HomeMy WebLinkAboutAgenda - 09-22-2008 - 3ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: September 22, 2008
Action Agenda
Item No. ~_
SUBJECT: Employee Pay and Benefits Update
DEPARTMENT: Human Resources PUBLIC HEARING: (YIN) No
ATTACHMENT(S):
1. Employment Security Employee Survey
Results
2. Comparative Benefits Information
3. Dental Insurance Table of Allowances
4. Dental Fund Projection
5. Health Insurance Participation
6. Health Insurance Considerations
7. Health Insurance Options
8. Health Insurance Current and Renewal
Costs
9. Advantages/Disadvantages of Health
Insurance Renewal and Options
10.9/9/08 (Distributed But Not Discussed) Pay
and Benefits Powerpoint Presentation
INFORMATION CONTACT:
Michael McGinnis, HR Director, 245-2552
Diane Shepherd, Benefits Manager, 245-2558
PURPOSE: To update the Board of Commissioners on the status of The Archer Company pay
study and current employee benefits and to receive feedback on potential benefit
recommendations for the January 1, 2009 plan year.
BACKGROUND:
Archer Pay and Classification Study
The Pay and Classification Study with The Archer Company was approved by the Board in
October 2007. The Archer Position Questionnaire was developed and training classes were
held with all employees in November 2007. Employees completed their respective position
questionnaires and the results were reviewed by the respective departmental management
teams and Human Resources staff prior to forwarding to The Archer Company.
From the completed questionnaires, job descriptions were developed and submitted to the
County for review and comment by appropriate employees, supervisors, department directors
and Human Resources. These reviewed and revised job descriptions were then returned to
The Archer Company. The job descriptions are currently being incorporated into The Archer
Company salary and classification matrix, and Archer representatives met with Human
2
Resources staff in mid-September to share the results. County staff will continue to work with
Archer to ensure accuracy and address any necessary revisions. The FY 08-09 Budget does
not provide funding for recommended implementation. Implementation costs have been
estimated for the FY 2009-10 budget of $4,100,000.
Benefits
The Human Resources Department and other County staff annually review the County
employee benefits package and advise the Manager regarding a recommendation to the Board
on benefit plans that become effective for the next calendar year. In spring 2008, the North
Carolina Employment Security Commission conducted an Employee Satisfaction Survey for
Orange County. Approximately 60% of employees responded. The results showed that 83.2%
of respondents are satisfied with their benefits: 78.8% are satisfied overall with their health
care; 68.6% are satisfied with the dental plan; and 60.2 % are satisfied with the 401(k)
contribution. While employees would naturally prefer to keep their benefits the same at the
same or no cost, 45.6% indicated they would prefer increases for dependent coverage while
keeping employee only costs the same. 34.9% stated they would prefer higher premium costs,
including an employee contribution, to keep benefits at the same level and 14.4% stated they
would prefer to keep the premiums the same and reduce the benefits level. Attachment 1
summarizes the survey results.
Discussions regarding benefits and the Archer Study have been held with the Employee
Relations Consortium (ERC), the ERC Pay & Benefits Committee and with department
directors. Each group provided input to the Human Resources Department related to
compensation and benefits.
Staff reviewed the survey conducted by The Archer Company and another local survey and
confirmed that generally Orange County benefits are comparable to nearby jurisdictions. This
data shows that Orange County health care provides some of the lowest deductibles and co-
pays for office visits with the lowest co-pays for prescriptions. Dental coverage is comparable to
others but data is limited. Orange County provides the highest number of leave days among
surveyed groups. Employees must have more years of service to qualify for longevity payments
than most of the surveyed organizations, and the maximum tuition reimbursement amount is
below the average. 401(k) contributions are the lowest of all organizations surveyed.
Attachment 2 presents a comparison of benefits.
Costs associated with the County Health Care plan, currently administered by CIGNA through
the North Carolina Association of County Commissioners (NCACC) pool, have consistently
increased. Significant premium increases over the last several years have made it difficult for
the County to continue coverage at the same plan level and employees face increased costs for
dependent coverage. A driving factor in this increase is the County practice to pay. the entire
employee premium and a significant amount of dependent care coverage. Currently, the
County pays $445.06 (for HMO coverage) or $522.08 (for PPO coverage) each month for
Employee Only coverage. Because health insurance is such an essential part of the total
compensation package that attracts and retains .employees, input from Commissioners will
assist in formulating recommendations for this year's plan as well as establish a direction for the
future.
Term Life/Accidental Death and Dismemberment Insurance
The County has provided for many years an employer-paid life insurance benefit at the
employee's annual salary (rounded to the next thousand dollars) with a maximum benefit of
3
$50,000. An employee also has the option to purchase additional coverage. Effective January
2008, Metl_ife became the carrier for athree-year contract. The Plan design for 2009 has no
changes. The County pays 22.5 cents for every thousand dollars of coverage per month for life
and accidental death and dismemberment insurance.
Dental Insurance
The County provides aself-insured dental plan with Delta Dental of N.C. serving as the third
party administrator. Premiums earned in FY 07-08 were $443,500 and claims and fees paid
were $368,800. The dental plan's fund balance at the end of FY 2007-08 was in excess of
$300,000. There is no increase in Delta Dental's administrative fee of $2.00 per member per
month.
All claims are paid based on a Table of Allowances (TOA) which Orange County establishes.
Although the County reimburses preventive services at 100% of the TOA, the current Table has
lagged behind standard rates of reimbursement, causing employees to pay an increasing
amount for services. This has reduced the value of the benefit and only a third of employees
are taking advantage of the preventive and diagnostic care.
