HomeMy WebLinkAboutAgenda 04-02-24; 6-b - Recommendations for Employee Health Insurance and Other Benefits 1
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: April 2, 2024
Action Agenda
Item No. 6-b
SUBJECT: Recommendations for Employee Health Insurance and Other Benefits
DEPARTMENT: Human Resources
ATTACHMENT(S): INFORMATION CONTACT:
Attachment 1: Projected Health and Dental Brenda Bartholomew, Human Resources
Insurance Rates for FY Director, (919) 245-2552
2024-25
PURPOSE: To approve the Manager's recommendations regarding employee health and dental
insurance effective July 1, 2024, through June 30, 2025.
BACKGROUND: The County provides employees with a comprehensive benefits plan that
includes participation in robust health and dental insurance plans for employees and their families.
Each year, the Board of Commissioners is asked to review and approve health and dental
insurance rates in advance of the annual budget so that open enrollment can be completed prior
to the beginning of the plan year which starts on July 1.
Health Insurance
Since the Board of County Commissioners approved Orange County's participation in the North
Carolina Health Insurance Pool in FY 2018-19, the County maintained the same monthly premium
equivalent rates for health insurance and dental coverage for employees and pre-65 retirees
based on stable claims experience until FY 2022-23. In both FY 2022-23 and FY 2023-24, the
Board approved an increase of 5% to the Health Insurance Premium Equivalents for both active
and pre-65 retirees as the Health Insurance plan experienced an increase in the overall number
of claims and higher costs per claim compared to prior years. The higher cost of claims also
resulted in a drawing down of reserves kept within the North Carolina Health Insurance Pool. The
increased cost was paid entirely by the County and not passed on to employees through increased
employee contributions.
Funding for the health plan is based on estimated premium equivalent rates that are calculated to
pay for incurred claims, administrative and reinsurance costs, and expected liability of claims
incurred but not reported (IBNR). The plan also carries a reserve balance which ensures the
County's ability to pay claims if the total cost of claims exceeds the total funding generated by the
premium equivalents.
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A reserve policy or the fund ratio target should range between 1.5 and 3.0 over IBNR to ensure
the ability to pay for future claims based on current claims experience. This means that the
County's reserve target should be between $1.1 million and $2.2 million. The County's current
fund ratio is 0.2 through January 2024 or a total balance of$167,000. In FY 2024-25 and beyond,
staff recommends a targeted reserve amount of two times of the expected IBNR liability. This
means that the targeted reserve would grow to $1.5 million over time.
Although the plan currently has a negative balance of $574,261, the reserve is expected to be
positive by year end due to significant rebate payments due in March and June 2024. However,
additional funding is necessary to cover projected total plan costs for FY 2024-25 and to continue
to build reserve levels up to the targeted two times of expected IBNR liability. The actuarial
analysis conducted by the North Carolina Health Insurance Pool recommends an increase of five
percent (5%).
Comparatively, increases for self-funded plans in general have averaged 8.4% for FY 2023-24,
7.4% in FY 2022-23 and 7.3% in FY 2021-22. For fully insured plans, increases are 2% to 4%
points higher than self-funded trends depending on the employer size. Contributing to the increase
in cost of services is the rising popularity and utilization of weight loss medications. Pharmacy
trends overall are up 11% in FY 2023-24 compared to prior years. Orange County, costs have
increased by 5% annually in the past three years, which outperforms market trends in the same
comparison period. In addition, sharing costs as a member of NCHIP for high-cost claimants has
benefitted the County.
The Manager recommends that the County assumes 100% of the recommended 5% increase
and that the employee contribution continues at current rates. This represents a total budget
increase of$740,643.
FY 2024-25 Health Insurance Rate Renewal
Year Rates Monthly Cost Annual Cost Employee Employer
Contribution Contribution
2023 Current Rates $1,234,404 $14,812,846 $1,438,222 $13,374,624
2024 Current Rates with Employer $1,296,124 $15,553,489 $1,438,222 $14,115,267
Increase Only(Renewal)
Netlncrease $61,720 $740,643 $0 $740,643
Dental Insurance
Delta Dental is the County's Dental provider, and the County would continue to provide coverage
with Delta Dental. No rate increase is recommended for FY 2024-25. The total annual Dental
budget is currently $685,376.
SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goals are applicable to
this item:
• GOAL: FOSTER A COMMUNITY CULTURE THAT REJECTS OPPRESSION AND
INEQUITY
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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.
FINANCIAL IMPACT: The FY 2024-25 Health and Dental Fund budget request is anticipated to
increase by $740,643.
RECOMMENDATION(S): The Manager recommends that the Board:
1) approve an increase of 5% to the Health Insurance Premium Equivalents for both active
and pre-65 retirees and the amount of the increase to be fully paid by the County;
2) approve an increase of Health Insurance funding of $740,643; and
3) approve the County's continued participation as a member in the North Carolina Health
Insurance Pool (NCHIP).
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Attachment 1: FY 2024-25 Projected Health and Dental Insurance Rates
Table 1: Comparison of Health Insurance Funding from FY 2023-24 to FY 2024-25
2023/2024 2024/2025
Premium Premium
Current PPO Plan Enrollment Equivalent Equivalent TOTAL COST EMPLOYEE EMPLOYER TOTAL COST EMPLOYEE EMPLOYER
Employee Only 634 $889.27 $6,765,528 $0 $6,765,528 $933.73 $7,103,808 $0 $7,103,808
Employee+Spouse 54 $1,798.96 $1,165,728 $265,164 $900,564 $1,888.91 $1,224,012 $265,164 $958,848
Employee+Child(ren) 186 $1,397.13 $3,118,404 $513,132 $2,605,260 $1,466.99 $3,274,320 $513,132 $2,761,176
Employee+Family 46 $2,528.82 $1,395,912 $405,636 $990,276 $2,655.26 $1,465,704 $405,636 $1,060,068
$12,445,572 $1,183,932 $11,261,628 $13,067,844 $1,183,932 $11,883,900
Current HDHP Plan Enrollment Premium TOTAL COST EMPLOYEE EMPLOYER PremiumTOTAL COST EMPLOYEE EMPLOYER
Equivalent Equivalent
Employee Only 114 $750.26 $1,026,360 $0 $1,026,360 $787.78 $1,077,672 $0 $1,077,672
Employee+Spouse 12 $1,509.86 $217,416 $39,144 $178,284 $1,585.36 $228,288 $39,144 $189,156
Employee+Child(ren) 31 $1,174.34 $436,860 $56,472 $380,376 $1,233.06 $458,700 $56,472 $402,216
Employee+Family 27 $2,119.29 $686,652 $158,676 $527,976 $2,225.26 $720,984 $158,676 $562,308
$2,367,288 $254,292 $2,112,996 $2,485,644 $254,292 $2,231,352
COMBINED PLANS $14,812,860 $1,438,224 $13,374,624 $15,553,488 $1,438,224 $14,115,252
INCREASE $740,628
Table 2: FY 2024-25 Employee and Employer Health Insurance Rates
Employee Semi-Monthly Rates (PPO PLAN)
EMPLOYEE SEMI-MONTHLY COUNTY SEMI-MONTHLY
COVERAGE LEVEL PAYROLL DEDUCTION CONTRIBUTION
Employee Only $0.00 $466.87
Employee + Child(ren) $114.95 $618.55
Employee + Spouse $204.60 $739.86
Employee + Family 0 $367.42 $960.21
Employee Semi-Monthly Rates (HDHP PLAN)
COUNTY SEMI-MONTHLY
EMPLOYEE SEMI-MONTHLY
COVERAGE LEVEL PAYROLL DEDUCTION CONTRIBUTION (INCLUDES
HSA FUNDING)
Employee Only $0.00 $511.89
Employee + Child(ren) $75.91 $658.62
Employee + Spouse $135.90 $774.78
Employee + Family $244.87 $985.76
Table 3: FY 2024-25 Employee and Employer Dental Insurance Contributions
Premium Tier Monthly Premium Monthly Employer Monthly Employee Cost Semi Monthly Employee
Equivalent Contribution Contribution Contribution
Employee Only $33.52 $33.52 $0.00 $0.00
Employee+Child(ren) $80.44 $41.12 $39.32 $19.66
Employee+Spouse $90.49 $42.75 $47.74 $23.87
Employee+Family 1 $117.30 $47.10 $70.20 $35.10