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Item I4BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY Meeting Date: March 21, 2012 Division: Employee Services Bulk Item: Yes _ No X Department: Employee Benefits Staff Contact Person/Phone #: Teresa AgWar X4458 AGENDA ITEM WORDING: Approval to change the department billing rate from $790 per month to $320 per month for employees and elected officials who choose to opt out of the medical and prescription benefits plan to become effective May 1, 2012. ITEM BACKGROUND: In May, 2011, the County asked the Attorney General to review the current practice of requiring the participation of all employees and elected officials to participate in the self - insured medical and prescription program. The Attorney General response was that participation must be voluntary. Even though the County will no longer provide medical and prescription coverage for these employees, the self -insured plan cannot afford to lose the entire $790 per employee per month funding. $320 is the actuarial estimate that is need to continue to pay for the County's subsidy for dependent and retiree coverage, administrative fees, in addition to the employee's and elected official's continued coverage for life insurance and accidental death & dismemberment, and EAP Provider fees. PREVIOUS RELEVANT BOCC ACTION: None CONTRACT/AGREEMENT CHANGES: None STAFF RECOMMENDATIONS: Approval TOTAL COST: None INDIRECT COST: BUDGETED: Yes No DIFFERENTIAL OF LOCAL PREFERENCE: COST TO COUNTY: None SOURCE OF FUNDS: REVENUE PRODUCING: Yes _ No X AMPUNT PER MONTH Year APPROVED BY: County A. OMB/PurC asing Risk Management DOCUMENTATION: DISPOSITION: Revised 7/09 Included X Not Required. AGENDA ITEM # C UNTY jo'�MONROE KEY WESTLORIDA 33040 (305)294-4641 Office of the Employee Services Division Director The Historic Gato Cigar Factory 1100 Simonton Strcct, Suite 268 Key West, FL 33o4o (305) 292-4458 — Phone (305) 292-4564 - Fax TO: Board of County Commissioners FROM: Teresa E. Aguiar, Employee Services Director DATE: February 27, 2012 SUBJ: Opt Out — Health Insurance & New Employee Health Insurance Premium Background: BOARD OF COUNTY COMMISSIONERS Mayor David Rice, District 4 Mayor Pro Tem Klm Wigington, District 1 George Neugent, District 2 Heather Carruthers, District 3 Sylvia I Murphy, District 5 The County's practice in regards to health insurance (including the pharmacy benefits program) has always been that as a condition of employment new employees and elected officials must enroll in the County's health insurance even if the individual wished not to use it or had other coverage available. Employee coverage also includes life insurance and accidental death & dismemberment. These benefits have been provided at no cost to the employee. In May 2011, the County asked the Attorney General for an opinion regarding (a) whether the County is allowed to require participation in the self-insurance medical and prescription program, and b) whether we can allow participation in the optional group insurance programs (vision, dental, life, and accidental death & dismemberment), if the employee/elected official/retiree chose not to participate in the medical and prescription benefits portion of the program. Section 627.4235(3)(a) states that the benefits of a plan that covers an individual as an employee must be considered before the benefits of a plan covering the individual as a dependent. The County believes that there may be some circumstances in which an employee may nonetheless prefer to be covered by a plan in which the employee is a dependent, rather than the County's plan, in which case the employee may wish to opt out of the County's health plan (Plan). The Attorney General's response was that (a) participation in the County's health insurance plan must be voluntary, and (b) that we can, if we chose to do so, allow participation in the optional group insurance programs even if the individual did not also participate in the medical and prescription benefits portion of the program. Page 2 of 3 March 21, 2012 BOCC Meeting Opt Out — charge premium Currently county departments and constitutional officers are billed $790 per month to pay for the individual's participation in the program. The $790 rate covers employee/elected official's medical and pharmacy claims and administrative fees. It also subsidizes dependent and retiree coverage. Life insurance and accidental death & dismemberment, and Employee Assistance Plan (EAP) provider fees are also paid for from the $790 rate. At this time, staff is requesting that the Board of County Commissioners approve the following: 1. Employees and elected officials hired on or after May 1, 2012 into a position that makes him/her newly eligible for health insurance (25+ hpw), will be charged a monthly premium of $50.00 if the individual chooses to enroll in the County's self-insurance health plan. The $50.00 will be adjusted accordingly and paid by payroll deduction each pay day. Current employees and elected officials enrolled as of April 30, 2012 will not be charged a premium. A special open enrollment will be held and if a current employee/elected official chooses to opt -out of the health insurance and in the future decides to enroll back into the program, he/she will be treated as newly eligible and will be required to pay the same premium as employees/elected officials hired on or after May 1, 2012. 