Staff reviewed the TOA and identified the most common preventive and diagnostic services that
could be reimbursed at the Maximum Payable Amount (MPA). Attachment 3 provides a
comparison of the current and proposed TOA. Based on experience, this change will increase
the County's claims by approximately $48,000 annually and can be absorbed by the current
funding over the next several years. Attachment 4 is a projection showing that the Dental Fund
will continue to be adequately funded over five years. Staff will continue to regularly monitor the
dental fund.
Flexible Compensation Plan
The County provides a Section 125 Flexible Compensation Plan administered by Tucker
Administrators. This Plan consists of a tax sheltering of health and dental premiums and two
Flexible Spending Accounts (a medical spending account and dependent/child care spending
account). These accounts enable employees to save money and increase their take home
pay by eliminating income taxes and Social Security taxes on contributions employees make to
the Spending Accounts. It also allows the County to reduce payroll taxes on employee
contributions. Employees affect these reductions in taxes by setting aside a specific amount of
funds into a spending account that are used for health related and/or dependent care expenses,
resulting in a tax savings for both the employee and the County.
The maximum contribution employees may currently make to the Medical Spending Account is
$2,600 each benefit year. Federal regulations allow employees to contribute $3,000.
Maximizing the amount of potential contributions allows employees and the County to take full
advantage of all possible tax savings. The County maximum allowable contribution to the
Dependent/Child Care Spending Account is already at the Federal maximum of $5,000 per
year.
An enhancement to the 2009 Plan incorporates a new debit card feature which enables
employees to pay for expenses at time of service with the funds from their accounts. This
enhancement will increase employee participation in the Flexible Compensation Plan.
Employee Assistance Program (EAP)
Magellan Behavioral Health provides the County's EAP for County employees and their
dependents. This benefit includes a number of services such as confidential assessment and
counseling services, 24/7 emergency services, and legal consultation. .Several changes that
would greatly enhance the EAP can be made with an increase in cost of 7 cents per month per
employee which would bring the overall cost to $1.61 per employee per month. The 2009
recommendation includes increasing the number of counseling sessions from three to five, the
removal of the LifeManagement Resource and Referral Service, and the addition of financial
consultation services to the legal consultation services. The Resource and Referral Service
provides members with referrals for dependent or senior care, and is duplicated by County
departments. Increasing the number of counseling sessions will allow employees more
treatment and a greater continuity of care in dealing with personal, emotional and financial
issues. The EAP is a complement to services provided through the County Health Plan at no
cost to employees.
Health
Currently the County offers two fully insured health insurance plans. Both health plans are
contracted through the NCACC Health Insurance Trust and administered by CIGNA. One plan
is a Health Maintenance Organization (HMO) that requires participants to use a vendor network
of physicians and facilities. The second plan is a Preferred Provider Organization (PPO) that
allows both in and out of network services. When using out-of-network services, the employee
pays a higher portion of the cost. Both plans offer an in-network wellness benefit at no cost,
which includes physicals, health screenings and immunizations. The current number of
employees enrolled in each plan, past rate changes, and past plan changes to the health
insurance are shown on Attachment 5.
Staff has considered several options for the 2009 plan year that will stay within the 8% increase
budgeted for FY 2008-09. The health care trend (percentage increase in claims costs that
actuaries expect to see in the next 12-month period) would require a premium increase of 10-
12% over the 2008 rates. Because Orange County's actual medical experience in health care
claims in FY 2007-08 was under this 10-12% trend, staff was able to negotiate the renewal rate
to a lower rate than the annual trend. Considerations used in preparing the renewal rates,
including claims information, are provided on Attachment 6.
The County currently pays the entire monthly premium for employee and retiree only coverage
for both the HMO and PPO plans. The County also subsidizes the premium cost for the
employee's dependent coverage at 52%, based on the lower priced plan (which has been the
HMO plan for the past several years). This practice provides affordable and thus, accessible
health insurance coverage for dependents (spouse, domestic partner, children, or entire family)
to employees, particularly lower salaried employees for whom dependent health insurance
coverage is a significant cost. Continuation of the subsidy at this level maintains a "family
friendly" feature that is highly valued by the 45% of employees with dependent coverage,
however, it does present an equity issue for employees without dependent coverage. By paying
the dependent subsidy, total compensation for employees with dependents is greater than for
those without dependents.
An added component of the health insurance for all options is Health Advisor, a CIGNA
program which provides each healthy and at-risk employee with a health coach who can assist
an employee in improving his or her health. Additionally, Orange County has partnered more
closely with NCACC to enhance the Wellness Committee and wellness activities. Because
healthier employees have a higher quality of life, are more productive, and require less health
care, wellness activities will continue to be an important benefit for County employees and
retirees.
Staff has reviewed the current plan and two options for the 2009 calendar year renewal. These
are:
Renewal of Current Plan Design-No Changes. Renewing with no change to plan designs
results in an increase to the County of approximately $262,960 for FY 2008-09. In the past,
premiums for the PPO plan have been higher than the premiums for the HMO. 2009 reverses
that pattern, and the premiums for the HMO are more expensive, because of the high volume of
claims and because it provides a greater benefit to employees. PPO employees will continue to
pay higher out of pocket expenses because members must pay 10% co-insurance costs up to
$1,000/year per member (to a maximum of $3,000 per family) for services such as
hospitalization and diagnostic medical services.
