HomeMy WebLinkAboutAgenda - 10-12-1995 - Item A 1-3 (no abstract) l
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Orange County
Personnel Department
208 S. Cameron Street October 11, 1995 Tel: 919-732-8181
Post Office Box 8181 919-968-4501
Hillsborough, NC 27278 919-688-7331
MEMO N TM 919-227-2031
Fax: 919-644-3009
TO: Orange County Board of Commissioners
John Link, County Manager
FROM: Elaine Holmes, Personnel Direct
SUBJECT: Employee health Insurance information for
October 12. 1995 Board of Commissioners'-Work Session
In follow up to the October 2 Board meeting,the scheduled Board Work Session for
October 12, 1995 includes three health insurance related items. These are:
Review of the draft Interlocal Agreement with the North Carolina Association of
County Commissioners(NCACC)Health Insurance Trust and decision on Trust
participation by Orange County.
Review and decision on the Health Insurance Waiver option for 1996.
Review and decision on the County contribution for health insurance dependent
subsidy for 1996.
This memorandum provides information in Items A,B and C related to the above three
items for Board discussion on October 12. Item D provides a recommendation on these items.
A. NCACC Trust Interlocal Agreement
Attachment 1 is the revised Interlocal Agreement negotiated with the NCACC
Health Insurance Trust. It is in three parts: a Resolution,the NCACC's standard
Interlocal Agreement and a Memorandum of Agreement Between Orange County
and the NCACC Health Insurance Trust which clarifies and provides more detail
as to the terms and conditions of the Interlocal Agreement.
The Interlocal Agreement,as negotiated,has satisfactorily resolved the staffs
questions and we are recommending the Board adopt the Interlocal Agreement
and enter into the NCACC Health Insurance Trust for 1996.
As you know, a key question we have sought to clarify in the amendments to the
Interlocal Agreement has been what risk, if any,the County incurs by Trust
An Equal opportunityiAlBrmative Action Employer
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t II
Orange County
Personnel Department
208 S. Cameron Street October 11, 1995 Tel: 919-732-8181
Post Office Box 8181 919-968-4501
Hillsborough, NC 27278 919-688-7331
919-227-2031
MEMORANDUM Fax: 919-644-3009
TO: Orange County Board of Commissioners
John Link, County Manager
FROM: Elaine Holmes,Personnel Direct
SUBJECT: Employee Iiealtli.Insurance Information for
October 12, 1995 Board of Commissioners' Work Session
In follow up to the October 2 Board meeting,the scheduled Board Work Session for
October 12, 1995 includes three health insurance related items. These are:
Review of the draft Interlocal Agreement with the North Carolina Association of
County Commissioners(NCACC)Health Insurance Trust and decision on Trust
participation by Orange County.
Review and decision on the Health Insurance Waiver option for 1996.
Review and decision on the County contribution for health insurance dependent
subsidy for 1996.
This memorandum provides information in Items A, B and C related to the above three
items for Board discussion on October 12. Item D provides a recommendation on these items.
A. NCACC Trust Interlocal Agreement
Attachment 1 is the revised Interlocal Agreement negotiated with the NCACC
Health Insurance Trust. It is in three parts: a Resolution,the NCACC's standard
Interlocal Agreement and a Memorandum of Agreement Between Orange County
and the NCACC Health Insurance Trust which clarifies and provides more detail
as to the terms and conditions of the Interlocal Agreement.
The Interlocal Agreement, as negotiated,has satisfactorily resolved the staffs
questions and we are recommending the Board adopt the Interlocal Agreement
and enter into the NCACC Health Insurance Trust for 1996.
As you know, a key question we have sought to clarify in the amendments to the
Interlocal Agreement has been what risk,if any,the County incurs by Trust
An Equal OpportunityiANirmative Action Employer
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participation. The County's current Blue Cross plans operate on a fully insured
basis. There is no financial liability to the County beyond the monthly premiums
for the contracted period. The County would join the Trust on a"fully insured"
basis but in the context of the Trust as a legal entity this has some different
ramifications. Attachment 2 provides additional information on this area.