2. Departments who have employees/elected officials opt out of the health plan will no longer be charged the full $790 rate for that individual, but will be charged a lesser rate of $320 a month. This is the actuarial estimate that is needed to pay for the County's subsidy for dependent and retiree coverage, administrative fees, in addition to the individual's continued coverage for life insurance and accidental death & dismemberment, and EAP Provider fees. 3. Retirees, if opting out of the County's health plan, will be allowed to maintain life insurance at a premium of $11.00 per month. It is not recommended that employees/elected officials be charged a premium for the life insurance and accidental death & dismemberment benefit. The County currently pays for the premium for employees and elected officials (as part of the $790 billed department rate) and the insurance policy requires 100% participation. If we charge employees/elected officials a premium for life insurance and accidental death & dismemberment coverage and allow them to opt out, the insurance policy would have to be re -written. Generally, the premium is higher on a contributory insurance policy. It is therefore suggested that the next time the life insurance and accidental death & dismemberment policy is distributed for RFP, we ask for a contributory quote in addition to the current non-contributory quote and bring the proposals to the BOCC for consideration. It is impossible to predict the exact number of employees who will opt out of the Plan and predict exactly how many employees will contribute to the plan in any given year. We therefore had the County's Actuary Consultant model and analyze the opting out issue along with charging a premium to future hires and how-these-changes=would-impae the Plarr=Overall the--e ected nehi xp mgact-is4irv-orab�le __,";.... _ _.. Page 3 of 3 March 21, 2012 BOCC Meeting Opt Out — charge premium If the BOCC approves these recommendations, the timeline for implementation will be as follows: March 21, 2012 BOCC Approval March 26, 2012 — April 6, 2012 Special Open Enrollment only to allow employees/elected officials to opt out of the health insurance program *Employees/Elected officials will be eligible at any time during the year after the close of this special enrollment to opt out of the Plan if they don't current!y pay a premium. May 1, 2012 and after Employees/elected officials first eligible to enroll in the health insurance program on or after 5/1/2012 will pay $50.00 per month premium if choosing to enroll in the health insurance program. May 1, 2012 and after Departments charged the billing rate of $320 per month for employees/elected officials who opt out of the health insurance program May 1, 2012 and after Employees/Elected Officials enrolled in health insurance before May 1, 2012 who choose to opt out of the health insurance program and re -enroll at a later date, will be charged the same premium as those employees/elected officials eligible and enrolled on or after May 1, 2012 ($50.00 per month May 1, 2012 and after Retirees choosing not to enroll in the health insurance program may choose to keep the life insurance at a premium of $11.00 per month If you have any questions, please contact me at 292-4458. Encl: Agenda Item and Backup — Attorney General Request for Opinion Attorney General Response Letter from Consulting Actuary dated February 1, 2012 BOARD OF COUNTY COMMISSIONERS AGENDA ITEM SUMMARY Meeting Date:_ May 18.2011 Bulk item: Yes X No, Division: Employee Services Department:_Employ Ben fits Staff Contact Person/Phone #: Teresa A¢uiar, Ext. 4448 or Cynthia Hatt_ x 3174 AGENDA ITEM WORDING: Approval to request Attorney General opinion regarding (1) whether the County will be required to allow employees and elected officials to opt out of its self -insured health insurance plan whether or not the County requires employees to pay premiums for the benefits, and (2) whether the County will be required to allow plan Participants to (life insurance, vision and dental) if the participants opt out of self -insured health insurance. icipate in group nce benefits ITEM BACKGROUND: The County wishes to know whether it must allow its employees to opt out of the self -insured health plan. PREVIOUS RELEVANT BOCC ACTION: None. CONTRACT/AGREEMENT CHANGES: None. STAFF RECOMMENDATIONS: Approval TOTAL COST:10 INDIRECT COST: BUDGETED: Yes _&_No DIFFERENTIAL OF LOCAL PREFERENCE: COST TO COUNTY: N/A SOURCE OF FUNDS: REVENUE PRODUCING: Yes _ No X AM`pUNT PER MONTH Year PjG` �V APPROVED BY: Cou nty Atty — OMB/Purl(as:ng Risk Management DOCUMENTATION: Included DISPOSITION: Revised 7/09 Not Required AGENDA ITEM # BOARD OF COUNTY COMMIMIDNERS OUNTYMON ROE ..,/� Mayor Heather Carruthers, District 3 Mayor Pro Tern David vice. District 4 Kim Wigington, District 1 KEY WEST FLOFADA 33000 t305r 2944wr George Neugent; District 2 Sylvia J. Murphy, DIstrIGt 5 Monroe County Board of County Commissioners Office of the County Administrator The Historic Gato Cigar Factory's ,. 1100 Simonton Street, Suite 205 Key West, FL 33040�,� (303) 2924441 — Phone ..� (305) 2924544 - Fax Date Attorney General Department of Legal Affairs The Capital PLO Tallahassee, FL 32399-1050 Pursuant to Section 16.01(3), F.S., on behalf of the Monroe County Board of County Commissioners, I am writing to request that your office provide an Attorney General Opinion on the following questions: 1. Does Monroe County have the authority to mandate that its employees take our insurance upon employment? 