Option 1 Buy up Plan. This option delivers the same plans, but requires employees to pay an
additional premium for the higher priced plan. Because the HMO would be the higher priced
plan, employees who choose to remain in the HMO would be required to pay the difference
(buy-up) between the premium for the PPO and the HMO. Costs to the County would stabilize
because the contribution for all employees would be the same. There would be no difference in
what the County paid for each employee. Because of the low claims in FY 07-08, this is a good
year to consider actions that will close the gap between the HMO and PPO pricing. Should the
County be faced with a high claims year, the cost of premiums could easily jump to over 25%,
as it did in FY 2004-05, and dependent premiums would be priced out of reach of many
employees. Implementing a "buy-up" plan in a year when employees received a 2.25%
increase COtA and have seen increased gas prices would not be well received, however, but it
would help the County control its health insurance costs.
This option would result in an increase for the County of approximately $224,000 for FY 2008-
09. The increase in premiums for employees would be $79,510, assuming that only 25% of
employees (based on NCACC projections) chose to stay with the HMO and pay the additional
monthly premium. Currently 93% of employees participate in the HMO. Only those employees
who chose the PPO would see a smaller increase in premiums, but they would see higher out
of pocket increases, if such services were required.
Option 2 One Plan. This option is a renewal with only a PPO plan. It eliminates the HMO plan,
allowing all members to access providers both in and out of network. This plan would require all
employees with major medical expenses (surgery, hospitalizations, diagnostic services, etc.) to
pay 5% co-insurance, to a maximum of $500 per member ($1,500 for a family) per year. This is
an improved benefit for current PPO members, who currently have a $1,000 per member co-
insurance maximum, but reduces the benefit for current HMO members who are accustomed to
$0 co-insurance.
Option 2 would result in an increase for the County of approximately $195,660 for FY 08-09.
The effect on employees with dependent coverage would be a smaller increase than renewing
the plan with no change.
Descriptions of the current plans, the renewal and option -plan designs are shown on
Attachment 7. Attachment 8 provides a detailed breakdown of the premiums for the current
6
plan and each of the options. Advantages and disadvantages of the renewal and options are
shown on Attachment 9.
FINANCIAL IMPACT:
During this Work Session, the Human Resources Director will share fiscal information related to
health insurance options. The 2009 Benefit Recommendations all meet the County budget for
FY 2008-09.
Term Life: There is no budget impact. Premiums will remain the same for 2009.
Dental: There is no budget impact in the FY 2008-09 approved budget. Premiums will remain
the same for 2009. The proposed changes will reduce the balance in the dental account over
time. Projections for the use of funds for the next five years are provided in Attachment 2. This
is a conservative projection, with assumptions of increases in both premiums and claims. No
administrative increases are anticipated at this time.
Flexible Spending Account: This is within the FY 2008-09 approved budget. There is a
potential for tax savings, based on the amount of contributions employees make of a minimum
7.65 cents savings for both the County and the employee for each $1.00 contributed. Losses
are possible when an employee claims and receives funds prior to making the full contribution,
and then leaves County employment prior to fulfilling their obligation to the Medical Spending
Account for the plan year. The potential loss will be greater, depending on the number of
employees who enroll overall.
Employee Assistance Program: This is within the FY 08-09 approved budget. The contract
renewal is at a rate of $1.61 per employee per month, which includes a 7 cents per month
increase from the previous plan year. The estimated annual cost for the EAP is $15,456,
including a projected increase of $675 a year ($337.50 for FY 2008-09) for the added services.
The recommended changes are within the amount allocated in the FY 08-09 budget.
Health: Within the FY 2008-09 approved budget. With the Commissioners' input, the Manager
will be able to determine the fiscal impact of the recommended option for the FY 2008-09
Budget.
Options County Cost (Calendar Year)
Renewal with No Changes $6,877,746
Option I Buy Up Plan $6,604,372
Option 2 One Plan $6,776,097
RECOMMENDATION(S):
The Manager recommends that the Board of Commissioners receive an update on the status of
The Archer Company pay study and current and future employee benefits and provide
feedback on potential benefit recommendations for the January 1, 2009 plan year. A final
recommendation will be presented to the Commissioners on October 7.
2008 EMPLOYEE SATISFACTION SURVEY Att~a~c]~hment 1
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59.2% of all employees responded, with at least 5 employees from each department responding..
__
The numbers shown are the percentage of employees responding with either "Strongly Agree
---
orAgree."
__
__ __ __
__ -__ ---
ALL DEPTS
RESPONDENTS (484)
EMPLOYEE PAY AND BENEFITS
___-____
7 My health care plan helps when I'm sick or injured. 95.0
__ -
4 I understand what my employee benefits provide.
94.9
-
11 I am satisfied with the County leave benefits. _ - __
91.3
9 I am satisfied with the County life insurance plan. ______
90.5
__ _ _ - - --
2 I am satisfied with employee benefits.
83.2
-._
5 I am satisfied with the County health care plan.
78.8
__ _ _ _ __
6 My health care plan helps me become healthier.
76.1
__ _ __
8 I am satisfied with the County dental plan.
68.6
14 The WPPR program is administered fairly. __
64.7
_- --
10 I am satisfied with the County contribution to the 401 k deferred compensation plan.
60.2
- - --
12 Increasing my salary is more important than maintaining and improving benefits.
___
53.4
16 The in-range increase program motivates me to improve performance. 51.8
___
15 There is a relationship between in-range increases and good performance.
49.2
__ _ ___
13 I am paid fairly for the work I do.
48.8
__
3 . Maintaining and improving benefits is more important increasing salary.
48.0
___
19 I would prefer an increase in the monthly employee premiums for dependents only and keep health care
45.6
plan the same.
1 I am satisfied with my pay. 41.4
17 I would prefer higher premium costs, including Employee contribution to keep the health care plan level the 34.9
same.
