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HomeMy WebLinkAboutAgenda - 03-29-2016 - 2 - Employee Benefits and Pay Review 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: March 29, 2016 Action Agenda Item No. 2 SUBJECT: Employee Benefits and Pay Review DEPARTMENT: Human Resources Department ATTACHMENT(S) INFORMATION CONTACT: A. Benefit Highlights Brenda Bartholomew, Human Resources Director, (919) 245-2552 B. Current Premium Equivalent Cost Share for Diane Shepherd, Benefits Manager, (919) Medical, Dental and Vision Benefits 245-2558 PURPOSE: To receive relevant information regarding the Manager's recommendations for employee health and dental insurance and other employee benefits effective July 1, 2016 through June 30, 2017 and to receive relevant information on pay compression and meritorious service awards. BACKGROUND: The County provides employees with a comprehensive benefits plan, including 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. The County has been self-funded since January 1, 2014 for medical and pharmacy plans and continues to be self-insured for the dental plan. The County transitioned from a twelve-month calendar plan year to a twelve-month fiscal plan year in 2015 aligning with the County's fiscal year. In February 2015, the Board of County Commissioners approved Gallagher Benefit Services (GBS) as Broker of Record for the administration of benefit programs, which include health, dental, vision, and other voluntary programs for employees and retirees. Health Insurance Almost all full time and part time employees participate in the County's group health insurance plan. As of January 16, 2016, the plan covered 871 employees and 160 County retirees under the age of 65. Enrollment data is detailed in Attachment A. Since the County's insurance plan is self-funded, the County uses a third party administrator (TPA) to administer and manage claims. To take advantage of changing market dynamics and services, the County periodically solicits proposals from companies offering TPA services. The County conducted a competitive solicitation this year through its broker and is in the process of negotiating a final contact with the most responsive and qualified provider for FY2016/2017. A 2 recommendation on the identity of the provider is scheduled for consideration by the Board of Commissioners on April 5. Based on the initial solicitation results, the County's broker has estimated that total health insurance costs next fiscal year will remain flat or decrease slightly. As a result, no plan design changes are recommended. All covered benefits, co-pays, co-insurance and deductibles are expected to remain the same. If the budget for health insurance is decreased, the premium equivalents charged to employees will be adjusted accordingly. Employees currently pay a share of the premium for most of the plan options. Attachment B shows the current monthly and bi-monthly cost share of premium equivalents. Dental and Vision Insurance Delta Dental is the County's current dental provider and Community Eye Care provides the County's vision plan. As part of three year contract, the County will continue providing dental coverage through Delta Dental. The current budget for dental insurance coverage is approximately $320,000 annually. No increase in premium is recommended for FY 2016-2017. In fact, the County will improve the dental plan design by removing diagnostic and preventative services from the annual maximum covered services to promote preventative oral health care. The bi-monthly employee cost share of dental and vision premiums are also provided in Attachment B. Other Employee Programs The County will continue to partner with representatives of the UNC Wellness @ Work program to offer health screenings to all employees. In the fall of 2016, the Health and Human Resources Departments coordinated flu clinics for employees, and Human Resources held two Breast Cancer Awareness Days (for mammograms) at UNC Radiology in Hillsborough. See Attachment A for more detail on Employee Wellness Activities and Orange County Sportsplex enrollment. Compression Review Compression has been a growing concern among directors and employees and was ranking highly during the Department Director's prioritization of internal needs. Pay compression occurs when the difference between two salary grades or between two employees within the same salary grade is too small without an intentional, reasonable pay policy to explain that difference. A classic example of pay compression occurs when new employees are hired at the same or higher rates as employees who have been employed by the organization for several years. In this case, market rates for certain positions may have advanced beyond the salaries paid to current employees. The organization is compelled to pay market rates to attract well qualified new employees but does not feel the same pressure to increase the salaries of current employees. As a result, the pay of these employees is compressed with respect to their time and experience within the organization. To help quantify this issue for Orange County, Human Resources contracted with Gallagher Benefit Services Inc.'s Fox Lawson Group (FLG) to conduct a Compensation Philosophy Development and Pay Compression