HomeMy WebLinkAboutAgenda - 10-21-2002 - 4 ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: October 21, 2002
Action Agenda
Item No. 4
SUBJECT: Employee Pay and Benefits Work Session
DEPARTMENT: Personnel PUBLIC HEARING: (Y/N) No
ATTACHMENT(S): INFORMATION CONTACT:
Elaine Holmes, Personnel Director,
Appendix A— Employee Health Extension 2550
Insurance for 2003 TELEPHONE NUMBERS:
Appendix B — Countywide Classification Hillsborough 732-8181
and Pay Study Chapel Hill 968-4501
Appendix C —Approved 2002-03 Pay . Durham 688-7331
Plans of Area Employers Mebane 336-227-2031
PURPOSE: To consider renewal of employee health insurance plans for 2003 and to consider
any further directions the Board of Commissioners wishes to pursue as to Orange County
employee pay and benefits for 2002-03. Note: Normally a work session item does not
require decision. However, the health insurance agenda item necessarily requires that
the Board make a decision at the October 21 meeting in order to meet the plan
enrollment deadlines. Because of the complexity of the health insurance item, the Board had
felt that the work session would offer more time for the Board's discussion than a regular Board
meeting.
BACKGROUND: During the June budget work sessions, the Board of Commissioners decided
to defer consideration of employee pay and benefits for 2002-03 to the October Pay and
Benefits work session. By October the Board felt the County's year end financial condition for
2002-03 would be determined, including fund balance; State budget decisions and the impact of
these on the County would be more clear; and there would be further time to assess the pace of
economic recovery.
Under the Board's plan for considering employee pay and benefits on a two-year cycle, the
October work session also would be the time the Board normally would consider employee pay
and benefits for the upcoming two years (2003-04 and 2004-05). However, the Manager
recommends that the Board defer consideration of pay and benefits for the upcoming two years
until the February 2003 work session to allow additional time to assess the state of the
economy.
As adopted in June 2002, the County budget for 2002-03 does not include funding for
Classification and Pay Study implementation, Cost of Living Increase, In-Range Salary
Increases or Meritorious Service Awards. The approved budget includes an Employee Pay and
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Benefits Contingency Fund of$145,400. As noted in Appendix A, it is recommended that this
be used to help fund the employee health insurance increase for 2003.
Employee Health Insurance for 2003
Appendix A is an agenda abstract covering Employee Health Insurance renewal options for
2003. Normally a work session item does not require decision However, the health
insurance agenda item necessarily requires that the Board make a decision at the
October 21 meeting in order to meet the plan enrollment deadlines. Because of the
complexity of the health insurance item, the Board had felt that the work session would offer
more time for the Board's discussion than a regular Board meeting.
Classification and Pay Study
In the June budget work session, the Manager had expressed to the Board his interest in
assessing the County's fiscal situation later in the year and considering the possibility of
recommending to the Board that the Board move forward to begin phasing in Classification and
Pay Study implementation. Appendix B is background information on the Classification and
Pay study, including a possible cost scenario for phasing in implementation.
Other Pay and Benefits Matters for 2002-03
Cost of Living, In-Range Salary Increases and Meritorious Service Awards
As noted, the budget for 2002-03 does not include funding for a Cost of Living Increase, In-
Range Salary Increase for employees whose work performance is Proficient or higher or for
Meritorious Service Awards in 2002-03.
Appendix C is the information Personnel normally provides each year that shows the approved
2002-03 pay plans for area employers. The Board will note that the pay and benefit actions by
other employers range from those with no action (such as Carrboro and Chapel Hill) to those
with more significant pay action (such as Cary, Durham County, Raleigh) to the State of North
Carolina which enacted a 1.84 percent salary increase for teachers, instructional support
personnel, principals and assistant principals and an additional, one time 10 day Vacation
Leave allocation for other State employees not receiving the pay increase.
401(K) Contribution
The County presently contributes $20 each pay period to the 401(k) plan for each permanent
employee not covered by the law enforcement 401(k) contribution. (As required by State law,
the County contributes five percent of salary to the 401(k) plan for each sworn law enforcement
officer.) While the Board has expressed interest in continuing to improve the County 401(k)
contribution, the budget did not provide for any increase in the County 401(k) contribution, given
the fiscal circumstances.
For information, presently about 70 percent of non-law enforcement employees make a 401(k)
contribution. This has declined from 80 percent immediately following the County's
implementation of the 401(k) contribution in 1999 and probably reflects the economic downturn.
3
Career Ladders
As planned in follow up to the Public Safety Study, Personnel has been working with the
Sheriff's Department and Emergency Management to develop proposed career ladders to
assist in addressing the recruitment and retention needs. Once developed the proposed Career
Ladders will be presented to the Board of Commissioners for review and decision.
The budget for 2002-03 does not include funding for Career Ladders. As noted in the budget,
staff anticipates that sufficient funds will become available through lapsed salaries during the
fiscal year to begin Career Ladder implementation and the Manager plans to recommend that
those funds be used for this purpose.
FINANCIAL IMPACT: The Board set aside an Employee Pay and Benefits Contingency Fund
of$145,400 for 2002-03. As outlined in Appendix A, it is recommended that the full amount of
that fund be used to fund the additional cost of health insurance for 2002-03 and to help offset
the impact on employees of the increased cost for dependent health insurance coverage.
RECOMMENDATION(S): The Manager recommends that the Board discuss employee pay
and benefits for 2002-03 and provide direction to staff as to elements of employee pay and
benefits, if any, that it wishes to pursue at this point for 2002-03.
