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HomeMy WebLinkAboutAgenda - 04-04-2017 - 6-c - Recommendations for Employee Health Insurance and Other Benefits 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: April 4, 2017 Action Agenda Item No. 6-c SUBJECT: Recommendations for Employee Health Insurance and Other Benefits DEPARTMENT: Human Resources ATTACHMENT(S): INFORMATION CONTACT: Current Premium Equivalent Cost Share Brenda Bartholomew, Human Resources for Medical, Dental and Vision Benefits Director, (919) 245-2552 PURPOSE: To approve the Manager's recommendations regarding employee health and dental insurance and other employee benefits effective July 1, 2017 through June 30, 2018, which are summarized as follows: • No increase in premium equivalent for medical coverage or increase in dental or vision premiums; • Include in the current plan design trans-inclusive health care coverage effective July 1, 2017; and • Carve out pharmacy coverage with a Pharmacy Benefits Manager for July 1, 2017 coverage. 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 Employee's 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 the benefit programs, which include health, dental, vision, and other voluntary programs for employees and retirees. In FY2016/2017, the Board of County Commissions approved the recommendation of the County Manager to continue with UnitedHealth Care (UHC) as the County's Third Party Administrator for health insurance programs and granted authority to the County Manager to renew the Third Party Administrator contract with United Health Care. 2 The UHC renewal was negotiated from $41.50 per employee per month to $29.50 per employee per month with a guaranteed fee for 2 years and a 3 percent rate cap for July 1, 2018's renewal. UnitedHealth Care will also fund $25,000 for FY 2017/2018 for wellness programs. Health Insurance The FY2016/2017 total adopted budget for health coverage for employees is $8,645,863 and $2,189,174 for retirees. The net increase for FY2017/18 is $524,433 based on the current enrollment of employees and participating pre-65 retirees. The net increase assumes that the pharmacy services will be independent of the UnitedHealth Care contract as described below. The increase represents 5.05 percent to the County's health insurance appropriation. An addition to the current plan design is trans-inclusive health care coverage effective July 1, 2017. Trans-inclusive health coverage includes benefit coverage for the treatment of gender dysphoria, a condition when a person's gender at birth is contrary to the one with which they identify. The coverage for the treatment of gender dysphoria allows member access to medical services based on gender identity and is not restrictive to services associated by a member's gender at birth. More specifically, services will include cross-sex hormone therapy administered by a medical provider, genital surgery, and pharmacy therapy, laboratory testing to monitor the safety of continuous cross-sex hormone therapy, and mental health services including psychotherapy and associated psychiatric diagnoses. All other health benefits, co-pays, co-insurance and deductibles will remain the same. The County Manager is recommending no increase in premium equivalent for employees or participating pre-65 retirees for FY2017/2018. The County participated in a Pharmacy Benefit Manager (PBM) Bid Comparison to "carve out" pharmacy coverage with another PBM for July 1, 2017 coverage. The County evaluated the PBM marketplace to accomplish two goals: 1) review the current contract with UHC-Optum Rx and 2) review proposals from other PBM vendors for consideration of changing pharmacy coverage effective July 1, 2017. Eights bids were received and two vendors were interviewed, the current vendor UHC-Optum Rx and Envision Rx. Staff provided the analysis for review and recommendation by the County Manager. The County Manager is recommending contracting with Envision Rx for pharmacy benefits. Envision Rx will offer the following: • Expenditure reduction of $141,000 annually is projected compared to the current contract with UHC-Optum Rx. • The County will only be responsible for paying an administrative fee for each prescription dispensed offering more transparency to actual cost because there is no undisclosed revenue. This is defined as a 100% pass-through offer. • If Envision Rx negotiates deeper rates with network pharmacies during the contract, the County is the beneficiary. It is likely that the network rates will exceed the minimums, providing additional savings, which is very common with pass-through models. • Envision Rx will communicate with employees directly during the transition. Employees currently taking non-formulary maintenance medications will be grandfathered into their program for 90 days. Employees not medically respondent to any drug change may be granted continuance because of medical necessity. 3 • Envision Rx will grandfather all members on specialty medications for the life of the contract. Dental and Vision Insurance Delta Dental is the County's Dental provider and Community Eye Care provides the County's vision plan. The County will continue to provide coverage with Delta Dental and Community Eye Care. In FY2017/2018 no increases in dental or vision premiums is recommended by the Manager. The attachment provides current monthly and bi-monthly cost share of cost premium equivalents for medical, dental and vision coverage. Prescription coverage will be included in the medical premium equivalent. FINANCIAL IMPACT: An increase in the FY2017/2018 Health Insurance appropriation of $524,433 and no increase to the FY2017/2018 Dental Insurance 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: • Approve increasing the funding for the FY2017/2018 Health Insurance appropriation $524,433 and maintaining current premium equivalent rates for health insurance, dental and vision coverage for employees and pre-65 retirees; • Approve including in the current plan design trans-inclusive health care coverage effective July 1, 2017; and • Approve contracting with Envision Rx as the County's Pharmacy Benefit Manager for pharmacy services for employees and participating pre-65 retirees and approve the County Manager to sign the contract following the County Attorney's review. 4 Current Medical Monthly Premium Equivalent Cost Share Traditional Choice Plus Orange County Cost Employee MONTHLY Medical Plan Premium Share Cost Share Equivalent Employee Only $761 $761 $0 Employee/Child(ren) $1,196 $966 $230 Employee/Spouse $1,540 $1,131 $409 Family $2,165 $1,430 $735 Health Savings Account MONTHLY Choice Plus Plan (High Orange County Cost Employee Deductible Plan) Premium Share Cost Share Equivalent Employee Only $754 $754 $0 Employee/Child(ren) $1,117 $965 $152 Employee/Spouse $1,404 $1,132 $272 Family $1,926 $1,436 $490 Current Dental and Vision Monthly Premiums Cost Share Delta Dental Eye Care MONTHLY Employee Cost Share Employee Cost Share Employee Only $0 $9.74 Employee/Child(ren) $47.74 $18.54* Employee/Child (Vision) Employee/Spouse $39.30 $18.54* Family $70.18 $27.30 *coverage for employee plus 1 only, an employee with more than one child, pays a family rate.