18 I would prefer to keep the premiums the same and reduce the health care plan benefits level. 14.4
TOTAL PAY/EMPLOYEE BENEFITS 63.0
TOTAL SURVEY 74.1
COMPARATIVE BENEFITS INFORMATION
Attachment 2
Survey data compiled from HIII, Chesson Wootly and The Archer Company 21x18
HEALTH INSURANCE
Individual
Premium Employee
cost of
Employee
covers e OfOCe Ysit Co-
pays
primary/Spec.
Deductible Co-
Insurance (in
network only) Coinsurance
maximum (in
network only) Prescription
Co-Pays Per
Tier Emergency
Room Co-
Pay
Chatham Co $ 591.00 $ 24.25
Guilford Co. 531.28 48.78 ' ~ `
Guilford Co. 511.82 29.50 0
Hillsborou h 450.00 20/30 400 70 1500 520/40
Fors h Co. 447.34 $ - 750 '
Oran a Co $ 445.00 $ 15130 250 100 0 5/15130 $ 150.00
Oran a Co $b22.08 $ 15130 250 90 1000 5/15130 $ 150.00
OWASA 433.00 2DN0 250 100 0 10/20/30 150.00
Person Co. $ 430.42 -
Carrboro 417.00 - 10/10 0 90 1500 1025/40 100.00
Durham Co.
Hi h o tion
303.00
20140
0
90
1750
1025/40
Ca 373.00 $ - 20!40 500 90 2000 025150 150.00
'
Cha el Hill $ 372.00 $ 10/25 0 100 0 10/25/40
Budin ton
352.66
-
1000
80 4000 (varies
based on
Ian
10145160
'
'
UNC Hos $ 346.00 - 20140 300 BO 1750 1020140150
Ralei h 345.00 20/40 250 80 1000 1025/40/75° 150.00
Durham Co.
Low o lion
319.00
25150
750
80
2750
10135150
Durham
(City) 3
levels
$121822/
69
20140 8 15130
$1000-$600-
300
1000
~' Data not provided
401 K CONTRIBUTION
LEO Non-LEO
Oran a Co 5% $7151 ear
Burlin ton 5% 5%
Carrboro 5% 3%
Ca 5% 5%
Cha I Hill 5% 5%
Chatham Co 5% 4.50%
Durham Ca. 5% 5%
Fors h Co. 0% 0%
Guilford Co. 5% 5%
Hillsborou h 5% 4.93%
OWASA $aa$1oo
based on
Ion evi
Person Co. 5% 5%
Ralei h 5% 3%
UNC Hos 5% 0%
Durham Ci
Ee Only
Premium
Deductible Max Allowed
Year
Orthodontics
Alamance C '
Burlin ton 29.46 25 1000 Y
Carrboro 31.92 50 1500 Y
Ca 38.00 0 1500 Y
Cha el Hill 31.26 50 1 500 Y
Chatham Co $ 33.72 50 1200 Y
Durham Cit
Durham Co. 29.00 50 2000 Y
Fors h Co. 26.46 1200 Y
Guilford Co. B asic 50 500 Y
Guilford Co.
Enhanced
50
2000
Y
Hillsborou h 24.50 50 1000 Y
Oran a Co $ 24.30 50 1200 Y
OWASA 29.17 50 1000 Y
Person Co. 26.28
Ralei h 22.68 50 1 500 N
UNC Hos 33.26 50 1500 Y
Durham Ci
V~
PTO=Paid Time OH
Average $ 890.00
TABLE OF ALLOWANCES
Costs for most frequently reported dental procedures
DIAGNOSTIC AND PREVENTIVE Orange Co.
2006-2008 Recommended Difference
Amount 2009
00120 Periodic oral exam $31 $37 $6
00140 Periodic oral exam $98 $98 $0
00150 Periodic oral exam $35 $65 $30
00210 Full Series x-ra s $109 $128 $19
230 X-ra s $11 $11 $0
00272 2 Bitewin s $30 $35 $5
00274 4 Bitewin s $39 $50 $11
00330 Panorex x-ra s $65 $88 $23
01110 Pro h taxis adult $62 $68 $6
01120 Pro h taxis child to a e 14 $43 $53 $10
01203 Fluoride Treatment $23 $27 $4
01351 Sealants limitation child $40 $45 $5
'These services were at or signer tnan the usual ~ ~.ustomary r~aias
and will remain at those levels.
RESTORATIVE
02140 Amal am Fillin s $97
02150 Amal am Fillin s $128
02160 Amal am Fillin s $155
02161 Amal am Fillin s $170
02330 Com osite Fillin s $100
02331 Com osite Fillin s $125
02332 Com osite Fillin s $160
2330 Resin-One Surface Anterior $100
2720 Crown-Resin with Hi h Noble $370
2750 Crown-Porcelain Fused $370
ENDODONTICS
03310 One Canal; anterior $485
03320 Two Canals, bicus id $640
03330 Three Canals, molars $765
PERIODONTICS
04210 Gin ivetom $400
04341 Root Planin $200
04342 Periodontal scalin former) 434 $100
ORAL SURGERY
07111 Deciduous tooth $90
07140 Extraction, eru ted tooth $102
DENTURE REPAIR
05610 Re air base $105
05630 Broken clas $150
05640 Re lace tooth $127
05650 Add tooth $155
05660 Add clas $150
GOLD AND CAST RESTORATIONS (Crowns)
02752 Porcelain/metal $753
02790 Full Cast $775
PROSTHODONTICS (Dentures)
05110 Com lets u er $950
05120 Com lets lower $950
05211 U er artial $550
05212 Lower artial $550
05213 U er cast artial $875
05214 Lower cast artial $875
Attachment 3
Attachment 4
Dental Projections Based on Modifications to
Table of Allowances
2007-2008 Beginning Balance $ 224,949.00 This chart projects that dental claims will initially
Premium Earned $ 443,517.00 increase as employees utilize more services, but
Interest $ 9,800.00 will generate savings long term because problems
Claims/Fees Paid $ 368,807.00 will be handled at earlier and less costly stages.