ORANGE COUNTY
BOARD OF COMMISSIONERS APPENDIX A
ACTION AGENDA ITEM ABSTRACT
Meeting Date: October 21, 2002
Action Agenda
Item No. 4 - a
SUBJECT: Employee Health Insurance for 2003
DEPARTMENT: Personnel PUBLIC HEARING: (Y/N) No
ATTACHMENT(S): INFORMATION CONTACT:
1 — Benefits Change Summary Elaine Holmes, Personnel Director,
2 — Benefits Changes (PCP/Blue Care Extension 2550
Plans)
3 — Benefits Changes (PPO/Blue TELEPHONE NUMBERS:
Options Plans) Hillsborough 732-8181
4 - Health Insurance Renewal Options — Chapel Hill 968-4501
Estimated FY 2002-03 County Cost Durham 688-7331
5— Health Insurance Dependent Mebane 336-227-2031
Subsidy
6— Draft 2003 Health Insurance Rates
PURPOSE: To consider renewal of employee health insurance plans through the North
Carolina Association of County Commissioners (NCACC) Health Insurance Trust and CIGNA
effective January 1, 2003.
BACKGROUND: In summary, the County has received renewal rates for employee health
insurance effective January 1, 2003. The NCACC Trust renewal rates for the Blue Cross plans
provide for a possible range of increases from 13 to 25 percent, depending on the renewal
option the County selects. The CIGNA renewal provides for a 12.55 percent increase.
Each of the three renewal options is explained below. The Manager is recommending that the
County renew its health insurance with Option 1. The Manager also is recommending that the
Board authorize a temporary increase in the County subsidy for dependent coverage for 2003
to mitigate the employee impact of the health cost increase.
Current Health Plans
Currently Orange County offers three health insurance plans: Blue Cross Personal Care Plan
(PCP), Blue Cross Preferred Provider Plan (PPO) and CIGNA. Both Blue Cross plans are
offered through the NCACC Trust. Blue Cross PCP and CIGNA are health maintenance
organizations (HMOs). The Blue Cross PPO is a type of traditional health insurance plan. The
chart below shows the number of employees enrolled in each plan.
Health Plan Employees Enrolled
Blue Cross Personal Care Plan 497
Blue Cross Preferred Provider Plan 41
CIGNA 136
2
Renewal Options
The renewal quotes provide for three possible options:
• Option 1 - Renewal of current plans with changes to the Blue-Cross PCP (Blue Care Plan
1) and Preferred Provider Plan (Blue Options Plan 1) as noted under Option 1 below and
continuation of CIGNA. -
• Option 2 — Renewal of the two Blue Cross Plans with an alternative benefits package (Blue
Care Plan 2 and Blue Options Plan 2) and continuation of CIGNA.
• Option 3 —The same as Option 2 (that is, renewal of the two Blue Cross Plans with an
alternative benefits package — Blue Care Plan 2 and Blue Options Plan 2) with the
elimination of CIGNA. Under this option, the NCACC Trust becomes the County's sole
health insurance provider.
Option 1 — Renewal of Current Health Plans
(Blue Care Plan 1 and Blue Options Plan 1)
The NCACC Health Insurance Trust renewal rate quotation for the current health plans provides
for a 25 percent increase. The NCACC Trust advises that the increase arises from the trend in
health insurance costs as well as the County's higher utilization experience over the past six
months. The CIGNA renewal rate quotation provides for a 12.55 percent increase.
With the renewal, the NCACC Trust and CIGNA also have advised of several changes to the
plans. These are summarized in Attachment 1 and described in more detail in Attachments 2
and 3. A key change is that the NCACC Trust renewal provides for the County to change from
the Blue Cross Personal Care Plan (PCP) to the new "Blue Care" Plan effective January 1,
2003. The Trust and Blue Cross advise that they are eliminating PCP and replacing it with the
Blue Care Plan.
Option 2 — Renewal With Alternative Benefits
(Blue Care Plan 2 and Blue Options Plan 2)
In its renewal proposal, the NCACC Trust has provided a quote for an alternative Blue Care
Plan (Blue Care Plan 2) and Blue Options Plan (Blue Options Plan 2) at a renewal rate of a 16
percent increase rather than a 25 percent increase. These alternative benefits are summarized
in Attachment 1 and described in more detail in Attachments 2 and 3.
Option 3 — Renewal with Alternative Benefits
(Blue Care Plan 2 and Blue Options Plan 2) with Blue Cross as Sole Provider
The County requested that the NCACC Trust provide a sole provider quote for the Blue Cross
plans through the Trust. If the County enters into a sole provider contract, this would mean
discontinuing the current CIGNA plan effective January 1, 2003 and offering only the Blue
Cross plans. For the sole provider option, the Trust has not offered any reduced rate for this if
the County renews with the Blue Care Plan 1 benefits.
If the County renews with the alternative benefits (Blue Care Plan 2 and Blue Options Plan 2),
3
the Trust has provided a quote for the sole provider option. This would be a 13 percent
increase rather than the 16 percent increase for Option 2.
Budget for Health Insurance
For each renewal option, Attachment 4 shows the estimated fiscal year 2002-03 County cost.
It also shows the cost in comparison to the amount budgeted for health insurance for 2002-03.
In summary, Option 1 - renewal with Blue Care Plan 1 - exceeds the amount budgeted for
health insurance for fiscal year 2002-03 by about $85,000, Option 2 - renewal with Blue Care
Plan 2 - is about $32,000 less than the amount budgeted and Option 3 - renewal with Blue Care
Plan 2 and the sole provider option (eliminating CIGNA) - is about $71,000 less than the
amount budgeted.
County Contribution for Employee and Dependent Health Insurance
In the past the County has established its contribution for employee health insurance as the:
• Full cost for the individual employee only coverage and
• 40 percent of the cost of dependent coverage based on the Blue Cross PCP rate. The
County then has applied the dollar amount of the dependent contribution calculated on the
Blue Cross PCP rate to the Blue Cross Preferred Provider rates and CIGNA Plan rates.
Calculating the rates in the above way for 2003 will result in a significant increase in employee
cost for dependent coverage. About 300 employees or 42 percent have dependent coverage.
In the June Budget Work Sessions, the Board of Commissioners had expressed interest in
taking steps to mitigate the impact on employees of the health insurance cost increase. As
discussed in June, a way to accomplish this is to increase the County's subsidy for dependent
coverage. Attachment 5 shows the three renewal options with the employee cost at the current
subsidy level and the increase in the County subsidy necessary to fully mitigate the employee
cost increase. It also shows the number of employees with dependent coverage by salary.