2. Can we and/or should we allow employees or retirees to choose to keep, for instance, life insurance if they decide not to have the health insurance? Enclosed herewith is a memorandum of law setting forth the County's legal analysis of the questions Presented. Also attached is a copy of the minutes of the Board of County Commissioners showing that a majority of the Board requested the formal opinion. We appreciate your assistance on this matter. Should you have any questions, or if this office can be of assistance as you review the materials, please feel free to contact either myself or Assistant County Attorney Cynthia L. Hall at (305) 292-3470. Sincerely, Roman Gastesi County Administrator MEMORANDUM OF LAW TO: Office of the Attorney General of Florida Hon. Pam Bondi FROM: Cynthia Hall, Assistant County Attorney THRU: Roman Gastesi, County Administrator DATE: May _, 2011 SUBJECT: Request for Opinion of the Attorney General re: Employee Opt -Out of Self -Insurance and Group Insurance t. INTRODUCTION AND BACKGROUND FACTS Monroe County, a non -charter county ("County") , offers an insurance benefits program to a total of approximately 2,226 persons consisting of County employees, employees of constitutional officers, retirees, dependents and spouses. Monroe County currently requires that all of its employees and elected officials participate in a self -insured health insurance plan, which includes a pharmacy benefit component. Employees and elected officials are not charged a premium for the health insurance for themselves. Retirees have the option of continuing in the plan following retirement. Employees, officials and retirees are given the option of enrolling spouses and dependents in the plan, and if they do so, they pay a premium for the dependents and/or spouses. The funds necessary for the self-insurance health insurance and pharmacy benefits programs come from a combination of ad valorem taxes (departmental contributions) and premiums paid by employees (only for dependent coverage) and retirees. The department or constitutional officer employing the worker contributes $790 per employee per month to fund the health insurance plan, including the pharmacy benefit component. Claims and administrative costs are paid using these funds. The other insurance programs offered by the County as employment benefits are group insurance plans. These include vision, dental, and accidental death & dismemberment. For vision and dental plans, the employee, official or retiree can elect to participate, in which case the employee or retiree pays 100% of the premium. The County contracts with the insurance carrier to provide the insurance. The employee, elected official or retiree can also add spouses or dependents, and their premiums would be paid in full by the employee or retiree. A nominal life insurance policy and accidental death & dismemberment policy are also provided to employees, officials and retirees at no charge. Claims made by the plan participants arc paid by the carriers. Employees, officials and retirees may change their participation in all group insurance programs during one opt- in/opt-out period each year. Whereas participation in the self -insured plan (health insurance, with the pharmacy benefit component) is mandatory, participation in the group insurance plans (vision, dental) is voluntary. Theoretically participation in the life insurance and accidental death & dismemberment programs is also optional, but because it is provided at no cost to the employee, constitutional officer and retiree, no individual has attempted to opt out. As a result of economic pressure, the County is considering whether it may in the future charge a premium to employees and elected officials to participate in the health insurance program, and if so, whether it may continue to require its employees and elected officials to participate in the health insurance plan. Put another way, the County is wondering whether it must allow employees and elected officials to opt out of the health insurance plan if the County begins to charge the employees premiums. II. QUESTIONS PRESENTED The two questions being asked by the County are as follows: 1. Is the County required to allow its employees and elected officials to opt out of its self -insured health insurance program whether a premium is charged or not? 2. If the answer is no, then must the County allow employees, elected officials and retirees the option to participate in group insurance programs if the individuals elect not to participate in the self-insurance programs? I. BRIEFANSWERS 1. The County is not required to allow its employees to opt out of its insurance plans which are self -insured, although it may do so.. 2. The language in Section 112.0801(1), F.S. does not require the County to allow employees (and retirees) to opt out of group insurance programs. It appears, because of the word ` oe, in Section 112.0801(1), that an employee or retiree should be able to keep a group insurance program even if the County allows plan participants to opt out of self-insurance and an employee or retiree does in fact opt out of the self-insurance plan. APPLICABLE LAW, ANALYSIS, AND CONCLUSION A. Historical Background to Sections 112.08 through 112.14, F.S. The authority for a non -charter county such as Monroe County to provide group insurance for its employees and officers flows from Sections 112.08 through 112.14 of the Florida Statutes. Sections 112.08, .09, .10, .11, .12, .13 and .14 of the Florida Statutes were first passed by the Florida legislature in 1941. As worded at the time, the sections only included a reference to "group insurance." The statutory language did not include any mention of "self insurance." Section 