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HomeMy WebLinkAboutAgenda - 09-02-1997 - 9d r � Orange County Board of Commissioners Action Agenda Item Abstract Meeting Date: September 2, 1997 Action Agenda Item No. Subject: Personnel Ordinance Revision - Retiree Health Insurance Department: Personnel Public Hearing: Yes No X Budget Amendment Needed: Yes No X Attachment(s): Information Contact: 1- Draft Revision to Article IV, Section 7.2, Elaine Holmes, Personnel Director Retiree Health Insurance Extension 2550, 2- Current Article IV, Section 7.2 Telephone Number: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 227-2031 Purpose: To consider extending the eligibility for retiree health insurance on a prorated basis to employees with at least five years Orange County service who are: • Retiring at age 65 or older or Retiring on a disability retirement. Background: Currently, the County provides retiree health insurance to retirees from Orange County with 10 years of total Orange County service as a permanent employee. For retirees on the County's group health insurance plans, the County provides the same contribution for individual and dependent coverage as it does for current employees. That is, the County pays the full cost of individual coverage and 40 percent of the cost of dependent coverage. When a retiree reaches age 65, the County pays the cost of Medicare supplement insurance for the retiree. The Attachment 1 Personnel Ordinance revision extends eligibility for retiree health insurance on a prorated basis to employees with at least five years, but less than 10 years of total Orange County service as a 2 permanent employee, if that employee is age 65 or older or retiring on a disability retirement. For such retirees on the County's group health insurance plan, the County contribution, on a prorata basis, would be 50 percent of the cost for individual coverage and 20 percent of the cost of dependent coverage, if any. For an employee age 65 or older, the County contribution would be 50 percent of the Medicare Supplement cost for the retiree. This proposal arises from employee concern and feedback that an employee who does not have 10 years service and who is age 65 or older likely will not be able to complete 10 years of service before retirement. Also the concern that an employee retiring on disability has a critical need to continue health insurance coverage but may not be able to work the 10 years with Orange County necessary to qualify for full coverage. If the County extended retiree health insurance eligibility to employees age 65 or older with five but less than 10 years County service, Personnel's records indicate that three current employees would be eligible for such coverage in 1997-98. If all three employees elected to retire in 1997-98, the estimated additional annual cost of this coverage is about $5.000. Personnel reviewed employee records and also projected eligibility over the next five years. This identified only one additional current employee who would be eligible under this provision. Over the past five years the County has averaged about two disability retirements a year. If the County extended retiree health insurance to employees retiring on a disability retirement with five but less than 10 years County service and if the average two disability retirements both were employees with less than 10 years service, the estimated additional annual cost is about $7,500. Funds to cover any increase in cost first would be charged to the funds budgeted for retiree health insurance in 1997-98. If sufficient funds to cover the increase in cost were not available from those funds, then these costs could be funded from funds realized by the operating department when an employee retires and the position is filled at a lower salary level. Recommendation: The Manager recommends the Board adopt the Attachment 1 amendment to the Orange County Personnel Ordinance effective September 1, 1997. f-.\e\retabs.doc August 14, 1997 3 Attachment 1 Draft Revision Orange County Personnel Ordinance Article IV, Section 7 2, Retiree Health Insurance 7.2 Retiree Health Insurance The County provides retiree health insurance and contributes toward the cost of this for eligible employees. 7.2.1 Employees Eligible An employee is eligible for retiree health insurance if he or she retires from Orange County and meets one of the following criteria. • Has at least 10 years of total Orange County Service as a permanent employee. • Is age 65 or older and has at least five years of total Orange County Service as a permanent employee. • Is retiring on a Disability Retirement and has at least five years of total Orange County Service as a permanent employee. 7.2.2 Eligibility Period To Elect Participation In Retiree Health Insurance To participate in retiree health insurance,the eligible retiree must be retiring directly from Orange County and request such participation within 30 calendar days of the last date of employment. 