The Board may enact a change in subsidy on a temporary basis for the 2003 health insurance
rates only and then reconsider the subsidy in the process of setting health rates for 2004, based
on any actions taken as to employee pay. Below are the County costs to mitigate the
dependent cost increase for each renewal option.
Option Subsidy Percent Annual County FY 2002-03 County
Required Cost Increase Cost Increase
1 - Blue Care Plan 1 and Blue Options 52.0% $169,845 $99,076
Plan 1 with CIGNA
2 - Blue Care Plan 2 and Blue Options 48.5% $111,645 $65, 127
Plan 2 with CIGNA
3 - Blue Care Plan 2 and Blue Options 47.0% $89,565 $52,247
Plan 2 with Blue Cross as Sole
Provider (Drop CIGNA)
Looking beyond 2003, an option the Board may wish to consider for 2004 in lieu of the
increased subsidy is providing an employer funded medical spending account contribution for
_ 4
each employee. These would be funds an employee could receive as reimbursement for
medical expenses such as the cost of dependent care premiums, prescription drug co-pays or a-
deductible (if the County plan provided for a health insurance deductible).
Implementation Meetings and Schedule
Given the changes in the Blue Cross PCP and PPO plans under any of the renewal options,
Personnel plans to include meetings with all employees on health insurance as part of open
enrollment. To meet the payroll and enrollment deadlines, these meetings are planned for the
first week in November.
Recommendation
After assessing the options, the Manager recommends the Board adopt Option 1 — Renewal
through the NCACC Trust with Blue Care Plan 1 and Blue Options Plan 1 and continuing to
offer CIGNA. The Manager also recommends the Board temporarily increase the subsidy for
dependent health insurance for 2003 to 52 percent based on Blue Care Plan 1 to mitigate the
cost impact on employees. This recommendation most fully mitigates the cost impact on
employees of the health insurance cost increase. Attachment 6 shows the draft monthly health
insurance rates with Option 1 and recommended dependent subsidy.
FINANCIAL IMPACT: The County budget provides funding for up to an 18 percent health
insurance increase effective January 1, 2003. The estimated additional general fund cost over
the amount budgeted to renew with Option 1 is about $85,000. The additional cost to increase
the health insurance dependent subsidy to 52 percent is about $99,000. Of the total additional
amount required ($184,000), $145,000 can be funded using the Employee Pay and Benefits
Contingency Fund that the Board established for 2002-03. As to the remaining cost of$39,000,
staff will identify the specific funding source for this as the Board makes decisions regarding the
use of sales tax revenue over the next few months.
RECOMMENDATION(S): The Manager recommends that the Board:
1. Approve renewal of the County health insurance plans with the benefits outlined for Blue
Care Plan 1 and Blue Options Plan 1.
2. Authorize the Chair to sign the implementing Interlocal Agreement with the NCACC Health
Insurance Trust, subject to the review of staff and the County Attorney.
3. Approve the Attachment 6 health insurance rates for coverage effective January 1, 2003,
including the temporary increase in County contribution for dependent health insurance.
4. Appropriate $145,400 from the Employee Pay and Benefits Contingency Fund to fund the
cost of health insurance and increasing the dependent subsidy for 2002-03.
Attachment 1
Benefits Change Summary
Option 1 — Renewal of Current Health Plans
(Blue Care Plan 1 and Blue Options Plan 1)
• Changes From Blue Cross Personal Care Plan to Blue Care Plan
The NCACC Trust renewal provides for the County to change from the Blue Cross
Personal Care Plan (PCP) to the new "Blue Care" Plan effective January 1, 2003. The
Trust and Blue Cross advise that it is eliminating PCP and replacing it with the Blue Care
Plan for any plan renewals July 1, 2002 and after, including Orange County's. The Trust
and Blue Cross are no longer offering the PCP option.
The major difference in the two plans is that the new Blue Care Plan is an "open access
within network" model health maintenance organization. This means a plan participant
may see any physician (primary care or specialist) within the Blue Care network without a -
referral from his or her primary care physician. In comparison, the present PCP plan
requires that the participant obtain a referral from his or her designated primary care
physician or OB-GYN before accessing other physicians within the network. Blue Cross
advises that the Blue Care network is the same as that for PCP.
Along with the change to the Blue Care Plan there are several changes in benefits.
These are highlighted on Attachment 2 under Blue Care Plan 1 and mainly involve an
increase in the specialist and prescription drug co-pay amounts.
• Changes from Blue Cross Preferred Provider Plan to Blue Options Plan
Blue Cross will continue to offer the Preferred Provider Plan (PPO), a form of traditional
insurance. The name is changing to the "Blue Options" Plan. There also are benefits
changes that are highlighted on Attachment 3 under Blue Options Plan 1. These mainly
involve an increase in the deductibles and co-insurance maximums and addition of a co-
pay with 100 percent coverage after the co-pay rather than 90 percent coverage with no
co-pay.
• Changes to CIGNA health care plan
The CIGNA renewal also provides for the County to change to an open access within
network model to match that of the Blue Care plan. There also are several changes in
benefits. These mainly involve an increase in the prescription drug co-pay from $5
(generic), $15 (preferred brand name) and $35 (non-preferred brand name) to $10, $20
and $40, the addition of$100 co-pay per hospital admission and the addition of a $50
outpatient facility co-pay.
Option 2 — Renewal With Alternative Benefits
(Blue Care Plan 2 and Blue Options Plan 2)
• Changes to Blue Care Plan
As to the Blue Care Plan, this proposal provides for different.benefits in two areas:
✓ Addition of a $250 deductible for inpatient and outpatient hospital services and
certain other services. It is a single deductible that is paid once in the plan year per
plan participant when a covered service is used with a maximum deductible of$750
per family. After the one time calendar year deductible is satisfied, 100 percent of
the charge is paid.
To assess the possible impact of a new deductible, Blue Cross provided data on PCP
claims paid in 2001 and to date in 2002. Based on this data —of the 1,011 PCP plan
members (employees and dependents) - about 40 percent of members would pay no
deductible, about 35 percent would pay some amount toward the deductible but less
than $250 and about 25 percent would pay the full $250 deductible.