Ending Balance $ 309,459.00
FY 2008-2009 Premium Earned $ 443,517.00
Year 1 Interest $ 9,800.00
Anticipated
claims/Fees $ 437,070.99 15% inc for last 1/2 of FY08-09
Ending Balance $ 325,705.01
FY 2009-2010 Premium Earned
Year 2 Interest
Anticipated
claims/Fees
Ending Balance
FY 2010-2011 Premium Earned
Year 3 Interest
Anticipated
claims/Fees
Ending Balance
FY 2011-2012 Premium Earned
Year 4 Interest
Anticipated
claims/Fees
Ending Balance
FY 2012-2013 Premium Earned
Year 5 Interest
Anticipated
claims/Fees
Ending Balance
$ 482,189.40 5%inc in premiums
$ 9,900.00
$ 480,778.09 10% inc
$ 337,016.32
$ 506,298.87 5% inc in premiums
$ 9,000.00
$ 528,855.90 10% inc
$ 323,459.29
$ 531,613.81 5% inc in premiums
$ 9,000.00
$ 581,741.49 5%inc
$ 282,331.61
$ 558,194.50 5% inc in premiums
$ 9,000.00
$ 610,828.56 5% inc
$ 238,697.55
Does not include July-Dec. 2008
* premiums/claims which have been
resulting in $5,000-$12,000 balances
per month
Attachment 5
Participants in Health Plans
Health Plan # Enrolled
Active Employees Retirees
Open Access Plus In-Network Co-Pay
(HMO) 788 89
Open Access Plus Co-Pay (PPO) 53 12
Health Insurance Rate Changes
The chart below lists past increases implemented by the NCACC Health Insurance Trust:
Calendar
Year Percentage
Increase Cost of Employee Only
month) remium Difference (per month
er em to ee Changes to the Plan
2008 9.7% $445.06 $39.42 Increased office visit co-
a s $10/$20 to $15/$30
2007 1.9% $405.64 $7.40
2006 16.5% $398.24 $55.47 $250 deductible added to
HMO
2005 -3.6% $342.77 -$12.84
2004 13.8% $355.61 $43.17 Increase in ER co-pay
$100 to $150
2003 25.0% $312.44 $62.50
2002 8.0% $249.94 $18.41
2001 18.9% $231.53
ORANGE COUNTY
GROUP BENEFITS RENEWAL HIGHLIGHTS
For 2009 Plan Year
WHAT OUR RECENT CLAIMS SHOW
Atta hment 6
~~
1. 56% of total claim costs are incurred by members between ages of 40 - 64. This is consistent in
counties across the State. Given that our employee's average age is 41, we can expect to see
costs continue to rise because of employee and retiree age.
2. There was a 25% increase in cost of Dependent claims for both Family and EE + Spouse tiers.
3. Prescription claim costs remains stable, however, prescriptions are 26% of total claim costs at
$1,755,361 over past 12 months (average is 18% - 20% in other NC counties). Increasing use of
the Mail Order Program would reduce Orange County's prescription costs.
4. The Top 3 Diagnostic Categories are conditions which can frequently be helped with
improvements in lifestyle: exercise and nutrition:
A. Musculoskeletal claims = $846,727
B. Digestive claims = $613,359 .
C. Circulatory claims = $444,405
5. Top 3 Maintenance Drugs (those taken daily) also reflect conditions often helped by changes in
lifestyle:
A. Nexium (heartburn and acid reflux)
B. Lipitor (high cholesterol)
C. Actos (diabetes)
6. Low usage of mail-order on prescriptions (4.76%) although better than prior year. Mail Order
saves the Employee a full co-pay every three months for every Rx filled and allows for a larger
rebate from Caremark to NCACC, passed on to Orange County at renewal by reducing total claim
cost when rating.
OTHER FACTORS
1. Net paid claims decreased by $84,790 over prior year.
2. As a result, the renewal will be under the 10% trend (inflationary cost).
3. Overall increase for apples-to-apples renewal is 7.9% ($601,005 more for a full calendar year,
including all costs (retiree, non-General Fund employees).
4. Each option continues the 100% Preventive Care benefits (no co-pays). Every employee and
dependent is able to receive a complete head-to-toe annual exam and blood work at no charge,
as well as age-appropriate screenings (colonoscopy, PSAs, mammograms, immunizations, etc.)
at no cost to the employee. NCACC will continue educational program toward these visits,
helping employees maintain health with a focus on preventing serious, chronic conditions in the
future.
5. Implementation of Cigna's Health Advisor program for all employees is included in each option.
This program provides a personal Health/Wellness Coach to every employee who completes a
Health Risk Assessment and includes proactive outreach to employees with personal one-on-one
coaching on getting/staying fit. NCACC will assist in communications and awards for getting
Health Risk Assessments completed for program success.
NCACC COUNTY HEALTH PLAN COMMITMENT
13
1. The County will continue Employee Education through Lunch & Learns on utilization of the plan,
being a smart provider/service consumer, Stress management sessions, Nutrition/activity
sessions, Rx mail order education etc. Utilization reports for Orange County determine topics for
these sessions so the areas most significantly driving costs are discussed.