112.08. F.S. was significantly amended in 1976, via Ch. 76-208. At the time, section 112.08 essentially consisted only of what is now subsection (2)(a) of the current statute. One of the most significant changes effected by Ch. 76-208 was to ddd the following two sentences at the end of the statute as it then existed: "Each county... may self -insure any plan for health, accident and hospitalization coverage subject to approval based on actuarial soundness by the department of insurance. Each shall contract with an insurance company or professional administrator qualified and approved by the department of insurance to administer such plan. " F.S. I I2.08(2)(b), which was added subsequently, goes on to state that in order to have a self -insured plan, each local government unit must initially submit its plan to the Office of Insurance Regulation for approval together with a certificate from an actuary attesting to the plan's actuarial soundness, and thereafter must receive annual approval. Section 112.0801, F.S., which governs the availability of insurance plans for retirees, was added by the Florida legislature in 1976. As initially enacted, the section only stated that retirees must be able to participate in group insurance. In 1981, via SB 189, which became Ch. 81-103, the Florida legislature added the words "or self-insurance plan." The words remain there today. In pertinent part, Section 112.0801(1) states: "Any ... county ... which provides life, health, accident, hospitalization, or annuity insurance, or all of any kinds of such insurance, for its officers and employees and their dependents upon a group insurance plan or self-insurance plan shall allow all former personnel who have retired ... and their eligible dependents, the option of continuing to participate in such group insurance plan or self-insurance plan." Sections 112.11 and 112.14 have been amended twice since 1941. In 1972, via Ch. 72- 338 (attached), the legislature amended the sections to add the word "officer" in addition to employees, to make it clear that officers were also entitled to withdraw voluntarily From group insurance programs. In 1995, the sections were amended again to make them gender -neutral. In 1985, the legislature added sections 112.0804 (dealing with Medicare supplement policies for retirees) and 112.0805 (stating that employers who provide insurance coverage under 112.0801 must notify employees who retire of their eligibility to continue in either group insurance or self-insurance). Terminology The terms "group insurance" and "self-insurance" have never been defined in Chapter 112. Section 627.652, F.S., which is within the chapter on insurance rates and contracts, defines the term "group hgiM insurance" to include self -insured plans. "The terms 'policy', 'insurance policy,' `health insurance olio health insurance policy' include plans of self-insurance proving health insuran e,group benefits." 627.652(2), F.S. However, by its terms, the definition in section 627.652 is only applicable to Ch. 627, part IV, because the section begins with the words "As used in this part . . . ." In any event, by its language, section 627.652 only applies to health insurance, not any other form of insurance offered by the County as an employment benefit (e.g., life insurance, accidental death & dismemberment). Analysis "The most basic rule of statutory construction is, of course, that when a statute is plain on its face its meaning should not be expanded by judicial interpretation." St. Petersbuig Bank and Trust Co. v Hamm, 414 So.2d 1071 (Fla. 1982). In this instance, the Florida legislature could have included the words "self-insurance" in sections 112.11 and 112.14 (in order to allow employees to opt out of self -insured plans) had it wished to do so., on at least three occasions. Clearly, the legislature could have done so in 1976, when it was amending 112.08 to add the sentences giving counties to the right to engage in self- insurance plans in addition to having a group insurance plan, and also in 1976 when it was adding section 112.080 L Likewise, the legislature could have added the language in 1985, when it was adding section 112.0805, which itself specifically includes a reference to self-insurance in addition to group insurance. Thus, in using the term "self-insurance" in certain locations, and not others, the Florida legislature appears to have intended to create a distinction between opt -out provisions applied to group insurance plans as compared to self-insurance plans. This conclusion is buttressed by the fact that the amendment to F.S. 112.08 (adding the two sentences giving local entities the ability to self -insure) in 1976 in fact occurred one year after the Attorney General issued an opinion, opining that under Section 112.08 as it existed in 1975, a local school district could not offer a self-insurance plan to its employees. Tee AGO 75-256. The 1976 change to section 112.08 appears to have been prompted by this AGO. When the Florida legislature amended section 112.08 the following year to give local governments the authority to offer self-insurance in addition to group insurance, it could also have amended 112.11 and 112.14 to allow the opt -out requirements to apply to self-insurance as well as group insurance. It did not. Because the Florida legislature did not do so, the inescapable conclusion is that sections 112.11 and 112.14 mean what they say: That participation in group insurance plans is voluntary, and a retiree can withdraw from the grouR insurance plan at any