✓ Increase in the prescription drug co-payment to $10 (Tier 1), $20 (Tier 2) and $30
(Tier 3)from the $5, $15 and $30 in Blue Care Plan 1 renewal proposal.
Attachment 2 highlights the benefit differences between Blue Care Plan 1 and Blue Care
Plan 2.
• Changes to Blue Options Plan
As to the Blue Options Plan, - if the County selects the Blue Care Plan 2 renewal option -
the benefits provided for the Preferred Provider Plan (Blue Options) also change in
coordination with this plan. The changes here primarily are to increase the deductibles,
co-insurance maximums and prescription drug co-pays. Attachment 3 includes a
comparison of the benefit differences between Blue Options Plan 1 and Blue Options
Plan 2.
r
Benefits Changes
Blue Cross PCP, Blue Care Plan 1 and Blue Care Plan 2
Services Personal Care Plan (PCP) Option 1 - Blue Care Plan 1 Options 2 & 3 - Blue Care Plan
Primary Care Physician or OBGYN must Open Access (No referral required within Open Access (No referral required within
General authorize referral network) network)
Deductibles
Individual (per calendar year) $0 $0 $250 (For designated services)
Family(per calendar year) $0 $0 $750 (For designated services)
Physician Services
Office Visits-Primary $10 Copay $10 Copay $10 Copay
Office Visits-Specialists $10 Copay $20 Copay $20 Copay
Urgent Care Office Visit $25 Copay $20 Copay $20 Copay
After Hours Visit $25 Copay $10 Copay PMD; $20 Specialist $10 Copay PMD; $20 Specialist
Prenatal/Postpartum Office Care $10 Copay Per Pregnancy $10 Copay PMD; $20 Specialist $10 Copay PMD; $20 Specialist
Short Term Therapy(Speech,
Occupational, Respiratory, and $10 Copay- Maximum of 30 Visits Per $10 Copay PMD, $20 Copay Specialist : $10 Copay PMD, $20 Copay Specialist :
Physical) Calendar Year Maximum of 20 Visits Per Cal Yr Maximum of 20 Visits Per Cal Yr
Preventive Care
Routine Physicals $10 Copay $10 Copay PMD; $20 Specialist $10 Copay PMD; $20 Specialist
Well Child Care $10 Copay $10 Copay PMD; $20 Specialist $10 Copay PMD; $20 Specialist
Immunizations, Prostate Specific
Antigen Tests, Mammograms,
Pap Smears 100% $10 Copay PMD; $20 Specialist $10 Copay PMD; $20 Specialist
Emergency Room Care $50 Copay $100 Copay $100 Copay
Hospital Services
Per Confinement Deductible None None None
Inpatient Professional 100% 100% 100% after deductible
Inpatient Facility 100% 100% 100% after deductible
Outpatient-X-Rays and Lab with
surgery or other services 100% 100% 100% after deductible
Outpatient-X-rays & Lab without
surgery or other services 100% 100% 100%
Maternity(Hosp Services) 100% 100% 100% after deductible >
Ambulatory Surgical Facility 100% $75 Copay $75 Copay
Prescription Drugs
Tier 1 $6 Copay; Tier 2 $12 Copay; Tier 3 Tier 1 $5 Copay; Tier 2 $15 Copay; Tier 3 Tier 1 $10 Copay;Tier 2 $20 Copay; Tier 3
Short Term Supply $18 Copay(1-34 Day Supply) $30 Copay(1-30 Day Supply) $30 Copay(1-30 Day Supply)
healpcpcomp10/3/2002
Benefits Changes
Blue Cross PCP, Blue Care Plan 1 and Blue Care Plan 2
Services Personal Care Plan (PCP) Option 1 - Blue Care Plan 1 Options 2 & 3 - Blue Care Plan 2
Tier 1 $12 Copay; Tier 2 $24 Copay; Tier Tier 1 $15 Copay; Tier 2 $45 Copay;Tier Tier 1 $30 Copay;Tier 2 $60 Copay;Tier
Extended Supply Benefits 3 $36 Copay(35-90 Day Supply) 3 $90 Copay(31-90 Day Supply) $90 Copay(31-90 Day Supply)
Other Providers
Home Health/Home Care 100% (60 Days Maximum Per Calendar
Agencies Year) 100% (No Days Maximum Per Cal Yr) 100% after deductible
100% (60 Days Maximum Per Calendar 100% after deductible (60 Day Maximum Per
Skilled Nursing Facility Year) 100% (60 Day Maximum Per Cal Yr) Cal Yr)
Durable Medical Equipment 100% ($3,000 maximum per Calendar
Suppliers Year) 100% (No Maximum Per Cal Yr) 100%after deductible
$10 Copay PMD; $20 Specialist; Hosp Svcs.
$10 Copay PMD; $20 Specialist; Hosp 100%after ded., Inp&Outpt Prof 100% after
Infertility 50% Svcs. 100%, Inp&Outpt Prof 100% ded.
Infertility Lifetime Maximum of$10, 000 Lifetime Maximum of$5, 000. Lifetime Maximum of$5,000
Mental Health Services
$100 Copay Per Day-30 Days Maximum
Inpatient Per Calendar Year 100%-30 Days Maximum Per Cal Yr 100%, 30 Days Maximum Per Cal Yr
$20 Copay(1-20 visits)$30 Copay(21-30
Outpatient- Individual Therapy Visits-30 Visits Maximum Per Calendar $20 Copay-30 Visits Maximum Per Cal
Visits Year Combined Individual Therapy Yr $20 Copay-30 Visits Maximum Per Cal Yr
$10 Copay for 1-20 Visits. $15 Copay for
Group Therapy Visit 21-30 Visits. Not Separate for Group vs Individual Not Separate for Group vs Individual '
100% -30 Days Maximum Per Cal Yr
Chemical Dependency Services 100% (no day limit) Inpatient/Outpatient combined
Office Visit $10 Copay $20 Copay $20 Copay
$100 Copay Per Day-30 Days Maximum
Per Calendar Year with $8,000 Cal Yr Max 100%with $8,000 Cal Yr Max and 100%with $8,000 Cal Yr Max and $16,000
Inpatient/Outpatient and $16,000 Lifetime Max $16,000 Lifetime Max Lifetime Max'
Chiropractic $20 Copay $20 Copay; 20 visits per policy year $20 Copay(Max 20 visits per Cal Yr) .,
Transplants Covered 100% 100% after deductible
4th Quarter Carryover Yes No No
PMD = Primary Care Doctor
Note: Shows benefit changes for Blue Care Plan 1 as compared to PCP and for Blue Care Plan 2 as compared to PCP and Blue Care Plan 1.