B. Health Insurance Waiver Option
Attachment 3 shows the waiver amount,number of employees participating in the
waiver option by year and the cost of the waiver option based on varying
amounts. It also shows the cost if the 46 participating employees enrolled in
employee only health insurance coverage. If the value of the waiver is reduced, it
is possible that at some level some of the employees participating may elect to
enroll in health insurance coverage in lieu of the waiver option and this would
offset the cost savings from reducing the waiver.
C. Health Insurance Dependent Subsidy
Attachment 4 shows the number of employees participating in each dependent
coverage type and the current subsidy for each coverage type if calculated as a
percentage.
The reasons for providing the subsidy for dependent coverage is to partially offset
the employee's cost and make dependent health insurance more affordable for the
employee,particularly the lower salaried employee who might not otherwise
enroll in dependent health coverage. The reason for recommending the subsidy be
calculated as a percentage is to even out the subsidy among the three dependent
coverage types as well as to simplify the calculation and make it more
understandable.
Setting the subsidy at 42 percent maintains the same relative level as currently
provided for employee/spouse coverage. If the current subsidies were averaged,
the average is about 38 percent. Attachment 5 shows the estimated costs for the
42 percent subsidy as well as the estimated cost if the subsidy were 40 percent or
38 percent. Attachment 6 shows the monthly amount paid by the employee under
the various options.
D. Recommendation
As to NCACC Trust participation:
It is recommended that the Board adopt the Interlocal Agreement and enter into
the NCACC Health Insurance Trust for 1996.
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As to the health insurance waiver and dependent subsidy:
The health plan option selected by the Board on October 2 provides for cost
savings over the amount currently budgeted for health insurance of approximately
$225,000. (This cost savings reflects the dependent subsidy at 42 percent.)
If the Board wishes to pursue reduction of the waiver from the current level as
well as additional cost savings,it is recommended the Board reduce the waiver to
$50 per month and set the dependent subsidy at 40 percent. This increases the
total estimated cost savings to about$250,000. Attachment 7 shows the elements
and cost savings of this recommendation.
This recommendation maintains the waiver at a level where employees may
continue to wish to participate if eligible and maintains about the same relative
level of dependent subsidy. Please note this action would result in a reduction to
each employee currently participating in the waiver of $210 on an annual basis.
The alternative would be to "grandfather" in the employees currently participating
at the$67.50 amount. However,this would not result in the projected$9,660 in
cost savings from reducing the waiver.
Please let me know if you have any question or if I can provide any additional
information.
ATTACHMENT 1
RESOLUTION TO ADOPT THE INTERLOCAL AGREEMENT AND TO JOIN THE
HEALTH INSURANCE TRUST GROUP SELF INSURANCE FUND FOR HEALTH,
DENTAL,LIFE AND DISABILITY RISK SHARING
WHEREAS, (Orange. C minty provides to its employees
(County or Local Agency)
insurance and other health benefits; and
WHEREAS, the North Carolina Association of County Commissioners Health
Insurance Trust,hereafter referred to as "NCACC HIT",has been established by counties pursuant
to G.S. 153A-445(a)(1) and G.S. 160A-460 through 160A-464; and
WHEREAS, it is desirable for orange C'n„nty to join NCACC
(County or Local Agency)
HIT and participate in its insurance and health benefits fund in order to provide a method of risk
sharing for health-related claims of its employees;
NOW,THEREFORE,BE IT RESOLVED that the Board of County Commissioners
of Drange_ County hereby adopts the interlocal agreement entitled "Interlocal Agreement for a
Group Self-Insurance Fund for Health, Dental, Life and Disability Risk Sharing" with the
amendments set out in the attached Memorandum of Agreement and thereby joins and agrees to
participate in NCACC HIT which has been formed to create a group fund to pay and service the
health-related claims of the employees of the counties and other local agencies joining the Trust.