time. Conversely, the fact that there is no language referring to self-insurance plans means that counties are free either to allow employees to opt out or not, but are not required to allow employees to opt out. There is no indication in the statute that this conclusion is dependent upon whether employees are receiving health insurance under a self -insured plan for free (as is the case now), or are being charged a premium. Likewise, the plain statutory language appears to state that employees have the option of staying in group programs if they withdraw from self -insured plans. As mentioned above, F.S. 112.0801(1) states that any county "shall allow all former personnel who have retired ... the option of continuing to participate in such group insurance plan or self- insurance plan" (emphasis added). The use of the word ` or" is significant. Likewise, language in sections 112.11 and 112.14, giving a means of opting out of group insurance, but not self -insured plans suggests that a current employee could opt out of the group insurance programs even if the employee was not allowed to opt out of the self -insured plan. Conversely, the fact that there is no language prohibiting a county from allowing its employees and retirees to opt out of a self-insurance plan is also significant, for the same reason. The Florida legislature could have added this language, and did not. This appears to be a situation not yet addressed directly by Florida courts. Other Attorney General opinions likewise are helpful, though somewhat distinguishable on the facts. For example, in AGO 2008-0, the Attorney General concluded that the City of Live Oak could allow its officers and employees to opt out of a group insurance plan. However, (a) the facts involved only group insurance, not self-insurance, and (b) the opinion was applied to a city, not a non -charter county. In AGO 94-52, the Attorney General opined that a city could permit an employee of the city's retirement system (possibly a separate corporation) to participate in the city's self-insurance program if the city determined that it served a public purpose. However, again, this opinion applied to a city, not a non -charter county. Cities have more latitude to take actions than non -charter counties by virtue of their status as municipal corporations. Conclusions There appears to be no statutory language which requires the County to allow its employees to opt out of self -insured health insurance plans, even if they are being charged a premium for the benefit. Sections 112.11 and 112.14, F.S, do say that employee participation ingrout) insurance shall be "entirely voluntary" at all times. However, it appears that when the Florida legislature used the term "group insurance," it did so deliberately — and it was distinguishing between group insurance and self -insured plans. Therefore, Sections 112.11 and 112.14, F.S. do not appear to require the County to allow its employees to opt out of the County's self -insured plan, but would require the County to allow employees to opt out of any group insurance plans. Conversely, nothing in Chapter 112 prevents the County from allowing its employees to Opt out of the County's self-insurance plans. In light of the answer to the first question, the second question is moot. However, it is helpful to point out that the County is required to allow at least retirees to keep group insurance programs (e.g., life insurance) even if this group of employees elects not to participate in the self -insured health insurance plan in light of the statutory language in F.S. 112.0801(1), which states that any county "shall allow all former personnel who have retired ... the option of continuing to participate in such group insurance plan or self-insurance plan." f t FAX COVER SHEET OFFICE OF THE ATTORNEY GENERAL OPIIVIONS DIVISION THE CAPITOL, PL-01 TAL.LAHASSEE, FL 32399-1060 (850) 245-0158 FAX: (860) 922-3969 0-1t ) JCL 7reresaI-- - m(. o.k.. L'o Date: September 21, 2011 To: Roman Gestesl Fax 305-292-4544 From: Shelia R. Hail Pages: 6, not including this cover sheet Subject Formal Opinion — self -Insured health insurance program COMMENTS: Attached Is AGO 2011-18. If this office can be of further assistance, please do not hesitate to contact us. This office now provides access to formal Attorney General Opinions dating back to 1974 through a searchable database on the Attorney General's Internet home page at: ft:/Imlfto-rldaleaal.com orldaleaal.com STATE OF FLORIDA PAM BONDI ATTORNEY GENERAL September 21, 2011 11-18 Mr. Roman Gastesl Monroe County Administrator The Historic Gato Cigar Factory 1100 Simonton Street, Suite 205 Key West, Florida 33040 Dear Mr. Gastesi: You have asked substantially the following questions: I. May Monroe County require its employees and elected officials to participate in its self -Insured health insurance program, regardless of whether a premium Is charged? 2. If the answer is yes, then must the County allow employees, elected officials, and retirees the option to participate In group Insurance programs (offering coverage for dental, vision, and accidental death or dismemberment) if the Individuals elect not to participate In the self - Insurance program? In sum: 1. Monroe County may not require its employees and elected ofWalo to participate In its self -Insured health insurance program. 