up to $34 Up to $150 allowance Up to $150 allowance*** Covered in Full Up to $25
Bifoce Covered in Full Up to $48 Up to $150 allowance Up to $150 allowance*** Covered in full Up to $40
Trifoca Covered in Full Up to $64 Up to $150 allowance Up to $150 allowance*** Covered in Full Up to $55
Lenficula Covered in Fuli Up to $88 Up to $150 allowance Up to $150 allowance*** 20% discount Not Covered
Progressiv Covered as Trifocal Up to $64 Up to $150 allowance Up to $150 allowance*** Copdy + $65 Not covered
" Polycarbonate - $40 Polycarbonate - $40
Optional
Add-Ons" Maximum
Charge Scratch Coating - $13
Anti-Reflective -$50
No Benefit
Up to $150 allowance ***
Up to $15b allowance Scratch Coating - $15
No Benefit
Anti-Reflective - $45
UV Coating - $15 UV Coating - $15
Contact lens allowance Every 12 months, medically necessary - up Every 12 months, medically necessary - up
medically necessary -full, to $210, elective - up to Up to $150 allowance Up to $150 allowance*** medically necessary -full, to $200, elective - up to
elective - u to $150 $100 elective - u to $130 $104
Contact LensFittin Fee $25.00 Not Covered $20.00 ,Not Covered None None
Refractive Eye Surgery Discouht At Network
Not Covered Discount at Network
Not Covered
Discount at Network
Providers Providers Providers Not Covered
Providers Visit www.superiorvision.comfor acomplete listing Visit www.communtiyeyecare.netfor acomplete Visit www.ameritasgroup.comfor acomplete listing
of roviders listin of roviders of roviders
Partici ation Re uirement None None None
Financial Ratin , AM Best. A -National Guardian life Not Rated - Not an Insurance Co. A+
Em to ee $9.70 $9.74 Em to ee onl - $9.09
Em to ee+One $18.80 $18.54 Em to ee/S Ouse-$19
24
Em to ee + Fa~nil $27.60 $27.30 .
Em to ee/Child ren - $16.48
Premium Stabilization
No Em to ee/Femil -$26.64
' Rate Guarantee
4 ears No
4 ears Yes
2 years
Q
~'~'~ ~ ~m ~/oy~ e /Y-. r.~.s'~ ~ /e c:. f c~,:n .
10
23
OTHER Ii~ISUftANCE BENEFITS
The County continues to provide term life insurance for all .permanent employees at no cost to
the individual employee. MetLife has provided this coverage witfi no increase. in price since
2007. The monthly rate of $.225 per $1,000 of coverage (up to $50;000) was r-enewed last year
for a tfiree year term ending December 31, 2013: Employees may purchase -group discounted
term life insurance for themselves, spouse/domestic partner and/or children.
Employees may elect additional income .protection paid through payroll deductions. They
benefit from group purchasing if they wis-h to purchase whole life insurance, Accident Insurance,
Critical Illness (including cancer), and/or Short Term Disability.
Prior to 2011, Orange County offered a-variety of insurance-, including Short Term Disability and
Accident insurance through an informal agr-cement with Colonial Life Insurance. In 201'!, the
County ended that relationship and several different vend-ors were selected to provide
supplemental benefits.
-During Open Enrollment in -Fall 2010, the County-offered employees "guaranteed issue" for
each benefit, regardless of pre-existing conditions-. This, in combination with the face to face
meetings employees had with non-commissioned enrollers, more than doubled the number of
policies issued.
Number of Supplemental Benefits F~olicies
Product Current Carrier 2009 2010 2011
.Short T-erm Disability AUL (American 62 91 136
United Life
Criticallllness/Cancer Continental 17 21 92
Insurance American
Life Insurance Boston -Mutual 4 2 53
Whole Life
Accident Insurance Continental 9 16 45
American
Total Policies 110 141 326
These same benefits will be offered to employees during Open Enrollment in Fall 2011,
however, without guaranteed issue.
A-21
24
-EMPLOYEE ASSISTANCE PROGRAM (EAP)
Magellan Behavioral Health provides the County's EAP for County employees .and their
dependents. The -EAP provides confidential assessment and counseling services, 24/7
emergency services, and legal consultation.. It also serves as a complement to services
provided through the County Health Plan at no cost to employees or their dependents.
The current two-year contract ends December 31, 2012. The-County has budgeted $15,500 for .
the Employee Assistance Program in Fiscal Year 2011-12.
As part of its health insurance plans, Unitedl=lealthcare provides an employee assistance
program at no additional cost. Services- consist ofi three counseling sessions, legal. and
financial telephone consultations, and six hours of employee training programs.