BE IT FURTHER RESOLVED that Elaine Hnlmee. Percnnnel Nrer-tnr is
(County Official)
authorized to execute the application to join NCACC HIT.
This the_12t1h day of Oc-tnher , 1995_ .
ATTEST:
Clerk
Moses Carey, Chair
Change County Board of
Commissioners
cc: NCACC,P.O.Box 1488
Raleigh,NC 27602
INTERLOCAL AGREEMENT FOR A GROUP SELF INSURANCE FUND FOR , DENTAL,
LIFE AND DISABILITY RISK SHARING
This Agreement is made and "entered into by and between all the parties who are now or may hereafter
become members of this Trust and join in a group fund for the purchase of life and accidental death or
dismemberment or other health insurance, and for risk sharing in the provision of accident and health
benefits,which may include hospitalization,medical,surgical,major medical,dental and any other health care
benefits, and long or short term disability, which Trust is acting by and through its Board of Trustees as
provided herein.
Article I. Purposes of the Agreement.
1. To carry out the desire of certain counties of the State of North Carolina to create and become the
North Carolina Association of County Commissioners Health Insurance Trust, hereafter referred to
as the "Trust", and to enable these counties to pool the risk of payment of the employee benefits set
forth above pursuant to the provisions of North Carolina General Statutes 153A-445(a)(1) and 160A-
460 through 160A-464.
2. To designate a Board of Trustees to direct the affairs of the Trust and to describe the responsibilities
of the Board.
3. To provide for payment,from the assets of the fund and from excess insurance purchased by the Trust,
any insurance premiums and claims for health benefits covered by the Trust's plan, which awards
have been sustained by final judgement where suit shall have been filed as authorized by the rules
of the Trust.
4.- To provide for payment by members of the Trust of premiums and contributions based upon
appropriate classification rates,experience modifications,or other methodologies with which the Trust
will establish and maintain a fund for the payment of the premiums and claims of covered employees,
and their dependents, and retired employees and their dependents, of members and for payment of
the administrative costs of operating the Trust.
.2.
Article II. Duration of the Agreement.
This agreement shall remain in force until terminated by the Board of Trustees.
Article III. Board of Trustees: Creation, Powers and Duties.
1. The counties that are signatories hereto do hereby establish the North Carolina Association of County
Commissioners Health Insurance Trust, hereafter referred to as the "Trust", as a joint interlocal
agency to operate a fund for employee insurance benefits and accident and health benefits risk
sharing, hereafter referred to as the "Fund". The Trust and the Fund shall be governed by a Board
of Trustees composed of seven (7) elected officials or employees of county governments who are
members of the Trust and who shall be appointed by the President of the North Carolina Association
of County Commissioners, hereafter referred to as the "Association". Three of the initial appointees
shall serve three and one-half(31/z)year terms ending December 31,1998;two shall serve two and one-
half(21/2)year terms ending December 31, 1997;and two shall serve a one and one-half(11/2)year term
ending December 31, 1996. Following these initial appointments, terms of Trustees shall be for three
calendar years beginning January 1 of the first year and ending December 31 at the end of the third
year. A member of the Board of Trustees shall continue to hold office until his successor is selected.
Any vacancy shall be filled for the unexpired portion of the term by appointment by the President of
the Association. A member of the Board of Trustees who ceases to be an elected official or employee
of county government, or whose county ceases to be a member of the Trust shall be deemed to vacate
his seat on the Board.
2. The Board of Trustees annually shall select a chairman from among its membership to preside for the
ensuing year. A majority of the membership of the Board shall constitute a quorum thereof and any
question may be decided by a majority vote.