2. There Is no statutory requirement that Monroe County must allow employees, elected officials, and retirees to participate In optional group Insurance programs, such as dental, vision, and accidental death or dismemberment plans, offered to county employees and elected officials when the Individuals elect not to participate in the county's self -Insured group program. You State that Monroe County currently requires all employees and elected officials to participate in a self -Insured health Insurance plan which also has pharmacy e Bdk,1JnPLQYea&artdAIBCAd.offi+cla m----- chetped a.premiurnA"Ag eeut - P"" 7R* Capps!, 7bllahats", Florida 3239Q-1050, AlWhone (850) 4I4-3300 Fax (850) 4s7.2s64 Mr. Roman Gasteal Page Two contributing $790.00 monthly per employee for participation In the plan. The county provides nominal life Insurance and accidental death and dismemberment plans at no charge to Its employees and elected officials. Retirees have the option of continuing In the plan at their own expense. All participants have the option to enroll spouses and dependents In the plan at an additional premium cost paid by the employee, elected official, or retiree. Funding for the program and pharmacy benefits is derived from ad valorem taxes and premiums collected for coverage of retirees, spouses, and dependents. The county offers optional Insurance plans for vision, dental, and accidental death and dismemberment, available at the expense of employees or elected officials. While the self-insurance plan Is mandatory, employees and elected officials may change their participation in all other group Insurance programs during an opt-In/opt-out period each year. Question One to: Section 112.08(2)(a), Florida Statutes, authorizes every local governmental unit (P'jrovide and pay out of its available funds for all or part of the premium for life, health, acddent, hospitalization, legal expense, or annuity Insurance, or all or any kinds of such insurance, for the officers and employees of the local governmental unit and for health, accident, hospitalization, and legal expense insurance for the dependents of such officers and employees upon s group Insurance plan and, to that end, to enter into contracts with Insurance companies or professional administrators to provide such insurance. , .. Each local govemmental unit may soNnsure any plan for health, accident, and hospitalization coverage or enter Into a risk management consortium to provide such coverage, subject to approval based on actuarial soundness by the Office of Insurance Regulation; and each shall contract with an insurance company or professional administrator qualified and approved by the office to administer such a plan. (e.s.) The authority for local govemmental units to provide group insurance to their employees originated In 1941.' Officers were added as eligible participants in 1972? As originally enacted, the act stated that participation In such group Insurance by any I See Ch. 20862, Laws of Fla, (1941), authorizing all governmental units In Florida to set up group Insurance plane for employees ' Bea.Ch.- o z'wisi.Lawa of Flar4187? Mr. Roman Gestesi Page Three employee "shall be entirely voluntary at all Urnes.14 The not further required a written request thorn the public employee before the employer could deduct the costs of premiums from the employee's wages.4 While the language in section 112.08, Florida Statutes, was substantially reworded in 1978, the only significant alteration was to provide local governing units authority to "self -insure any plan for health, accident and hospitalization coverage[.j'a The provisions In the act recognizing participation Is voluntary and the requirement of written authorization from the officer or employee fcr deductions to be made from his or her wages for premiums present In the original act remain Intact today and are contained In section 112.11. Florida Statutes, which states: The participation In such group insurance by any officer or employee shall be entirely voluntary at all times. Any officer or employee may, upon any payday, withdraw or retire from such group Insurance plan, upon giving the employer written notice thereof and directing the discontinuance of deductions from wages In payment of such premiums. (e.a.) The plain language of the statute relates to voluntary participation In "group Insurance." not a particular plan that may be provided through an insurance company, a professional administrator, or self-insurance. The term "group Insurance plan" Is not defined for purposes of the act, but the Intent of the Legislature in the enactment of the law is clearly stated In section 112.14, Florida Statutes: It Is hereby declared to be the purpose and Intent of this law to make available upon a voluntary participation basis to the several officers and employees aforesaid. the economics, protection and benefits of group insurance not available to each officer and employee as an Individual. It is also the purpose and Intent of this law to provide authority for the payment of premiums or changes for group Insurance for county officers whose compensation is fixed by chapter 1451n addition to the compensation provided in chapter 145. (e.s.) It is well settledthatlegislative Intent Is the polestar that guides a courts statutory construction analysis. While the authorized means for a local government to provide group insurance were expanded to Include self-insurance or participation In a risk Section 4, Ch 20852, Lem of Fla. (1941). ctlon 3, Ch. 20852, Laws of Fla. (1941). Sw s. I. Ch. 76-208, Laws of Fla. (1978), subota ntlally rewording sectlon 112.08, Fla Slat., tons resent form allowing local governmental units to self -Insure Its group Insurance plan. See Stele V. We, 789 So. 2d 288, 292 (Fla, 2001); Mrl aughlln v. Sta INS).te, 721 50. 