A-22
25
DECISION POINTS/ACTIONS NEEDEO-
Sta#f are seeking guidance related to
Health Insurance:
• .Preferred plan-designs and premium structure for 2012
Vision coverage:
• Shaal staff select ~ voluntary vision plan for employees -who wish to purchase coverage
through payroll deduction?
A-23
Summary of Health Insurance Par#icipation and Gosts for` Employees and Retirees
2007-2011
e~ .;f M.~.. 7r1A A
.-~~ v~ m w w ~ ~
oun os
of Employee
Coverage
Employee (Exclusive of County Cost
Plan Year
Plan Design Changes Plan
Expel~ience*
# Covered Cost for
Dependents Dependent
Subsidy) of Dependent
Subsidy Total AnnNal
County Cost
Total Premium
$1000 allowance for hearing aids Active HMO -693 $1,134,129 ' $4,334,976 $1 0 1 668 $5 376 644 $6
510
773
Mental health visits covered at 100% At;tive PPO 112 $192 453 $684,123 $208,496 $892
619 ,
,
$1
085 072
2011 Opened dependent status to all children up to Retiree H 0 127 ~ $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
Provided $0 generics Total
Active HMO 1 076
730 $1 473 399
$1,160,963 $6 370152
$4,289 184 $1 386 83
$1,070,674 $7 756 ,990
$5
359 858 $9 230 389
$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 111.03% Retiree HMO 121 $1 5 384 $716 736 $90 831 $807 567 ,
$912 951
Care Clinics Retiree PPO 13 $3,056 $74,562 $3 310 $77 872 $80 g28
Removed student status criteria for` children Post-65 109 , $0 $385,980 $0 $385
980 $385 980
over 19
Added Health Advisor program Total
Active HMO 1 0 5
' 743 $1 397 033
$1
171 078 $6 051 485
$4
24 793 $1 303 082
1 ,
$7 354 567 ~ $8 75 600
, , $
0 9 464 . $5 328 258 $6,499 336
2009
Right-priced" premiums based on claims & co-
103.34% Active PPO
Retiree HMO 80
94 $99 532
' $82 536 $446,784
$541'558 $107 827
$75 687 $554 611
$617
24 $654,143
69
insurance so HMO became more costly plan
Retiree PPO
11
$2 976
$61 433
$3,223 ,
$64 656 $
9 781
$67 632
Post-65 92 $0 $303,432 $0 $303,432 $303 432
Increased Office Visit co-pays from $10/$20 to Total
Active HMO 1 020
752 $1 356 122
$1 014 989 $5 602 000
$4 016 221 $1 266 202
$1 099 565 $6 868 202
$5 115 786 $$ 224 323
2008
$15/$30
Added Employee/Child tier
Active'PPO
Retiree HMO
46
75
$33 424
$67 81
' $280 788
$20,707
, $30'1 495 $6 130 775
$334 919
$400,554 $73 464 $474 018 $541
832
Retiree PPO 13 $4,797 $8Q 520 $3,081 $83 600 ,
$88
398
Post-65 data is lJ navaila le ~ ,
'
(Participation as of July 2007) Total
Active HMO 8,86
,741 $1 121 0~5
$1 057 483 $4 778 083 ~ ' $1 196 817 $5 974 900
$3 606 951 $1 14 614 $4
752
564 $7 095 925
$5 810
Added 100% covered preventive care
Active PPO
36
$28,88 ,
,
$199,666 $18 292 $217 95$ ,048
$246 841
2007 Retiree HMO 84 $81 291 $408,885 $88,067 $496,952 , $57>~
243
Retiree PPO 19 $13,117 105 964 $8,422 $114 366 ,
$127
503
Post-65 data is unavailable ' ,
Total 880 $1 180 774 $4 321 466 $1 260 394 $5 581 861 $6 762 635
*Plan Experience is the ratio of claims to expenses. A number greater that 100% indicates that claims are exceeding premiums paid ~
Q~
r_
N
CJ~
Current and Renewal Option Costs Detail fob' Active Employees a~1d Pre-65 Retirees
Renewal effective January 1, 2012
Months Costs Ca lendar Year Costs Percenta a I ncrease Over 201 1 Premiums
q ype o
Plan
Tier 0
Participants
Total Premium oun
Contribution mp ogee
Contribution
Total Premium nnua oun
Cost mp oyee
Contribution
Total oun
Contribution mp dyee
Contribution
Individual 457 $531 531 $0 $2 914 417 $2 914 417 $0 '