3. The Board of Trustees shall have the following powers and duties:
a) To control and supervise the affairs of the Trust and the Fund;
b) To establish,operate and enforce administrative rules,regulations and bylaws as between the
Trust and the individual members of the Trust;
a
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c) To establish terms and conditions of coverage within the pool, including underwriting criteria
and exclusions of coverage;
d) To select and designate a Plan Administrator for the Trust, agree upon the terms of service
fees to be paid to the Plan Administrator and assess the performance of the Plan
Administrator,and to negotiate,review,and give final approval to any Agreement between the
Trust and the Plan Administrator and to execute such Agreement;
e) To select and designate other contractor(s) for the Trust, agree upon the terms of service fees
to be paid to such other contractor(s) and assess the performance of such other contractor(s),'
and to negotiate, review, and give final approval to any agreement(s)between the Trust and
other contractor(s) and to execute such agreement($);
f) To ensure that all claims are paid promptly;
g) To take all necessary precautions to safeguard the assets of the Trust;
h) To maintain minutes of its meetings;
i) To delineate the areas of authority delegated by the Board of Trustees to the Plan
Administrator and to other contractor(s);
D To exercise sole discretion in determining whether applicants for membership shall be
admitted to the Trust and whether existing members shall be suspended or expelled, subject
to the following limitations:
(1) Only governmental units, institutions or agencies in the State of North Carolina shall
be eligible for membership; and
(2) A member may be suspended or expelled only after receiving sufficient notice pursuant
to Article VIII, paragraph 2, of this Agreement. The Board of Trustees may
promulgate rules and regulations, as needed, regarding admission, suspension or
expulsion of members;
k) To approve and monitor all loss control programs;
1) To negotiate,execute and monitor any other contracts and agreements necessary to effectuate
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this Interlocal Agreement;
m) To bear sole responsibility for any dispositions out of the Fund by way of dividends or
distribution, if any, of accumulated reserves to the members of the Trust. Any such
dispositions shall be made solely at the discretion of the Board of Trustees; and
n) To contract for and purchase excess insurance as deemed necessary to safeguard the assets
of the Trust.
Article IV. Duties of Plan Administrator; Duties Of Other.Contractors
L The Board of Trustees shall designate a Plan Administrator for the Trust and its Fund. The Plan
Administrator may contract with such other contractor(s) as is necessary for the administration of
claims and services of this Trust and to provide for the coverage and services contemplated by this
agreement. The Plan Administrator shall directly supervise other contractor(s) for the Trust. The
Plan Administrator shall deposit to the account of the Trust at any bank or banks designated by the
Board of Trustees,all contributions as collected,and such monies shall be disbursed only as provided
by the rules, regulations and bylaws of the Board of Trustees, and the agreement(s) with the other
contractor(s). The Plan Administrator shall receive a fee which shall be negotiated from time to time
by the Board of Trustees, and which shall be set forth in the Agreement between the Trust and the
Plan Administrator. All other contractors who render services for the Trust shall receive a fee which
shall be negotiated from time to time by the Board of Trustees, and which shall be set forth in the
agreement between the Plan Administrator and the contractor.
2. The duties and responsibilities of other contractor(s) may include, but are not limited to, claims
administration,program development and loss control on behalf of the members. Other contractor(s)
may be used to assist the Board of Trustees in determining all contributions due the Fund, and in
such capacity,the contractor(s)may be required to prepare for payment all approved items of expense
and claims,and give a monthly accounting of all monies and claims so handled. The responsibilities
and duties of other contractor(s)shall be more particularly defined and described in the agreement(s)
executed with the Plan Administrator. All books and records kept by a contractor that relate to the
Trust shall be open to inspection by the Board of Trustees and the Plan Administrator or their agents
at all reasonable times.
Article V. Contributions to the Fund-,Audits.
1. Contributions to the Fund by individual members shall be determined by the Board of Trustees. The
Board of Trustees shall have the discretion to modify the contributions as may be necessary to
maintain the soundness of the Fund. The Board of Trustees is authorized to determine the method
and timing of payment of contributions to the Fund and the method and timing of the distribution of
any accumulated reserves,with due regard for the interests of the members and the financial security
of the Fund. The Board of Trustees may distribute accumulated reserves in the form of a reduction
of premiums and contributions if it so chooses.