2. Michelle Love from NCACC and Taemi Prapuolenis, Health Education Coordinator for NCACC
County Health Plan, will serve as Co-Chairs for the county Wellness Committee until the vacant
Senior Health Educator position is filled. This will keep the initiative moving forward.
3. Taemi will provide a 16-month calendar of all health/wellness initiatives by month to bring us
through 12/31/09. These will be tailored to Orange County specific utilization info and trends
captured.
4. The County and the NCACC will continue educating employees on actual costs of claims and
how individual employees have a role in keeping costs down so that health insurance will face
minimal changes year-to-year.
Attachment 7
~~
HEALTH INSURANCE PLAN DESIGNS
Current, Renewal and No change
Option 1 (Buy Up) PPO HMO
Primary Care Provider Copay $15 $15
Specialist Copay $30 $30
Emergency Room Copay $150 $150
Individual Deductible (IN / OON) $250 / 500 $250
Coinsurance Maximum (IN / 00 $1,000 / 2,000 $0
Family Maximums 3 times 3 times
Coinsurance (IN / OON) 90% / 70% 100%
OP Lab & Mammograms (IN / O 100% 100%
Preventive Care Program (IN / 100% / 0% 100%
Retail Drug Copay (30 Day Sup $5-15-30 $5-15-30
Mail Order Drug Copay (90 Day $13-26-60 $13-26-60
Vision - E e Exam Deductible $15 $15
Option 2 One Plan PPO
Prima Care Provider Co a $15
S ecialist Co a $30
Emer enc Room Co a $150
Individual Deductible IN / OON $250
Coinsurance Maximum IN / 00 $500
Famil Maximums 3 times
Coinsurance (IN / OON) 95%
OP Lab & Mammo rams IN / O 1
Preventive Care Pro ram IN / O 1
Retail Dru Co a 30 Da Su $5-15-30
Mail Order Dru Co a 90 Da $13-26-60
Vision - E e Exam Deductible $15
Attachment 8
2009 HEALTH INSURANCE PREMIUM COSTS
Current Pro ram Current Rates
PPO HMO
Total Current Membershi
PPO HMO
Total Coun Pas
PPO HMO
Total Em to ee Pa s
PPO HMO
Total
Em to ee $522.08 $445.06 55 481 536 $522.08 $445.06 $0.00 $0.00
Em to ee/S ouse
Em to ee /Child $1,101.52
$730.90 $938.66
$623.06 6
3 119
95 125
98 $823.39
$630.67 $701.73
$537.62 $278.13
$100.23 $236.93
$85.44
Em to ee /Children $1,007.54 $858.98 0 76 76 $774.52 $660.30 $233.02 $198.68
Famil
Annual/Total $1,566.18
$468,989 $1,335.18
$7,101,320
$7,570,309 1
65 106
877 107
942 $1,065.01
$439,341 $907.92
$5,940,911
$6,380,253 $501.17
$29,648 $427.26
$1,160,409
$1,190,056
Renewal Pro ram Renewal Rates Current Membershi Coun Pas Em to ee Pa s
Core Core
PPO HMO Total Core PPO HMO Total PPO HMO Total Core PPO HMO Total
Em to ee $465.40 $485.88 55 481 536 $465.40 $485.88 $0.00 $0.00
Em to ee / S ouse $981.98 $1,025.20 6 119 125 $734.02 $766.32 $247.96 $258.87
Em to ee /Child $651.56 $680.22 3 95 98 $562.20 $586.93 $89.36 $93.28
Em to ee /Children $898.22 $937.74 0 76 76 $690.46 $720.85 $207.75 $216.89
Famil $1,396.18 $1,457.62 1 106 107 $949.41 $991.18 $446.78 $466.44
Annual/Total $418,077 $7,753,247 $8,171,324 65 877 942 $391,646 $6,486,101 $6,877,746
ooi $26,431 $1,267,121 $1,293,552
R 70/
Increase Overall -10.9% 9.2% /.a io ~ ~~ ~°
O tion 1 Bu U Plan Renewal Rates Renewal Membershi Coun Pas Em to ee Pa s
Core Buy-Up Core Core
PPO Bu -U HMO Total Core PPO HMO Total PPO Bu -U HMO Total PPO Bu -U HMO Total
Em to ee $465.40 $485.88 402 134 536 $465.40 $465.40 $0:00 $20.48
Em to ee / S ouse $981.98 $1,025.20 94 31 125 $734.02 $734.02 $247.96 $291.18
Em to ee /Child $651.56 $680.22 74 24 98 $562.20 $562.20 $89.36 $118.02
Em to ee /Children $898.22 $937.74 57 19 76 $690.46 $690.46 $207.75 $247:28
Famil 396.18
$1 $1,457.62 80 27 107 $949.41 $949.41 $446.78 $508.21
nual/Total
A ,
064
$5
886 646
$2
044 930
710
$7 707 235 942 $4,956,006 $1,648,366 $6,604,372 $930,060 $396,280 $1,326,341
n ,
, ,
, ,
, ~ coi 11 .ri%
Increase Overall
4.25 %o
O tion 2 One Plan Rates Membershi Coun Pas Em to ee Pa s
pp0 Total PPO PPO
Em to ee $477.50 536 $477.50 $0.00
Em to ee / S ouse $1,007.52 125 $753.11 $254.41
Em to ee /Child $668.48 98 $576.81 $91.67
Em to ee /Children
Famil
Annual/Total $921.58
$1,432.50
$8,048,503 76
107
942 $708.42
$974.10
$6,776,097
.,°. $213.16
$458.40
$1,272,406
a ooi
L"
Increase Overall b.sro
Attachment 9
ADVANTAGES
~.:J
DISADVANTAGES
RENEWAL OF CURRENT PLAN
No change to plan design. Continues to increase the cost to the County
and to the 45% of employees with dependent
covera e.