heal pcpcomp10/3/2002 °
Benefits Changes
Blue Cross Preferred Provider Plan (PPO), Blue Options Plan 1 and Blue Options Plan 2
Services Preferred Provider Plan Option 1 -Blue Options Plan 1 Options 2&3-Blue Options Plan 2
In-Network Out-of-Network 1n-Network Out-of-Network In-Network Out-of-Network
Yearly Deductible $200 $300 $250 $500 $500 $1,000
Family $600 $900 $750
$1,500 $1,500 $3,000
Coinsurance Maximum Individual $1,000 $2,000 $1,000 $2,000 $2,000 $4,000
Coinsurance Maximum Family $2,000 $4,000 $3,000 $6,000 $6,000 $12,000
Physician Services-Office 90%after deductible 80%after deductible 100%after$10 copay 70%after deductible 100%after$10 Copay 70%after deductible
Visits,PMD P Y
Office Visits,Specialists 90%after deductible 80%after deductible 100%after$20 copay 70%after deductible 100%after$20 copay 70%after deductible
Urgent Care Office Visit 90%after deductible 80%after deductible 100%after$20 Copay 100%after$20 copay 100%after$20 copay 100%after$20 copay
Maternity 90%after deductible 80%after deductible 100%after$20 copay 70%after deductible 100%after$20 copay 70%after deductible
Outpatient Diagnostic 90%after deductible 80%after deductible 100% 70%after deductible 100% 70%after deductible
Surgery(in&Out) 90%after deductible 80%after deductible 90%after deductible 70%after deductible 90%after deductible 70%after deductible
Inpatient/Outpatient-Medical 90%after deductible 80%after deductible 90%after deductible 70%after deductible 90%after deductible 70%after deductible
Short Term Therapy-Speech, $90 copay PMD-$20 copay 70%after deductible - $10 copay PMD-$20 copay 70%after deductible -
Occupational,Respiratory and 90%after deductible 80%after deductible for specialist, 30 visits per Maximum 30 visits per for specialist-30 visits per Maximum 30 visits per
Physical and Chiropratic benefit period. Calendar Year benefit period. Calendar Year
Preventive Care(Routine
Physicals,Well Child Care and 90%after deductible 80%after deductible $10 Copay PMD-$20 for Not available $10 copay PMD-$20 for Not available
Immunizations specialist,. specialist.
Vision Not available Not available $10 copay for eye exam Not available $10 copay fore a exam Not available
Emergency Services 90%after deductible 80%after deductible $100 copay,waived if $100 copay,waived if $100 copay,waived if $100 copay,waived if
admitted admitted admitted admitted
Hospital Services(Inpatient,
Outpatient,Maternity/Delivery, 90%after deductible 80%after deductible 90%after deductible 70%after deductible 90%after deductible 70%after deductible
Ambulatory Surgical Facility)
Prescription Drugs
Tier 1 $6 Copay;Tier 2$12 Tier 1 $6 Copay;Tier 2$12 Tier 1$5 Copay;1 jer2$15 Tier 1 $5 Copay;Tier 2$15 Tier 1 $10 Copay;Tier 2$20
Copayment+charge over Short Term Supply Copay;Tier 3$18 Copay(1- Copay;Tier 3$18 Copay(1- Copay;Tier 3$30 Copay(I- Copay;Tier 3$30 Copay(I- Copay;Tier 3$30 Copay
"
�'
30 Day Supply) 30 Day Supply) 30 Day Supply) 30 Day Supply) (1-30 Day Supply) In-network allowed amount
'Tier 1 $12 Copay;Tier 2 *Tier 1 $15 Copay;Tier 2 er 1 $30 Copay;Tier 2
Extended Supply Benefits $24 Copay;Tier 3$36 Copayment+Charge over $45 Copay;Tier 3$90 Copayment+Charge over $60 Copay;Tier 3$90 Copayment+c.harge over
Copay(31-90 Day Supply) in-network allowed amount Copay(31-90 Day Supply) in-network allowed amount Copay (31-90 Day In-network allowed amount
Supply)
healppocomp10/3/2002 ��
Benefits Changes
Blue Cross Preferred Provider Plan (PPO), Blue Options Plan 1 and Blue Options Plan 2
Services Preferred Provider Plan Option 1 -Blue Options Plan 1 Options 2&3-Blue Options Plan 2
In-Network Out-of-Network in-Network Out-of-Network In-Network Out-of-Network
Other Providers-Home Health 90%after deductible;no 70%after deductible;no visit 90%after deductible;no 70%after deductible;no 4
Care/Home Care Agencies 90%after deductible 80%after deductible visit limits per benefit period limits per benefit period visit limits,per benefit period visit limits per benefit period
Durable Medical Equipment 90%after deductible 80%after deductible 90%after deductible 70%after deductible 90 6h after deductible 70%after deductible
Hospice 90%°after deductible 80%after deductible 90%after deductible 70%after deductible 90%after deductible. 70%after deductible
Private Duty Nursing Care 90%after deductible 80%after deductible 906/0 after deductible 70%after deductible 90%after deductible 70%after deductible
Special Services/Providers
Ambulance,prosthetic
appliances,orthotics,dental 80%after deductible 80%after deductible 90%after deductible 70%after deductible 90%after deductible 70%after deductible
services related to accident.