2. The Fund shall be audited annually by a certified public accounting firm. The Board of Trustees shall
obtain periodically an appropriate actuarial evaluation of the loss and loss adjustment expense
reserves of the Fund including an estimate of losses and loss adjustment expenses incurred but not
reported.
Article VI. Amendment of the Agreement.
The Board of Trustees of the North Carolina Association of County Commissioners Health Insurance Trust
is hereby authorized to make any amendments to this agreement which would not fundamentally alter the
contemplated arrangement. Any amendment shall be proposed by a member of the Trust or, alternatively,
by the designated Plan Administrator,and submitted in writing to the Board of Trustees not less than thirty
(30)days prior to the next regularly scheduled meeting of the Board of Trustees. A proposed amendment shall
be adopted if approved by a two-thirds (2/3)vote of the Board of Trustees. Written notice of any amendment
proposed for adoption by the Board of Trustees shall be mailed to each member not less than twenty(20)days
in advance of the meeting at which such proposal is to be considered. Written notice of amendments finally
adopted by the Board of Trustees shall be mailed to each member not more than thirty (30) days after
adoption. Only such proposed amendment or amendments as are specifically submitted in writing in advance
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may be considered by the Board of Trustees.
Article VII. Terms, Conditions and Limits of Liability Exclusions Insuring Agreements Assistance and
Cooperation of Members, Subrogation and other Terms and Conditions of Membership
1. For the purposes of this Interlocal Agreement, the terms accident and health benefits shall include,
but are not limited to, hospitalization, medical, surgical,major medical, dental and any other health
care benefits,as they are subsumed or described in the policy or risk sharing contract approved by the
Board of Trustees from time to time.
2. Terms, conditions and limits of liability, exclusions, insuring agreements, assistance and cooperation
of members,subrogation and other terms and conditions of membership shall be governed by the policy
or risk sharing contract approved by the Board of Trustees from time to time.
Article VIII. Cancellation,
1. This Contract can be cancelled by the member only on a Trust anniversary date and only after having
given written notice to the Trust at least ninety (90)days prior to such anniversary date. The Trust
anniversary date shall be July 1 of each year.
2. This Contract can be cancelled by the Trust only on an anniversary date and only after having given
written notice to the member at least ninety (90) days before such anniversary date except that the
Trust may cancel at any time after giving fifteen (15) days written notice to the member if
(a) the member has failed to pay any contribution when due, or
(b) the member has refused or failed to comply with any loss prevention recommendation
submitted to the member by the Trust or by the Service Agents) on behalf of the
Trust, or
(c) the member has refused or failed to comply with any underwriting requirement of the
Trust.
3. If at any time this Contract is cancelled by any party, the Trust holds any contributions which are
refundable to the member, such contributions shall be refunded following the time that the statute
of limitations on all claims for the year has run.
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Article IX. Terms of Agreement Conformed to Statute.
Terms of this Agreement which are in conflict with the provisions of North Carolina Law are hereby amended
as necessary from time to time to conform to such law.
Article X. Effective Date of Agreement.
Any member who formally applies for membership in this Trust and Fund by submission of a resolution
requesting membership in said Trust and Fund and is accepted by the Board of Trustees shall thereupon
become a party to this Agreement and be bound by all of the terms and conditions hereof,and such resolution
shall constitute a counterpart of this Agreement.