2d 1170, 1172 (Fla, Mr. Roman Gastesi Page Four management consortium? there Is nothing In the language of the statute or the legislative history of section 112.06, Florida Statutes, to indicate a change In the Legislature's Intent that employees and officers voluntarily participate In the group Insurance offered by local governing units. Accordingly, it Is my opinion that Monroe County may not require Its officers and employees to participate in Its self -insured group health Insurance plan. Question Two As noted above, section 112.08, Florida Statutes, authorizes local governmental units to provide all or part of the premium for life, health, accident, hospitalization, legal expense, or annuity insurance, or "all or any kinds of such insurance" for their officers and employees. The governmental unit may also provide and pay for health, accident, hospitalization, and legal expense Insurance for the dependents of such officers and employees. In providing such Insurance, each local governmental unit "may determine the portion of the cost, If any, of such fund, plan, or program to be paid by officers or employees of the local governmental unit and fit the amounts b be paid by each such officer or employee as will best serve the public interest."° The discretionary authority for local governmental units to provide and pay for group Insurance, however, does not appear to carry with It an obligation to provide group Insurance, nor does it require the offering of additional types of insurance, such as optional insurance plans for vision, dental, and accidental death and dismemberment or require the county to allow participation by those who have opted out of the group insurances Section 112.0801, Florida Statutes, provides: Any state agency, county, municipality, special district, community college, or district school board which provides life, health, accident, hospitalization, or annuity Insurance, or all of any kinds of such insurance, for its officers and employees and their dependents upon a group Insurance plan or self-insurance plan shall allow all former personnel who retired before October 1, 1987, as well as those who refire on or after such date, and their eligible dependents, the option of continuing to participate In such group Insurance plan or self -Insurance plan. Retirees and their r See House Commwce Committee, Tape 1 of 2. Side 8, April 27,1976, reflecting that the purpose of authorizing local govnmmental units to self -fund group insurance Is to lower rates and allow local governmental unite to receive the Interest that Scones on the premiums paid Into the fund, rather then the grlvote Insurance company; further reiterating that the bill Is merely permissive, not mandatory. section 112.O0(3), Fla, Slat. Mr. Roman Oastesi Page Fire eligible dependents shall be offered the same health and hospitalization insurance coverage as is offered to active employees at a premium cost of no more than the premium cost applicable to active employees. For retired employees and their eligible dependents, the cost of continued participation may be paid by the employer or by the retired employees.. When a statute enumerates the things upon which It operates, it is ordinarily construed as excluding from Its operation all things not expressly mentloned.10 Thus, the Legislature In section 112.0801, Florida Statutes, has prescribed those instances In which a local governing unit is taquired to allow others than Its officers and employees, In this case retirees, to participate In a group Insurance plan offered by the unit, It Is beyond the authority of this office to read additional requirements Into the statute or to extend its application to other types of group insurance offered by a governmental unit." There Is nothing In sections 112.08 or 112.0801, Florida Statutes, nor has any other statutory provision been brought to my attention, requiring the county to allow participation In its optional dental, vision, and accidental death or dlsmemberment group plans by anyone other than those who are designated by the county as eligible to do so. While, as discussed in Question One, participation In the group insurance provided by the county Is voluntary, nothing in the appllcabie statutes mandates the types of Insurance which must be offered. Accordingly, it Is my opinion that Monroe County Is not required to allow employees, elected officials, and retirees to participate In optional group Insurance programs, such as dental, vision, and accldentai death or dismemberment plans, offered to county employees and elected officials, If the Individuals elect not to participate In the county's self -insured group program. Sincerely, ay.b6olk Pam Bondi Attorney General PBltels 10 See Thayer v, Sfft. 335 So. 2d 815, 817 (Fla. 1976) (enumeratlon of spex:lft items Implies the exclusion of othere not mentioned). 