Item C25BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: May 18, 2011
Bulk Item: Yes X No
Division: Employee Services
Department: Employee Benefits
Staff Contact Person/Phone #: Teresa Aguiar, Ext. 4448 or
Cynthia Hall, 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 participate in group insurance benefits
(life insurance, vision and dental) if the participants opt out of self -insured health insurance.
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: $0 INDIRECT COST: BUDGETED: Yes X No
DIFFERENTIAL OF LOCAL PREFERENCE:
COST TO COUNTY: N/A SOURCE OF FUNDS:
REVENUE PRODUCING: Yes — No X AMPUNT PER MONTH Year
pi
APPROVED BY: County Atty _ OMB/Purlasing Risk Management
DOCUMENTATION:
DISPOSITION:
Revised 7/09
Included Not Required
AGENDA ITEM #
OUNTYMONROE
KEY WEST FLORIDA 33040
(305)294-4641
Monroe County
Board of County Commissioners
Office of the County Administrator
The Historic Gato Cigar Factory
1100 Simonton Street, Suite 205
Key West, FL 33040
(305) 292-4441 — Phone
(305) 292-4544 - Fax
Date
Attorney General
Department of Legal Affairs
The Capital PLOT
Tallahassee, FL 32399-1050
_
BOARD OF COUNTY COMMISSIONERS
Mayor Heather Carruthers, District 3
Mayor Pro Tem David Rice, District 4
j
Kim Wigington, District 1
George Neugent, District 2
s 61 n,A
Sylvia 3. Murphy, District S
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
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 are 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.
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?
BRIEF ANSWERS
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 "or" 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 add 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. 112.08(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 health insurance" to include self -insured plans. "The terms
`policy', `insurance policy,' `health insurance policy,' `group health policy,' and `group
health insurance policy' include plans of self-insurance proving health insurance
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. Petersburg
Bank and Trust Co. a 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 112.0801. 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. See 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 group 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 in group 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."
Page 1 of 2
Isabel Desantis
From: "Frederick -Debbie" < Frederick- Debbie@MonroeCounty-FL.Gov>
To: "County Commissioners and Aides" <County_Commisioners@MonroeCounty-FL.Gov>
Cc: <idesantis@monroe-clerk.com>; "Aguiar-Teresa" <Aguiar-Teresa@MonroeCounty-FL.Gov>
Sent: Monday, May 16, 2011 10:24 AM
Subject: F"': Employee Life Insurance Policy -Item C-25
Please review the below email that I received from former Commissioner Spehar. Since she can not be at the
BOCC meeting this week, she asked that you read the below request from her. This item is on the agenda this
week to get approval for an Attorney General's opinion on whether or not we can separate our benefits.
Deputy County Administrator
The Historic Gato Cigar Factory
1100 Simonton Street, Suite 2-205
Key West, Florida 3304
Office 305-292-4441
Fax 305-292-4544
frederick-debbie (Dmo_ nroecoun_t -fy I.gov
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From: Dixie McCarty [mailto:dixiemccarty@gmail.com]
Sent: Sunday, May 15, 2011 6:36 PM
To: Frederick -Debbie
Cc: Dixie Mc Carty
Subject: Employee Life Insurance Policy -Item C-25
Dear Debbie,
Thank you for the telephone message and I am sorry that I was not in to speak with you.
I would appreciate it if you would please read this email to the Commissioners on May 18, regarding Item C-25.
I am thanking you in advance for the time that you have given me regarding this issue because it is very important to
me.
Honorable Commissioners,
Thank you for allowing my message to be heard in this manner as I am unable to speak before you in person.
Upon leaving employment with Monroe County, I completed the paperwork for the State of Fla Pension Plan and
Monroe County for my benefits package. I received a letter from the Monroe County 11/2/2008, confirming my
eligibility for health, prescription and life insurance. They also notified me that since I was over 65, Medicare would
be my primary insurance coverage and Monroe County was secondary.
I also received a form stating that I relinquish both health and retirement ben its. I had no intention of canceling my
life insurance benefits which is part of my retirement benefits that I paid for during ny years of employment so I
did not sign the form. I sent in the monthly payment requested and than it was automatically deducted from my FRS
check each month thereafter.
Due to the fact that remembering the burden of Retiree 's Insurance before you each budget year and, the fact that I had
5/16/2011
Page 2 of 2
moved "Out of Network", I chose a plan which is more geographically beneficial which I pay for myself. But because
of my age and my fixed income, I cannot afford the premiums for life insurance.
Commissioners, I voluntarily relinquished my hospitalization, which saves Monroe County money. I understand that
due to my age life insurance coverage drops to $10,000 but, at no time did I consider giving away my life insurance
benefit which I feel that I am entitled to.
I ask for your consideration in hearing my plea to maintain my life insurance.
Thank you,
Dixie McCarty
239/541-8065
5/16/2011