G:\SHARED`KIM\INTRLCL2
Memorandum of Agreement Between Orange County and the North Carolina
Association of County Commissioners (NCACC) Health Insurance Trust
WHEREAS, Orange County has adopted a resolution dated October 12, 1995 authorizing
Orange County to enter into an Interlocal Agreement(hereafter called Agreement)with the
NCACC Health Insurance Trust(hereafter called NCACC Trust)which Agreement will provide
for a self insurance fund for group health,dental, life,and disability risk sharing; and
WHEREAS,the Agreement for group self insurance fund for group health, dental, life,
and disability risk sharing is a part of that resolution, and
WHEREAS,the Agreement does not fully describe the terms, conditions and
implementation of the Agreement between Orange County and the NCACC Trust; and
WHEREAS, Orange County and the NCACC Trust have agreed to clarify and provide
more detail as to the terms,conditions and implementation of the Agreement.
The parties therefore agree that the Agreement is subject to the following terms and
conditions:
1. The Agreement covers the period January 1, 1996 through December 31, 1996.
2. Orange County may cancel the Agreement on its anniversary date of membership
(January 1)after having given the NCACC Trust at least ninety(90) days written notice
prior to this anniversary date.
3. Orange County's monthly health insurance contributions for the covered period are those
set out in Appendix A. These contributions can only be increased and the frequency
changed during the covered period with the written consent of Orange County. Orange
County will consent to an increase in its contributions if the NCACC Trust:
As a whole,experienced a deficit at the end of its plan year,and
The NCACC Board of Trustees determined a special assessment against all plan
members was necessary to offset the deficit, and
Designated a pro-rata share to Orange County.
Orange County's refusal to consent to an increase in contributions or change in frequency,
except as described in this paragraph, is not grounds for cancellation of the Agreement
by the NCACC Trust pursuant to Article VIII, Section 2 of the Agreement during the
covered period.
4. Orange County offers HealthSource of North Carolina (a non-Blue Cross and Blue
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Shield plan)to its employees as a health insurance plan option and may continue to do so
on a"grandfather" basis when it joins the NCACC Trust, without regard to the number or
percentage of employees participating in HealthSource. Orange County would be
expected to comply with any future minimum participation requirements as might be
adopted by the NCACC Trust Board of Trustees in the following circumstances:
If Orange County discontinued offering a Trust(Blue Cross and Blue Shield)
health maintenance organization product while continuing to offer a competitor's
health maintenance organization product; or
If Orange County discontinued its HealthSource option; or
If Orange County offered additional health insurance carriers.
5. Orange County's health insurance plan reserves held by Blue Cross and Blue Shield of
North Carolina as of December 31, 1995 will continue to be held by Blue Cross when
Orange County joins the NCACC Trust and accounted for and distributed by Blue Cross,
as provided for by the contract between Blue Cross and Orange County.
6. The underwriting, eligibility and benefit provisions of Orange County's existing contract
with Blue Cross and Blue Shield as of December 31, 1995 are hereby incorporated in this
Agreement with the NCACC Trust with the following exceptions: 1)that Orange
County's existing Blue Cross and Blue Shield Traditional Plan will change to the Blue
Cross and Blue Shield Preferred Provider Plan(PPO Select Plan S3) effective January 1,
1996 and 2)that the monthly contributions for coverage will be as designated by the
NCACC Trust. Among other things,this means Orange County employee eligibility for
health insurance will remain the same as in the referenced contract with Blue Cross.
7. Orange County has two sub-groups on its Blue Cross health insurance coverage for the
Orange Community Housing Corporation and the Orange County Visitors Bureau. The
NCACC Trust agrees to continue coverage for these in the Orange County group on the
same basis as Blue Cross and Blue Shield has done.
8. Orange County is entering into the NCACC Trust only for coverage as to health
insurance and is not entering into life,dental,disability or other insurance programs
through the NCACC Trust.
9. The NCACC Trust may only cancel Orange County's contract for health insurance
coverage through the Trust for refusing or failing to comply with a loss prevention
recommendation submitted to Orange County by the Trust with Orange County's written
consent.
10. To the extent that the NCACC Trust can cancel the Agreement under Article VIII,
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Section 2 of the Agreement, it may only do so following at least thirty (30)days written
notice from the NCACC Trust to Orange County of the NCACC Trust's intent to cancel
and the reason(s) for the cancellation.