11 See, e.g., Board of County Commbobnem of Monroe County V. Department of CommunllyA/hht, SW So. 2d 240 (Fla. 3d DCA 1990) (In construing a statute, courts cannot atbibute to the leltlelature an intent beyond that expressed), Mr. Roman Gastesl Page Six RE: COUNTIES — INSURANCE — GROUP INSURANCE — ability of county to require participatIon In counts self -insured group insurance program. Be. 112.08,112.11, and 112.14, Fla. Stat. 4D. A Division of Gallagher Benefit Services, Inc. February 1.2012 Ms. Teresa Aguiar Division Director. Employee Services Division Monroe County Board of County Commissioners 1100 Simonton St. Key West, FL 33040 Re: Employee Health Plan Opt Out Analysis Dear Teresa: I thought it might be helpful to summarize the assumptions and findings of the analysis we prepared regarding the treatment of employees who opt out of the County health plan in the future. Our understanding is that the County is going to allow current enrollees and future hires to opt out of the health plan, and at the same time is considering charging a premium to future hires who elect to enroll in the plan but select single coverage. Currently, active employees do not contribute towards the cost of single coverage, and for current enrollees that would continue. Our analysis consisted of the following steps: • We estimated the % of existing enrollees with single coverage that would elect to opt out ofthe plan. We assumed those already covering dependents would not opt out. We assumed 5% would opt out, and that all of the opting out would take place in the first year. • We estimated the % of future hires that would elect either to opt out of the plan or to take single coverage under the plan. We looked at a range of alternatives for the % opting out since we have no historical data. • We projected the cumulative number of employees opting out over the next 3 years, assuming an annual turnover rate of 10% based on data from the County. • We Projected the value of employee contributions that would be charged to the new hires, using a premium of $50 per month in the first year with gradual increases thereafter. • We estimated the reduction in plan costs that would result from current and future employees opting out of the plan. This includes both claim costs and administrative fees. We assumed that employees who opt out of the plan will, on average, be 50% less costly than those who elect to take the coverage. • We estimated the loss of revenue to the plan that would result from the Board paying less than the current Department rate of $790 per employee per month for fi ture opt outs. We assumed that departments would continue to be charged $320 per employee per month for future opt outs, based on our estimate of the Portion of the current funding that goes to pay for items other than the cost of employee coverage. We modeled the impact that these changes would have on both the plan and the Board. The impact on the plan is a function of the reduced funding due to the loss of revenue for employee opting out offset by reduced plan costs for those same opt outs and by the premiums collected from future employees who take single coverage. We project a loss to the plan of approximately $100,000 in the first year, primarily because the loss of revenue is expected to exceed the reduction in expenses for the current enrollees who opt out. The results for future years depend on how many new hires are assumed to opt out. As morn lives are assumed to opt out, the loss associated with those lives increases (because their costs are assumed to be less than the funding that is lost) and the number of new hires from whom premium is collected decreases, so the results get worse. If 10 new hires opt out each year, the loss to the plan gradually falls, with a Yd year projected loss of $20,000. If20 new hires opt out each year, the loss is projected to stay flat at right around $100,000 per year, and if 30 new hires opt each year, the loss is expected to grow to $175,000 by the 3rd year. HeulthcaceAnal�t;eR mllvisioircrtattr[gherCnctervices', ��__55 = .. c.. Ga&n Rd., Ntc 400E, Roca Raton. 1-1.3343, PH: 561-998.6755 - FU%! 56-995.6708 Teresa Aguiar February 1, 2012 Page 2 We estimated the net gain/ (loss) to the Board by adding the net gain/ (loss) to the plan to the reduction in Board funding based on the reduced Departmental rate required for lives opting out. The logic here is that any gain or loss to the plan is ultimately a gain or loss to the Board, so the net impact to the Board is their reduction in funding plus whatever happens to the plan. For example, if the plan loses $50,000 because of the opt out provision, but the Board contributes $200,000 less, then the Board has really had a net benefit of $150,000. We project a first year benefit to the Board of approximately $200,000, and by year 3 we project a gain to the Board of between $400,000 and $600,000, depending on how many new hires opt out. The Board results improve as more lives are assumed to opt out since the reduction in the Department rate for opt outs more than offsets the additional loss to the plan. Overall, this is a "safe" approach and will generate moderate savings to the Board. We looked at other assumptions regarding the number of current and future employees opting out, and all of the scenarios produced at least some gain to the Board. Even if only the healthiest of employees opt out, we still expect a small gain to the Board, although the plan itself would experience larger losses. It ultimately comes down to the fact that covering fewer people can only result in a lower total cost, even if the average cost might go up if the opt outs consist of healthier lives. Combined with the premium that will be charged to future hires for single coverage, the net impact to the Board will be favorable under any set of assumptions we use. I believe this is a reasonable approach to dealing with the opt out issue. Let me know if you have any questions or need any additional information. Sincerely, V��%2� Glen R. Volk, FSA, MAAA Vice President tit Consulting Actuary ter-Benefitervices, nc, Healthcare Analytics r i h n k i n g o h e. d a division of f,allasher Benefit Service,-, Inc.