Ind/Child 115 $744 $615 129 $1 026 692 $848 552 $ 78 141
Ind/Children 77 $1 026 $755 $270 $947 710 $697 794 $249 918
HMO Ind/S ouse 85 $1 121 $803 $319 $1 143 746 $818 876 $324 870
CIGNA Famii 78 $1594 $1038 $556 $1492246 $971953 .' $520'293
Current Total 812 $7,524,612 $6,251,592 $1,273,220 0.00% 0.00% 0.00%
Plan Individual 64 $509 $509 $0 $390 927 $390 927 0
Designs IndlChild 12 $713 $615 $98 $102 617 $88 546 $14 072
(2011 Rates) Ind/Children 10 $982 $755 $227 $117 890 $90 622 ' $27 269
PPO Ind/S ouse 12 $1 074 $803 $271 $154 659 $115 606 $39 053
Famil 19 $1 527 $1,038 $489 $348 174 $236 760 $111 414
otal 117 $1,114,268 $922,460 $191, 08 0.00% .00°/0 0.00%
Gurrent Plan Totals $8,63 ,080 $7,174,052 $1,465,02 0.00% 0.00"/0 0.00°!0
Individual 457 $621 $621 $0 $3 407 648 $3 407 648 $0 '
Ind/Child 115 $1007 $828 $179 $1389163 $1142750 $246413
Ind/Children 77 $1 007 $828 $179 $930 135 $765 146 $164 989
United HMO Ind/S ouse 85 $1 311 $988 $323 $1 337 332 $1 b08 100 $329 232
Health Care Famil 78 $1 864 $1 279 $585 $1 744 835 $1 197 522 $547 313
Option 1 Total 812 $8,809,114 $7,521,166 $1,287 947 17.07% 20.31% 1.16%
(Renewal of Individual 64 $629 $629 $0 $483 026 $483 026 $0
Current Ind/Child 12 $1 019 $828 $191 $146 719 $119 244 $27 475
Plan
Design) POS
(Point of Ind/Children
Ind/S ouse 10
12 $1 019
$1 327 $828
$988 $191
$339 $122 266
$191 097 $99 370
$142 320 $22 896
$48 777
Service) Famil 19 $1887 $1279 $607 $430193 $291704 $138489
Total 117 $1,373,300 $1,135,663 $237,636 23.25% 23.11% 23.89%
O tion 1 Totals $10,182,413 $8,656,829 $1,525,584 17.86°l0 20.67°/0 4.13%
Individual 457 $621 $621 $0 $3 407 648 $3 407 648 $0
Ind/Child 115 $1 007 $769 $238 $1 389 163 $1 061 138 $328 025
Ind/Children 77 $1 007 $769 $238 $930 135 $710 50ti $219 634
HMO Ind/S ouse 85 $1 311 $886 $426 $1 337 332 $903 267 $434 065
Famil 78 $1 864 $1 097 $767 $1 744 835 $1 027 141 $717 694
United Total 812 $8,809,114 $7,109,694 $1,698,420 17.07°l0 13.73% $3.47"/0
Health Care • Individual 64 $621 $621 $0 $477 220 $477 220 $0
Option 2 Ind/Child 12 $905 $769 $136 $130 342 $110 727 $19 fi14
Health Ind/Children 10 $905 $769 ' $136 $108 618 $92 273 $16 345
Savings tnd/S ouse 12 $1 129 $886 $244 $162 635 $127 520 $35 115
Account Famil 19 $1 537 $1 097 $439 $35Q 379 $ 50 201 $100 178
ota 117 $1,229,1,93 $1,057,94 $171,252 10.31°k 14.69°l0 -10.72%
0 lion 2 Totals $10,0 8,3 7 $8,167,635 $1,870,672 ' 16.20% 13.85% 27.69%
Individual 457 $561 $561 $0 $3 074 495 $3 074 495 $0
Ind/Child 115 $908 $708 $200 $1 253 344 $977 372 $275 972
POS
i
f Ind/Children 77 $908 $708 $200 $839 195 $654 41 $184 781
(Po
nt o
i
S Ind/S ouse AS $1 183 $825 " $358 $1 206'578 841 353 $365 226
erv
ce) Famil 78 $1 682 $1 037 $645 $1 574 240 $970 325 $603 914
United otai 812 $7,947,852 $6,517,959 $1,429,893 5.62% 4.26% 12.31%
Health Care Individual 64 $561 $56'1 $0 $430 602 $430 602 $0
Option 3 Ind/Child 12 $844 ' $708 $136 $121 601 $101 987 $19 614
Health ind/Children 0 $844 $708 $136 $101 334 $84 989 $16 345
Savings Ind/S ouse 12 ~ $1 069 $825 $ 44 $153 894 $118 Z79 35 115
Account Famii 19 $1 476 $1 037 $439 $336 539 $236 361 $100 178
ota 117 $1,143971 $972,718 $171,252 2.67% 5.45% -10.72%
O tion 3 Totals $9,091,823 $7,490,677 ' $1,601,145 5.24% 4.41% ' 9.29%
Option 2 includes an annual contribution to a Health Swings Account of $1,964
Option 3 includes an annual contribution to a Health Savings Account of $1,235
w
IV
v