80%after deductible-70 90%after deductible :60 ` 70%after deductible-60 90%after deductible-60 70%after deductible-60
Skilled Nursing Facility 80%after deductible p days per benefit period. days per benefit period.
days per benefit period. days per benefit period. days per benefit period. da
Up to$5,000 lifetime. $10 Up to$5,000 lifetime. $10
copay PMD-$20 copay for ° copay PMD-$20 copay for °
Infertility&Sexual Dysfunction 90%after deductible 70%after deductible 70%after deductible 70%after deductible
specialist. Hospital-90% specialist. Hospital-90%
after deductible .;:. ,. after deductible
Blood/Blood Derivatives 80%after deductible 90°k after deductible 70%after deductible 90%after deductible 70%after deductible
Medical Supplies 80%after deductible 80%after deductible 90%after deductible 70%after deductible 90%,after deductible 70%after deductible
Mental Health/Chemical
Dependency
90%after deductible-limit 80%after deductible-limit 90%coinsurance{30 days 70%coinsurance(30 days 90%coinsurance(30 days 70%coinsurance(30 days
Mental Health-Inpatient 10 days per year preferred 10 days per year preferred per benefit period preferred per benefit period preferred per benefit period preferred per benefit period preferred
and nonpreferred. and nonpreferred. and nonprefened) and nonpreferred) and nonpreferred) and nonpreferred)
Mental Health-Outpatient 70 after deductible-limit 50 after deductible-limit $
20 visits 20 visits 20 copay(certified) 70%coinsurance $20 copay(certified) 70%coinsurance
Chemical Dependency-Inpatient 90%after deductible 80%after deductible 90%coinsurance` 70%coinsurance 90%coinsurance 70%coinsurance
Chemical Dependency-
Outpatient 90%after deductible 80%after deductible $20 copayment 70%coinsurance T$20 copayment 70%coinsurance
r-=
heal ppocom p 10/3/2002
Benefits Changes
Blue Cross Preferred Provider Plan (PPO), Blue Options Plan 1 and Blue Options Plan 2
Option 1 -Blue Options Plan 1 Options 2&3-Blue Options Plan 2
Services Preferred Provider Plan P
In-Network . Out-of-Network In-Network ,
Out-of-Network In-Network Out-of-Network
limited$8,000 per
Benefit limited$8,000 per Benefit limited$8,000 per Benefit limited$8,000 per Benefit limited
a d$16,000 Benefit f t year and$16,000 BTM f t i
year and$16,000 LTM year and$16,000 LTM year and$16,000 LTM year and$16,000 LTM year
in/outpatient combined ' in/outpatient combined in/outpatient combined in/outpatient combined in/outpatient combined in/outpatient combined
Transplants 90%after deductible 80%after deductible 90%after deductible 70%after deductible 90%after deductible 70%after deductible
P
No No No
4TH Quarter Carryover Yes Yes No
PMD=Primary Care Doctor
Note: Shows benefit changes only for Blue Options Plan 1 as compared to PPO and for Blue Options Plan 2 as compared to PPO and Blue Options Plan 2
r
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Health Insurance Renewal Options
Estimated Fiscal Year 2002-03 County Cost
Individual Compared to 4
Increase Employee Dependent Total County Total Cost Amount Budgeted
Renewal Option Percent Coverage Coverage Cost Increase FY 02/03
Present - $ 1,956,493 $ 452,973 $ 2,409,466
Option 1 - Blue Care Plan
1 and Blue Options Plan 1
with CIGNA 25% $ 2,228,504 $ 518,994 $ 2,747,498 $ 338,032 $ 85,072
Option 2 - Blue Care Plan
2 and Blue Options Plan 2
With CIGNA 16% $ 2,135,411 $ 495,215 $ 2,630,626 $ 221,160 $ 31,800
Option 3 - Blue Care Plan
2 and Blue Options Plan 2
with Blue Cross as Sole
Provider(Drop CIGNA). 13%1 $ 2,104,379 $ . 487,289 $ 2,591,668 $ 182,202 $ (70,758)
Notes:
1) The above cost estimates reflect general fund costs only and are calculated using the current subsidy policy of 40 percent on the
Blue Care Plan rate.
2) Health insurance cost increase budgeted for 2002-03 at 18% or about an additional $252,960
D
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n
3
CD
r
N
heal cost031 0/3/2002
Health Insurance Dependent Subsidy
Chart 1 - Employee Cost Impact of Health Insurance Increase*
Annual Employee Cost Increase With Present Annual Employee Increase with Increased I
(40%) Subsidy* Subsidy
Coverage Type Option 1 - If Option 2 - If 16% Option 3 - If 13% Option 1 - If Option 2 - If Option 3 - If
25% Increase Increase Increase 25% Increase 16% Increase 13% Increase
Employee/Child(ren) $419 $268 $218 $0 ($7) ($3)
Employee/Spouse $499 $320 $260 $0 ($8) ($3)
Employee/Family $900 $576 $468 $0 ($15) ($6)
Increased Subsidy % Applied 52.0% 48.5% 47.0%
*Based on Blue Cross Blue Care plan. CIGNA increase would be equivalent to that shown for Option 3
Chart 2 - Employees with Dependent Health Insurance Coverage By Salary Level
Number Employees With Dependent Coverage*
Salary Below Salary $35,000 Salary $50,000
Coverage Type Total Percent
$35,000 to $50,000 or Higher
Employee/Child(ren) 54 60 18 132 44%
Employee/Spouse 28 34 6 68 22%
Employee/Family 35 42 26 103 34%
Total 117 136 50 303 100% D
v
Percent 39% 45% 17% 100% �-
3
CD
*As of September 10, 2002 01
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healdependrevl 0/2/2002
14
- - = Attachment 6
Draft 2003 Monthly Health Insurance Rates
Blue Cross Blue Care Plan (Formerly PCP)
Total Cost Paid by the County Paid by the Employee
Old New Old New Old New
Employee Only $249.94 $312.44 $249.94 $312.44 $0.00 $0.00
Employee/Child(ren) 482.40 603.00 342.92 463.53 $139.48 $139.47
Employee/Spouse 527.16 658.94 360.84 492.62 $166.32 $166.32
Employee/Family 749.84 937.30 449.90 637.37 $299.94 $299.93
Blue Cross Blue Options Plan (Formerly PPO)
Total Cost Paid by the County Paid by the Employee
Old New Old New Old New
Employee Only $280.14 $350.18 $280.14 $350.18 $0.00 $0.00
Employee/Child(ren) 540.64 675.80 342.92 463.53 $197.72 $212.27
Employee/Spouse 591.06 738.82 360.84 492.62 $230.22 $246.20
Employee/Family 840.38 1,050.48 449.90 637.37 $390.48 $413.11
CIGNA Healthcare
Total Cost Paid by the County Paid by the Employee
Old New Old New Old New
Employee Only $263.34 $296.40 $263.34 $296.40 $0.00 $0.00
Employee/Child(ren) 508.44 572.27 342.92 463.53 $165.52 $108.74
Employee/Spouse 555.18 624.86 360.84 492.62 $194.34 $132.24
Employee/Family 778.62 876.34 449.90 637.37 $328.72 $238.97
Note: Rates based on Blue Care Plan 1 and Blue Options Plan 1 with increased dependent
subsidy to 52 percent.