11. The Agreement may be cancelled by Orange County after giving fifteen(15) days written
notice to the NCACC Trust if the NCACC Trust fails to comply with the terms and
conditions of the Agreement. Cancellation by Orange County,under this paragraph,will
be preceded by at least thirty(30) days written notice from Orange County to the
NCACC Trust of Orange County's intent to cancel and the reason(s) for the cancellation.
12. The NCACC Trust covers COBRA participants under the Trust and administers COBRA
in a manner consistent with that provided by Blue Cross and Blue Shield through
"COBRA Serv."
13. It is acknowledged that the NCACC Trust will occasionally make changes in the
Interlocal Agreement to more economically and efficiently serve all counties; but it is
also acknowledged that Orange County has the right to cancel its participation at any
anniversary if it does not agree to such changes or if it desires to cancel for any reason.
Any amendment purporting to change underwriting, eligibility,benefit or contribution
requirements may only be made effective, without Orange County's consent, with the
next plan year for which Orange County has an opportunity to cancel as provided in
paragraph number 2 of this Memorandum of Agreement.
14. Article VIII, Section 2c refers to "...any underwriting requirement of the Trust." These
underwriting requirements are those set out in this Agreement, including those
incorporated by reference in Item 6 of this Agreement.
This is the 12 day of October ' 1995.
Attest:
Clerk to the Board
Ron Aycock, Executive Director Moses Carey, Chair
N.C. Association of County Commissioners Orange County Board of Commissioners
Appendix A
Orange County Health Insurance Contributions For
January 1, 1996 through December 31, 1996
Blue Cross and Blue Shield Preferred Provider Plan
(Preferred Care Select-Plan PPO-S3)
Category Monthly Contribution
Employee Only $162.85
Employee and Child(ren) $314.29
Employee and Spouse $343.61
Employee and Family $488.54
Blue Cross and Blue Shield Personal Care Plan
(Option 100)
Category Monthly Contribution
Employee Only $162.85
Employee and Child(ren) $314.29
Employee and Spouse $343.61
Employee and Family $488.54
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Attachment 2
NCACC Health Insurance Trust
1. Financial Liability
The NCACC Trust advises that the only circumstance in which Orange County
would have a financial liability beyond the amount of its set monthly
contributions would if the Trust:
As a whole experienced a deficit at the end of its plan year, and
The NCACC Board of Trustees determined a special assessment against
all plan members was necessary to offset the deficit and
Designated a pro-rata share to Orange County.
2. According to NCACC Executive Director Ron Aycock:
The Trust has been establishing its member contributions at a level to
yield a small surplus at the end of the plan year.
The Trust carries aggregate stop loss insurance on the Trust as a whole at a
level of 115 percent. The maximum loss (worst case scenario)the Trust
could possibly incur is the difference between the projected payment for
health benefit claims(100 percent and the aggregate stop loss insurance or
115 percent). In dollar amount,he advises this amount is$5.6 million.
In addition to the aggregate stop loss insurance,the Trust has purchased
specific stop loss insurance at$100,000. Any individual claim over the
member's individual claim stop loss(Orange County's is$50,000)and
under$100,000 is covered by the Trust. Any amount over the $100,000 is
covered by the Trust's specific stop loss insurance and would not go
toward creating a Trust deficit.
The Trust's actuary has concluded there is a one in 1,000 chance of
reaching the 115 percent aggregate stop loss level. In the event of
reaching the 115 percent level,counties which are on an "administrative
services only" funding arrangement(not Orange County)would bear
approximately 60 percent of the $5.6 million liability or$3.4 million. The
remaining$2.2 million would be the responsibility of the "fully insured"
members(including Orange County). In essence, it is a one in 1,000
chance that Orange County and the remaining members would have to
provide additional funds of$2.2 million.
