S. County AdministratorBOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: November 15, 2006 Division: County Administrator
Bulk Item: Yes _ No X Department:, County Administrator
Staff Contact Person: Connie Cvr
AGENDA ITEM WORDING: Discussion and approval of the Board of County Commissioners
monthly meeting dates for 2007.
ITEM BACKGROUND:
At the November 20, 2006 BOCC meeting, the Board confirmed the scheduling of monthly one -day
meeting, if possible, beginning at 9:00 A.M., on the third week of each month, on
Wednesday/Thursday. At the November 16, 2005 BOCC meeting, the Board confirmed the sace
scheduling scenario for 2006. Attached is a comparison chart showing dates for the second week and
third week of month for consideration by the Board.
PREVIOUS RELEVANT BOCC ACTION:
As stated above.
CONTRACT/AGREEMENT CHANGES:
N/A
STAFF RECOMMENDATIONS:
Approval as normally done by November of each year.
TOTAL COST: -0-
BUDGETED: Yes No
COST TO COUNTY: -0- SOURCE OF FUNDS:
REVENUE PRODUCING: Yes No AMOUNT PER MONTH Year
APPROVED BY: County Atty
DOCUMENTATION: Included
DISPOSITION:
Revised 8/06
OMB/Purchasing
x Not Required
Risk Management
AGENDA ITEM #
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The dates for the NACO meetings are as follows:
Legislative Conference in Washington, DC -March 3 — 7, 2007
Annual Conference in Richmond, Virginia -July 13 — 17, 2007
The dates for the Florida Association of Counties are as follows:
Annual meeting in Walton County - June 27 — June 30
Legislative Conference — November 29 — December 1
The dates for the South Florida Regional Planning Council are as follows:
Meetings are at their office - The first Monday of the month
The dates for the Alliance for Aging are as follows:
Meetings are at their office - Board meetings - Third Monday of month
The dates for the National Hurricane Conference is April 2 — 6, 2007 in New Orleans, La
The dates for the Governor's Hurricane Conference is May 14 — 18, 2007 in Ft. Lauderdale, FL
BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: November 15, 2006 Division: County Administrator
Bulk Item: Yes _ No x Department:, County Administrator
Staff Contact Person: Connie Cyr
AGENDA ITEM WORDING:
Presentation by South Florida Water Management District on "Status of the blue-green algae bloom in
Florida Bay"
ITEM BACKGROUND:
N/A
PREVIOUS RELEVANT BOCC ACTION:
N/A
CONTRACT/AGREEMENT CHANGES:
N/A
STAFF RECOMMENDATIONS:
N/A
TOTAL COST: -0- BUDGETED: Yes No
COST TO COUNTY: -0- SOURCE OF FUNDS:
REVENUE PRODUCING: Yes No AMOUNT PER MONTH Year
APPROVED BY: County Atty OMB/Purchasing Risk Management
DOCUMENTATION: Included Not Required
DISPOSITION:
Revised 8/06
AGENDA ITEM #
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BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: November 15, 2006
Bulk Item: Yes No X
Division: County Administrator
Staff Contact Person: Tom Willi
AGENDA ITEM WORDING: Discussion of actuarial findings regarding amendment to Health
Plan Document to add language and allow employees to waive the County's group health
insurance benefits.
ITEM BACKGROUND: It has been brought to Administration's attention that employees wish
to waive the County's medical coverage due to them having other medical coverage available
(Retiree from another agency, military spouse, Medicare, etc.). Florida Statute 627.4235
requires that the Employer be the primary insurer, therefore, the employee must officially waive
the option of insurance coverage in order to use other available coverage.
PREVIOUS RELEVANT BOCC ACTION: At the October 18, 2006, the BOCC directed that an
actuarial study be done to determine the impact to the health plan if this option was offered to
employees. Attached is the actuary from Gallagher Benefit Services, Inc. dated November 6,
2006. The findings show that approximately 50 employees would opt out of the plan and the cost
estimate would be between $200,000 and $400,000 annually.
CONTRACT/AGREEMENT CHANGES: Amendment to the Health Plan Document to be
presented at following BOCC meeting if Item is approved.
STAFF RECOMMENDATIONS: Based upon the actuary of excess cost staff recommends
withdrawal of the previous recommendation to allow employees to waive the County's group
health insurance benefits.
TOTAL COST: est. between $200,000 - $400,000 BUDGETED: Yes No x
COST TO COUNTY: N/A SOURCE OF FUNDS: N/A
REVENUE PRODUCING: Yes No x AMOUNT PER MONTH Year
APPROVED BY: County Atty OMB/Purchasing Risk Management _
DOCUMENTATION:
DISPOSITION:
Revised 8/06
Included X Not Required
AGENDA ITEM #
Gallagher Benefit Services, Inc. --
November 6, 2006 A Subsidiary of Arthur J. Gallagher & Co.