ORANGE COUNTY
BOARD OF COMMISSIONERS APPENDIX B
ACTION AGENDA ITEM ABSTRACT
Meeting Date: October 21, 2002
Action Agenda
Item No. 4 - b
SUBJECT: Classification and Pay Study
DEPARTMENT: Personnel PUBLIC HEARING: (Y/N) No
ATTACHMENT(S): INFORMATION CONTACT:
1- Preliminary Implementation Cost Elaine Holmes, Personnel Director,
Estimate Extension 2550
2 - Estimated Phase In Implementation TELEPHONE NUMBERS:
Cost By Fiscal Year Hillsborough 732-8181
Chapel Hill 968-4501
Durham 688-7331
Mebane 336-227-2031
PURPOSE: To discuss the Classification and Pay Study status and consider any direction the
Board wishes to provide to staff on the study.
BACKGROUND: In June 2001, the Board initiated a countywide Classification and Pay Study
of all permanent County positions (now numbering 755). Given the 12 years since the last
Classification and Pay Study and the County's need to maintain a competitive, equitable pay
plan, the County planned this study as a priority for 2001-02 with the target to implement the
results in 2002-03. Given the fiscal circumstances the County faced during the budget process
for 2002-03, the budget did not include funds for Classification and Pay Study implementation.
Study Steps To Date
The County engaged a consultant (Condrey and Associates)to conduct the study and the study
was conducted during 2001-02. It has included:
• Employee and department head meetings in August 2001,
• Completion of updated position descriptions by employees in September 2001,
• Consultant interviews with over 75 percent of employees in September 2001,
• A labor market salary survey of 18 local government employers,
• Follow up conferences with department heads to review position comparisons and salary
relationships, and
• Preliminary report on study results to the Board in March 2002.
Given the fiscal situation, the study was placed on hold in April 2002 prior to completing and
communicating the final results.
What the Study Accomplishes
The reasons the County decided to pursue the study and the results the study accomplishes, if
implemented, include:
• Recognizing and taking account of changes in positions that have occurred over time such
as through organizational changes, new job requirements being added and the like.
• Establishing equitable salary relationships on a comprehensive and current basis.
• Providing a more competitive pay plan in the labor market.
Improving entry-level rates.
Through implementation of the study results, the County also will positively address its goals of
improving employee pay in relation to the housing wage and other criteria that reflect the costs
to live in this area.
The study represents a capital investment in the County's work force that will serve the County
for years to come.
Study Costs
The estimated cost of study implementation as recommended by the consultant is about $2.5
million as shown in Attachment 1. This cost provides for the following:
• Implementation of the new job classifications and salary schedule.
• Moving employees below the new minimum (Step A) of the salary schedule to the new
minimum step.
• Granting Service Based salary increases to employees to address salary compression.
Based on employees and service as of July 1, 2002, the consultant recommends a one step
(2.5 percent) increase to employees with less than 4 years County service, a two step (5
percent) increase for employees with 4 but less than 7 years service and a three step (7.5
percent) increase for employees with 7 or more years County service.
Implementation Scenario and Phased In Cost
Given the cost, staff has identified various scenarios in which the study could be implemented
on a "phase in" basis over three years. Attachment 2 is a draft of a possible scenario.
To initiate the first phase of implementation effective April 14, 2002 would require about
$372,000 in 2002-03. This first phase implementation would provide for:
- = 3
• Implementation of the new job classifications and new salary schedule.
• Moving employees below the new minimum step (Step A) of the salary-schedule to the new
minimum step.
• Granting a one step service based increase (about 2.5 percent) to those employees who
began work prior to July 1, 2002.
• Placing on step the salaries of employees whose salaries fall in the new salary range.
To help the Board assess the relative cost of the phased in Classification and Pay Study
implementation as compared to that for COLA and In-Range Salary Increases, the amount
required in 2001-02 for the 2.5 percent COLA and 2.5 percent In-Range Salary Increases was
about $1,000,000. If the County had granted a 2 to 2.5 percent COLA in 2002-03 and granted
the In-Range Salary Increases at 2.5 percent, the cost also would have been about $1,000,000.
Next Steps
If the Board decides to pursue study implementation in 2002-03, the next steps include the
following:
• Completing the study including final reviews with department heads and employees.
• Completing the final report and presenting it to the Board of Commissioners for
consideration along with related analyses such as the statistical pay equity analysis, housing
wage and others as the Board desires.
• Follow through on the Board of Commissioners' decisions as to implementation.
Recommendation
Implementation of the classification and pay study is a priority need for the County. If the funds
can be identified from the possible additional, unbudgeted sales tax revenue for 2002-03, the
Manager recommends that the County proceed with study implementation beginning in 2002-03
on a phase in basis as outlined in Attachment 2.
FINANCIAL IMPACT: The financial impact is outlined in Attachments 1 and 2. There are no
funds presently budgeted for Classification and Pay Study implementation in 2002-03.
Implementation in 2002-03 would require the identification of additional, presently unbudgeted
funds.
RECOMMENDATION(S): The Manager recommends that the Board provide direction to staff
as to the Classification and Pay Study and how the Board wishes to proceed.