No cost for employees with employee only Requires HMO participants with dependent
covera e. covera e to a hi her remiums than in ast.
Begins to address the difference in value/cost Does not provide employees with plans that
of the separate plans. represent a significant difference in cost and
benefit level.
May shift employees with dependents to the
PPO plan because cost of dependent coverage
in PPO is less than HMO.
OPTION I "BUY UP PLAN"
Addresses inequity between the cost of two Affects 877 HMO employees who must all
plans pay for the HMO or change to the PPO at no
cost.
Allows choice of plan best meeting employee The County saves but the employees' benefits
needs are reduced in the no-cost o tion.
Controls claims by cost sharing (paying fora Increases the costs for HMO dependents more
premium or co-insurance) because more than the renewal rate.
attention is aid to out of ocket costs.
OPTION 2 "ONE PLAN"
The cost of dependent coverage is the same for Affects all employees.
all employees.
PPO would have decrease in co-insurance 877 employees/retirees in HMO would have a
from $1,000 to $500. 5% co-insurance to a maximum of $500 vs.
current $0 co-insurance. This will affect
members with medical claims other than office
visits/prescriptions. (Projections indicate 10-
14% of members would be affected.)
Cost increase to employees with dependents is Cost to County is slightly higher than Option
the lowest of all options. 1.
877 HMO members would gain access to out
of network roviders.
Cost to Count is lower than renewal rate.
~~
Purpose
^ Provide Update on Archer Pay Study
^ Provide Status of Current Benefit Plans
^ Discuss Options and Receive Feedback
1
Update on Archer Pay and
Classification Study
^ Archer Company approved by Board October
2007
^ Archer Position Questionnaire developed and
training held with employees November 2007
^ Completed questionnaires reviewed by
department management teams and Human
Resources and sent to Archer Company May
2008
^ Archer Company analyzed questionnaires and
developed job descriptions August 2008
Update on Archer Pay and
Classification Study
^ By the end of September 2008 the
Archer Group will present preliminary
reports to HR staff on the County's:
^ Classii=lcation Structure
^ Pay Structure
^ Pav equity among current employees
a
Iq
Update on Archer Pay and
Classification Study
^ Human Resources will work with Archer
Group to review any recommended
changes to the County's pay system by
January 2009
^ Staff will present the recommended
changes to the Board, with an
implementation plan during the FY
2009-10 Budget Process
Update on Benefits
3
as
Status of Current Benefits
Plans
Contributory County Benefits
^ Life Insurance Plan (MetLife)
^ Dental Care Plan (Delta Dental of NC)
^ EAP (Magellan Behavioral Services)
^ Flexible Spending Account (Tucker Administrators)
^ Health Care Plan (NCACC/CIGNA)
^ 401(k) Supplemental Retirement (Prudential)
Employee Paid County Benefits
^ Disability Insurance (Colonial/Occidental)
^ Optional Life Insurance (MetLife)
^ 401(k) & 457 Supplemental Retirement
Group Life
Vendor:
Type of Plan:
MetLife
Basic Term w/AD&D
Basic County Paid at Annual Salary up to $50,000
at cost of 22.5 cents per $1,000 of coverage
Employee may purchase__additional Basic_Term
w/AD&D coverage up to total $ at group age
based rates
No Change to current benefits
4
a~
Dental Plan
Vendor: Delta Dental
Type of Plan: Self Insured
Monthly Premiums civo change in zoo9~
Coun Employee
Single $24.30 $0.00
Emp/Spouse $24.30 $35.18
Emp/Child/ren $24.30 $41.94
Family $24.30 $60.08
Enhancements:
Adjust the Table of Allowances used to pay claims
to reflect a higher maximum payable amount for
preventive and diagnostic services
Employee Assistance Program
Vendor: Magellan Behavioral Health
Type of Plan: Fully Insured EAP
cOSt: 2009 Increase from $1.54 to $1.61 per
employee per month (Total increase $672)
Enhancements:
^ Increase number of counseling sessions per
incident situation from 3 to 5
^ Add Financial Consultation services to existing Legal
Consultation services
5
i
Flexible Compensation Plan
Vendor: Tucker Administrators
Type of Plan:
- Tax Sheltering Premiums and Spendin Accounts:
Medical (max $2,600)-and Dependent pending
Account (max $5,000)
Enhancements:
Increase limit from $2,600/year to $3,000/year for
Medical Spending Account
Implement a Debit Card for transactions to save
employees the out of pocket costs associated with
the plan.