Study. The study found that the County experiencing pay compression at most grades in the salary schedule. The compression has been caused by 3 several different issues but is primarily due to the absence of a mechanism to move existing employees forward in the salary plan. Compression was also caused by structural issues within the current classification plan and lack of a strong pay philosophy across hiring managers. The County Manager's Recommended Operating Budget for FY 2016-17 is expected to include a recommendation to begin addressing salary compression. Meritorious Service Awards The Code of County Ordinances Section 28-61 provides a program of Meritorious Service Awards to financially reward employees whose work performance and accomplishments are exceptional or superior. Section 28-61 (c) provides that the award amount is subject to the Board of Commissioners' annual approval of funding. It also establishes award levels at $1,500 for exceptional performance and $750 for superior performance. The performance incentives are paid as one-time payment which does not become a part of an employee's annual base salary. The current Meritorious Service Award program is being administered using three award tiers. The current program recognizes exceptional performance with a $1,000 payment and superior and proficient performance with a $500 payment. As currently administered, the ordinance and current practice are not aligned. The County Manager's Recommended Operating Budget for FY 2016-17 is expected to address these inconsistences and make the award levels more granular. FINANCIAL IMPACT: The financial impact for health insurance will either remain flat or decrease. No financial impact for dental insurance is recommended. If approved by the Board, all costs including a compression adjustment and changes to the meritorious service award program will be part of the Manager's Recommended FY 2016-17 budget. SOCIAL JUSTICE IMPACT: The following two Orange County Social Justice Goals are applicable to this agenda item: • GOAL: FOSTER A COMMUNITY CULTURE THAT REJECTS OPPRESSION AND INEQUITY The fair treatment and meaningful involvement of all people regardless of race or color; religious or philosophical beliefs; sex, gender or sexual orientation; national origin or ethnic background; age; military service; disability; and familial, residential or economic status. • GOAL: ENSURE ECONOMIC SELF-SUFFICIENCY The creation and preservation of infrastructure, policies, programs and funding necessary for residents to provide shelter, food, clothing and medical care for themselves and their dependents. RECOMMENDATION(S): The Manager recommends that the Board receive the report in an effort to inform future decisions on a Third Party Administrator and the inclusion of compression adjustments and service award changes as part of the Manager's Recommended FY 2016-17 budget. 4 ATTACHMENT A Benefits Participation New employees enroll in plans effective with the first of the month after hire, and terminating employees' coverage ends on the last day of the month employed (unless a retiree under age 65). Participation is shown as of March 2016. Health Coverage 2011 2012 2013 2014 2015 2016 Traditional Plan n/a 610 605 624 646 661 High Deductible Plan n/a 187 197 198 182 209 Total Health Plan Participation n/a 797 802 822 828 870 Health Savings Account(employee n/a 81 89 73 64 69 contribution) (37%) (33%) (33%) Waived Health Insurance 20 22 21 29 31 32 Participation in Voluntary Benefits as of March 2016 Benefit # of Participants As of March 2015 As of March 2016 Delta Dental 838 885 Medical Flexible Spending Account 134 177 Dependent Care Spending Account 13 16 Community Eye Care 477 538 Accident Insurance 204 431 Critical Illness 179 254 Disability 231 305 Whole Life (2015)/Universal Life (2016) 113 242 5 Wellness Events/Activities July 2015 through March 2016 Annual Employee Flu Shot Clinic Participants 2010 2011 2012 2013 2014 2015 204 169 225 207 196 218 Sponsored Health Screenings Orange County Breast Cancer Awareness Day Mammograms Promoted to employees in October, but numbers unavailable Biometric Screenings (blood pressure, cholesterol, &glucose) 98 held June 2015 Results of Health Screenings: Employees by Risk Category % of Total % of Total Risk Category 2014 2015 Low 48% 60% Moderate 36% 32% High 16% 8% Orange County Sportsplex Membership Sportsplex Membership remains consistent with the past few years. Approximately 245 employees are members, receiving a total 75% discount on membership. Employee Wellness Activities Maintain, Don't Gain Holiday Challenge 28 participants Fit in 15! 6 ATTACHMENT B Current Medical Monthly Premium Equivalent Cost Share MONTHLY PPO Premium Equivalent OC Cost Share Employee Cost Share Employee Only $739 $739 $0 EE/Child(ren) $1,161 $931 $230 EE/Spouse $1,494 $1,085 $409 Family $2,101 $1,366 $735 BI-MONTHLY HSA Premium Equivalent OC Cost Share Employee Cost Share Employee Only $369 $369 $0 EE/Child(ren) $580 $465 $115 EE/Spouse $747 $543 $205 Family $1,050 $683 $367 Current Dental and Vision Monthly Premiums Cost Share Delta Dental Eye Care BI-MONTHLY Employee Cost Share Employee Cost Share Employee Only $0 $4.87 EE/Child(ren) $20.97 $9.27 EE/Spouse $17.59 $9.27 Family $30.04 $13.65