4
Attachment 1
Implementation Cost Estimate*
Classification and Pay Study
Estimated Cost for Full Implementation
Classification and Step Changes 1,017,394
1)Employees Below Step A, Increase to Step A
2)Employees in New Range But Off Step, Place on Next
Higher Step
3)Vacant Positions If Below Step A, Increase to Step A
Service Based Increases (Based on service as of 1,533,956
7/1/02)
1) Employees With Less Than 4 Years Service -
1 Step (2.5%),
2) Employees With 4 But Less Than 7 Years Service -
2 Steps (about 5 9/6)
3) Employees With Seven or More Years Service -
3 Steps (about 7.5%)
[Total Annualized Cost $ 2,551,350
*General Fund Costs Only
costscenarios 10/17/2002
: 5
Attachment 2
Estimated Phase In Implementation Costs By Fiscal Year*
Classification and Pay Study
Three Year Phased Implementation Including COLA and In-Range
Salary Administration 2002-03 2003-04 2004-05 Notes
Classification and Step Changes
For 2002-03, effective April
1)Employees and Vacant Positions $ 158,767 $ 591,767 14, 2003. For 2003-04, cost is
Below Step A, Increase to Step A to annualize increases from
2002-03.
------------------------------------------------- --------------- ---------------- --------------- -----------------------------------
2)Employees in New Range But Off Effective April 14, 2003. For
Step, Place on Next Higher Step 57,818 215,504 2002-03, cost is to annualize
increases from 2003-04.
Service Based Increases
One Step Effective April 14,
1) One step (2.591o) Service Based 155,008 577,759 _ 2003. For 2003-04, cost is to
Increase for employees as of 711102 annualize increases from
2002-03.
-------------------------------------------------- --------------- --------------- ---------------- -----------------------------------
2) Second one step (2.59/6) Service Second Step Effective
Based Increase for employees with 4 213,568 230,654 January 5,2004. For 2004-
or more years service as of 711102 05, cost is to annualize
increases from 2003-04.
-------------------------------------------------- --------------- -------------------------------- -----------------------------------
3) Third one step increase (2.5%)
Service Based Increase for 350,505 Third Step Effective July 1,
employees with 7 or more years 2004.
service as of 711102
In lieu of COLA for 2002-03
and 2003-04, fund Class &
Cost of Living Increase - - - Pay Study Implementation.
COLA for 2004-05 to be
determined.
In lieu of In-Range for 2002-03
In-Range Salary Increase - - 362,000 and 2003-04, fund Class &
Pay Study Implementation.
Resume In-Range in 2004-05.
Total Cost 371,593 1,598,598 943,159
*General Fund Costs Only
costscenarios 10/17/2002
Appendix C
Approved 2002-03 Pay Plans
Area Employers
Employer COLA/Market Performance-Related Additional Notes
Adjustments
Alamance None None
County
Carrboro None None
Cary 2.0% Depending on location of Salary increases budgeted at
adjustment to salary in salary range and about 5% of payroll. Lump
salary ranges performance rating of: sums budgeted at about 1.25%
only 7-1-02 Standard —0-4% of payroll. Salary increase may
be granted in combination of
Proficient— 0-7% base salary & lump sum
Exemplary— 0-10% depending on place in salary
range. In addition, new
In addition, for special employees in developmental
significant contributions, range may receive up to 5%
there is a lump sum award. every 6 months with
"acceptable" performance until
reach market segment of
range. Funds for this is
budgeted at about 3.5% of
payroll. Classification and pay
study results budgeted at about
2.0% of payroll.
Chapel Hill None None
Chatham None Approved new performance
County agreement system.
Employee is eligible to
receive a merit.increase up
to 8% based on
performance. Salary plan
will have minimum, midpoint
and maximum.
Durham None 2.0% merit if "meets Reduction in the 401(K)
City expectations" or higher. contribution from 5% to 3%.
Durham None From Steps A — C, if "meets Approved new longevity plan:
County expectations" or higher, 5%. 5 but < than 10 yrs - $400
From Steps C1 —J1, if
"meets expectations" or 10 but < than 15 yrs - $500
higher, 2.5%. 15 but < than 20 yrs - $600
Effective 7/1/02:
Employer COLA/Market Performance-Related Additional Notes
Adjustments
Developed a new stepless 20 but < than 25 yrs - $700
salary schedule with 25 and above - $800
minimum, midpoint and
maximum only.
Effective 1/1/03: If "meets Approved expanding salary
expectations" or higher, 5% ranges for all grades from 50%
regardless of where salary to 60%.
is in range.
OWASA None 3% merit effective 10/1/02. Increasing all salary ranges by
3.6% effective 10/1/02.
Person None None
County
Raleigh Approved All employees that receive a Approved a city-wide
1.5% range "standard" or above classification and pay study to
adjustment to performance rating, be conducted in FY 2002-03.
range including those employees
maximum at top of range will receive
only. 1.5% range adjustment.
In addition to range
adjustment:
If in lower range: Standard
2.5%, Above Standard,
3.75%; Outstanding 5%.
If in upper range:
Standard 0%, Above
Standard, 1.25%,
Outstanding 2.5%.
State of 1.84% for Adopted one time additional 10
NC teachers, days vacation for each
instructional permanent employee not
support receiving teaching and related
personnel, salary increase
principals &
assistant
principals.
None for other
State paid
personnel.
-2-
Employer COLA/Market Performance-Related Additional Notes
Adjustments
Triangle J None If below midpoint. meets Approved an additional .5%
Council of basic requirements — 1%, 401(K) bringing the total
Govern. consistently competent— amount to 4.0%. In July 2001
1%, outstanding — 1%. approved an additional .5% be
If above midpoint., none awarded each year over the
next three years which will
bring the total 401(k)
contribution to 5.0%.
Wake Received 3% Not yet available
County adjustment to
band structure
effective
4/15/02. Will
determine in
March 2003.
Orange None None Approved $145,000 Employee
County Pay and Benefits Contingency
Fund
kAcomp\paysv-02.doc
10/11/02
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