7.2.3 Retiree Health Insurance Plans Available For an eligible retiree under age 65: The retiree is covered under one of the County's group health insurance plans. The retiree remains on the County group health insurance plan in which enrolled at retirement. During any subsequent annual enrollment period,the retiree may change to another County health insurance plan as well as add or drop dependents. For an eligible retiree age 65 or older: Medicare becomes the primary insurer and the County becomes the secondary insurer. County group health insurance ends. The retiree enrolls in Medicare Part A and Part B and pays the cost. The County provides Medicare supplement insurance, as specified in this Ordinance. 7.2.4 County Contribution For Retiree Health Insurance For an eligible retiree with 10 years of total Orange County service as a permanent employee,the County subsides the cost of retiree health insurance as follows: 4 Retiree Dependent Retiree/Dependent Health Plan Type Supplement* Supplement* Retiree under 65 Group Health Plan 100% Dependent under 65 Group Health Plan 40% Dependent 65 or over Medicare Supplement None Retiree 65 and over Medicare Supplement 100% Dependent under 65 Group Health Plan None Dependent 65 or over Medicare Supplement None For an eligible retiree, age 65 or retiring on a disability retirement, with five years, but less than 10 years of total Orange County service as a permanent employee,the County subsides the cost of retiree health insurance as follows: Retiree Dependent Retiree/Dependent Health Plan Type Supplement* Supplement* Retiree under age 65 Group Health Plan 50% Dependent under 65 Group Health Plan 20% Dependent 65 or over Medicare Supplement None Retiree 65 or over Medicare Supplement 50% Dependent under 65 Group Health Plan None Dependent 65 or over Medicare Supplement None * The County pays the percentage shown of the cost not to exceed the amount it contributes for individual/dependent coverage for current employees. The retiree pays the cost for any group health insurance or Medicare supplement coverage for the retiree or the dependent costing more than the County contribution. If the retiree waives coverage,the County provides no cash payment in lieu of such coverage. 7.2.5 Payment Of Premiums For Which The Retiree Is Responsible The retiree pays Orange County any required premiums monthly. With appropriate notice, the County terminates coverage when premiums are more than 30 days past due. The health insurance provider bills the retiree directly for any Medicare supplement coverage for a dependent. 7.2.6 Dependent Under Age 65 At Death of Eligible Retiree Upon the death of the retiree enrolled in the County retiree health insurance, the County offers a dependent on group health insurance continuation of coverage under the Consolidated Omnibus Budget Reconciliation Act(COBRA). The dependent is eligible for such coverage for up to 36 months (or until attaining age 65)provided the dependent pays the full cost of this coverage. 7.2.7 Eligible Retiree Returning To Work In NC Local Government If the retiree returns to work with another North Carolina Local Government employer in a position which offers group health insurance coverage (whether the employee elects it or not), Orange County cancels the retiree's health insurance coverage through Orange County and such coverage may not be reinstated. F APers\Health\RetireH9.Doc 5 Attachment 2 Current Orange County Personnel Ordinance Article IV, Section 7.2, Retiree Health Insurance 7.2 Retiree Health Insurance 7.2.1 An employee who retires from Orange County with at least 10 years of total Orange County service as a permanent employee and whose last North Carolina local government retirement system employer providing major medical coverage was Orange County, is covered, upon request, by the County's group health insurance plan. Such request must be made within 30 days of the Orange County retirement effective date. The eligible retiree has the option, at additional expense, to cover the retiree's spouse, dependent children and/or family. The County continues its contribution for the retiree's and any covered spouse's or dependent's health insurance coverage at the same amount it contributes for employees. The retiree continues paying any additional premiums required at the rates established for dependent coverage. 7.2.2 When the retiree and/or covered dependent becomes eligible for Medicare, Medicare becomes the primary insurer and the County becomes the secondary insurer. County group health insurance coverage is canceled and replaced by Medicare supplement insurance. The County pays the cost of the individual retiree's Medicare supplement coverage so long as this does not exceed the contribution the County makes for individual employee coverage. The retiree is responsible for the cost of any spouse/dependent Medicare supplement coverage. 7.2.3 An employee with less than 10 years of Orange County service as a permanent employee may continue coverage on the County's group plan if under age 65 at the employee's own cost for up to 18 months or, if determined disabled under Social Security, for up to 29 months, as provided under COBRA.