If the Trust experienced a deficit it would be distributed over all the Trust
participants on a pro rata basis based on contributions to the Trust and
approximately$45 million in annual contributions. That is, Orange
County's share would be the percentage of the $2.2 million which its
contributions are of the total annual contributions. For example, if the
County's contributions are$1 million, this would be about two percent of
$45 million and represents about$44,000.
The Trust may not legally waive Orange County's or any other member's
liability even if the member enters the Trust on a"fully insured"basis. It
is the nature of a Trust that the members share in the potential loss as well
as gain.
Attachment 3
Orange County Health Insurance Waiver Option
A. Waiver Amount
The health insurance waiver amount has remained the same($67.50 each month) since
the option began in 1987. In 1987 $67.50 was the monthly amount the County paid
toward employee only health insurance coverage.
B. Employees Participating in the Waiver Option
Year Number Participating
1995 46
1994 43
1993 53
1992 49
1991 47
1990 35
1989 24
1988 13
1987 12 (estimated)
C. Cost of Waiver Option
Current Annual Cost at$67.50 with 46 Employees Participating: $37,260
Estimated Annual Cost of Waiver Option if Amount Changed To:
Monthly Amount Waiver Annual Cost Based On 46 Employees
$60 $33,120
$50 $27,600
$40 $22,080
$30 $16,560
$20 $11,040
D. Cost if Employees In Waiver Enroll In Health Insurance Coverage
Coverage Type Annual Cost Based on 46 Employees
Employee Only at $52,633
$162.85 per month
fpers\comp\dep7.wpd
October 8, 1995
Attachment 4
Current Orange County Health Insurance Dependent Subsidy
Orange County currently provides a partial subsidy to offset the employee cost of
dependent health insurance coverage. The subsidy currently is calculated as a flat dollar
amount. If calculated as a percentage of the cost,the current subsidy amount is:
Number Employees Subsidy Amount
Coverage-Type With This Coverage As Percentage
Employee and Child(ren) 101 30.7%
Employee and Spouse 46 41.7%
Employee and Family 121* 40.9%
Total Covered 268*
*Includes 25 vacant positions budgeted with this coverage type.
f-pers\comp\dep2.wpd
October 8, 1995
Attachment 5
Estimated County Contribution For Dependent
Health Insurance Coverage*
Annual Amount
Plans and Rates County Contributes
I Under Current Health Plans $391,089
and Rates
2. Effective 1-1-96 Under Option B** $317,615
With Dependent Subsidy Set
As a Percent and At 42 Percent
3. Effective 1-1-96 Under Option B** $291,546
With Dependent Subsidy Calculated
At a Flat Dollar Amount as in
the Past
4. Effective 1-1-96 Under Option,B $302,491
With Dependent Subsidy Set As a
Percent and At 40 Percent
5. Effective 1-1-96 Under Option B $287,366
With Dependent Subsidy Set As a
Percent and At 38 Percent
Excludes Cost for Employee Coverage
BC/BS Preferred Provider Plan and BC/BS Personal Care Plans Through NCACC
Health Insurance Trust and HealthSource
October 8, 1995
f-pers\comp\depl
Attachment 6
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Attachment 7
Health Insurance Waiver/Dependent Subsidy
Recommendation
Estimated Full Year
Change Cost Savings
A. Cost Savings Estimated for "Option B" $225,327
Which Included:
-Changing BC/BS Traditional Plan
to a Preferred Provider Plan,
-Renewal of BC/BS Plans
Through the NCACC Trust.
- Setting Dependent Subsidy at
42 percent.
- Continuing Health Insurance Waiver
Option at$67.50 per month.
B. Additional Cost Savings From Reducing the $ 9,660
Waiver from$67.50 per month to $50 per month.
C. Additional Cost Savings From Setting Dependent $ 15,124
Subsidy at 40%rather than 42%.
Grand Total Estimated Cost Savings $250,111
f:pers\comp\dep9.wpd
October 9, 1995