Current Health Care Plan
NCACC and CIGNA Administration
Types of Plans: Two Fully Insured Plans
^ HMO In-Network Plan (100% coinsurance after deductible
$10250) Office Visits $15/$30 Pharmacy $5/$15/$30 ER
^ PPO In and Out of Network Plan (90% coinsurance after
250 deductible) Office Visits $15/$30 Pharmacy
5/$15/$30 ER $150
_ __ __ _ . 1~00>I-host-_ __ . - - ---~o~;--
6,380,253 1,190,056 $7,570,309
6
Renewal of Existing Pian Designs
Health Benefits
Current PPO Current HMO
Primary Care Provider Copay $15 $15
Specialist Copay S30 $30
Emergency Room Copay $150 $150
Individual Deductible (IN / OON) $250 /500 $250
Coinsurance Maximum (IN / OON) $1,000 / 2,000 $0
Family Maximums 3 times 3 times
Coinsurance (IN / OON) 90% / 70% 100%
OP Lab & Mammograms (IN / OON) 100% 100%
Pn:ventive Care Program (IN / OON) 100% / 0% 100%
Retail Drug Copay (30 Day Supply) $5-15-30 $5-15-30
Mail Order Drug Copay (90 Day Supply) $13-26-60 $13-26-60
V'~sion -Eye Exam Deductible $15 $15
Renewal of Existing Plans -Keep the same
plan design for both HMO and PPO plans
Advantages
^ No change to plan design
^ No cost for employees with
employee only coverage
^ Begins to address the
difference in value/cost of
the separate plans
^ May shift employees with
dependents to the PPO plan
because cost of dependent
coverage in PPO is less than
HMO
Disadvantages
^ Continues to increase the
cost to the County and to the
45% of employees with
dependent coverage
^ Reqquires HMO participants
witFl dependent coveragge to
pay higher premiums tFtan in
past.
^ Does not provide employees
with plans that represent a
significant difference In cost
and benefit level.
7
a~
Option 1 Buy U p Pla n
Current Renewal Current Renewal
Health Benefiffi PPO PPO' HMO HMO'
Primary Care Provider Copay 515 $15 515 515
SpedaC~st Copay S30 S30 S30 S30
Emergency Room Copay 5150 5150 5750 5150
Individual Deductible (IN / OON) 5250 /500 5250 /500 5250 5250
51,000 / 51,000 /
Coinsurance Maximum (IN / OON) 2,000 2,000 SO $0
Family Maximums 3 times 3 times 3 times 3 times
Coinsurance (IN / OON) 90% / 70% 90% / 70% 100% 100%
OP Lab & Mammograms (IN / OON) 100% 100% 100% 100%
Preventive Care Program (IN / OON) 100% / 0% 100% / 0% 100% 100%
Retail Drug Copay (30 Day Supply) 55-15-30 55-15-30 $5-15-30. 55-15-30
Mail Order Drug Copay (90 Day
Supply) $13-2Cr60 513-26-60 513-26-60 513-26-60
V'~sion - E e Exam Deductible 15 15 15 15
Option 1 "Buy Up Plan" Employee pays monthly premium
when choosing the higher level plan or selects core plan at no
premium cost
Advantages
^ Addresses inequity
between the cost of two
plans
^ Allows choice of plan
best meeting employee
needs
^ Controls claims by cost
sharing (paying for a
___p.r_em.ls~m_9rsQ-____
insurance) because
more attention is paid
to out of pocket costs.
Disadvantages
^ Affects 877 HMO
employees who must
decide to pay, even for
employee only
coverage, or to receive
the same benefits as
the PPO at no cost
^ The County saves but
the em loyees' benefits
__
--are re ucedin tfie no-
cost option.
^ Increases the costs for
HMO dependents more
than the renewal rate.
Option 2 (One Plan) ~ .
Current pp0 Current
HMO Renewa~
PPO
Health Benefits
Primary Care Provider Copay $15 $15 $15
Specialist Copay $30 $30 $30
Emergency Room Copay $150 $150 $150
Individual Deductible (IN / OON) $250 /500 $250 $250 / $500
Coinsurance Maximum (IN / OON) $1,000 / 2,000 $0 $500 / $1,000
Family Mabmums 3 times 3 times 3 times
Coinsurance (IN / OON) 90% / 70% 100% 95% / 75%
OP lab & Mammograms (IN / OON) 100% / 70% 100% 100% / 75%
Preventive Care Program (IN / OON) 100% / 0% 100% 100% / 0%
Retail Drug Copay (30 Day Supply) $5-15-30 $5-15-30 $5-15-30
Mail Order Drug Copay (90 Day Supply) $13-26-60 $13-26-60 $13-26-60
Vision -Eye Exam Deductible $15 $15 S15
t anrr. rr rr apuac rro Arnr. e.m ~ rwo Nr,ws acp rro wh oon Errs
Option 2 "One Plan" Combines HMO and PPO into one PPO
Plan.
Advantages
^ No difference in cost of
dependent coverage
^ PPO would have decrease in
co-insurance from $1,000 to
$500.
^ Cost increase to employees
with dependents is the
lowest of all options.
^ 877 HMO members would
gain access to out of network
providers.
Cost to County is lower than
renewal rate.
Disadvantages
^ Affects all employees.
^ 877 employees/retirees in
HMO would have a 5% co-
insurance to a maximum of
$500 vs. current $0 co-
insurance. This will affect
members with medical
claims other than office
visits/prescriptions.
(Projections Indicate 10-14%
of members would be
affected.)
^ Cost to County is slightly
higher than Option 1.
9
a~
2009 Options--Health Care
Calendar Year Costs
County Employee Total Increase
2008 Current Plan
$6,380,253 $1,190,056 $7,570,309
Renewal of Current Plan
$6,877,746 $1,293,552 $8,171,324 7.9%
Option 1 (Buy Up Plan) _
$6,604,372 $1,326,341 $7,930,710 4.8%
Option 2 (One Plan--PPO)
$6,776,097 $1,272,406 $8,048,503 6.3%
Wellness Activities
^ Enhanced preventive services through
County Health Plan (no cost to
members)
^ Lunch 'n Learn Wellness Presentations
^ Wellness Committee
_---_. Add+tio~-e~-H-eal-t-#a Ad-vi-sir- _prsg-ram +~ --
2009
10
Questions
11