Ms. Maria Z. Fernandez
Monroe County Group Insurance Administrator
1100 Simonton St., Room 2-268
Key West, FL 33040
Re: Impact of Allowing Employees to Opt Out of Medical Plan
Dear Maria:
As you requested, I analyzed the financial impact on the County's health plan of allowing
employees to opt out of the plan, Using the assumptions set out below, I have concluded
that allowing employees to opt out poses a financial risk to the plan that I estimate to be
between $200,000 and $400,000 annually. My best estimate is that is would be closer to
$200,000 than $400,000.
Key Assumptions
In conducting the analysis, I made the following key assumptions;
• There would be no financial incentive for employees to opt out. The County will not
be offering any cash or opt out credit.
• The only employees likely to take advantage of this offer would be those with single
coverage. An employee who is already paying to cover one or more dependents is
unlikely to drop their coverage if there is no financial incentive to do so.
When given this option, very few employees would elect to opt out. Since a single
employee does not pay anything for this coverage today, opting out will appeal only
to that group that has what they consider to be better coverage at little or no cost from
another source. In most cases, even those employees are better off staying in the
County plan and having their preferred coverage be secondary. I expect that when
faced with the decision, most will elect to remain with the County's plan.
Results
Using these assumptions, I ran a number of scenarios assuming different levels of
employees opting out, and using different assumptions about the health of those
employees. The usual danger with allowing or encouraging employees to opt out is that
the healthy are far more likely to leave than the sick, so you wind up with a remaining
risk pool that is, on average, more costly. In the County's case, we have an additional
risk in that the current Department rate of $790 per month used to fund the plan is greater
One Boca Place
2255 Glades Road, Suite 400 E
Boca Raton, FL 33431
561.996.6706
Fax 561.996.6708
www.ajg.ccm
than the average cost of a single employee, which I estimate to be $685 per month.
Under this funding structure, even if the employees who opt out have "average" costs, the
plan will lose more in funding than it will gain in reduced costs.
With no cash benefit for opting out, I don't see much of an incentive for even healthy
employees to leave. If they don't currently pay anything, and they don't stand to get
anything in return for giving up their coverage, even the healthy have nothing to gain by
leaving the plan. The only real reason I see for anyone to drop the coverage is to avoid
the hassle of having to deal with two insurance plans if their other available coverage is
perceived to be richer. Despite this, I ran some scenarios that assumed those opting out
were substantially healthier than average to see how that would affect the plan.
In terms of annual plan cost, letting employees leave the plan can only result in a
decrease, since you aren't giving up any employee contributions, and even if they have
no claims you would at least save the fixed costs associated with them. If it were the
healthier employees who leave, however, you would wind up with inadequate funding
rates since you would see an increase in the average cost for the lives remaining in the
plan. My best guess is that the average cost per employee would increase by 2% to 3%,
and that would be the extent of the under funding. Under some of the scenarios I ran, it
could go as high as 5% to 6%, but I really don't believe the combination of opt out
percentage and assumed health status of those opting out that went into those scenarios
are realistic.
My best guess is that approximately 50 employees would elect to drop their coverage.
Based on the current $790 department rate, that would result in a loss of revenue of
$474,000 per year, Depending on the actual health status of the 50 lives, I expect the
claim cost reduction would be between $100,000 and $200,000. Even with the fixed
costs savings, the net loss to the plan would be between $250,000 and $350,000.
Other Considerations
It is possible that more than 50 employees would opt out of the plan, but I would be
surprised if the final total was much higher, I expect that is something that seems like a
good idea to the employees until they actually have to make the decision to leave the
plan. If the number is higher, the resulting cost to the plan will be potentially greater,
although I expect that the marginal cost per employee will decrease as the number of
lives opting out increases.
Another potential risk is the possibility that some employees may opt out of the plan for
now, but elect to return to the plan if they run into large medical expenses in the future.
At that point, the County plan would once again be primary for them. It is difficult to
quantify the potential long-term risk of this type of selection, but it is another thing to
keep in mind.
Offsetting some of this risk, it is possible that some of the lives that would opt out would
be older (and therefore more costly) than the average, since the source of alternate
coverage may be related to long-term service with another employer. I think it is also
possible that any employee willing to pay for another coverage because it is perceived to
be richer than their current free coverage may also be more likely to be a higher than
average user of the plan. These factors influenced my choice of morbidity assumptions
related to the lives opting out of the plan.
Overall, Maria, I do see some risk to the County in letting employees opt out of the plan,
even though I believe that the number of employees that ultimately opt out would be
relatively small. I expect the lost revenue based on the reduced enrollment would exceed
the reduce claim and fixed costs by between $200,000 and $400,000 annually. The
County would have to raise the Department rate, the employee contributions, or some
combination of both, to make up this shortfall.
PIease let me know if you have any questions about these findings.
Sincerely
Glen R. Volk, A, AAA
Vice President & Consulting Actuary
cc: Teresa Aguiar