Item D1 BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: June 30, 2014 Division: Employee Services
Bulk Item: Yes No X Department: Employee Benefits
Staff Contact Person: Teresa Aguiar X4458
AGENDA ITEM WORDING: Discussion and direction to staff on recommendations for fiscal year
2015 (Option 1, 2 or 3) for County subsidies of employee and dependent health insurance premium
amounts and/or department rate changes from $790 per employee per month for various optional rate
changes to maintain adequate fund balance.
ITEM BACKGROUND: The County's Health Insurance Consultant, Gallagher Benefit Services,
provides annual projected estimates on the health of the Insurance Fund each year. In October, 2013,
the BOCC requested an analysis of several components of the Plan. The BOCC also made decision on
May 1, 2014 on some of these recommendations shown in RED. These requested items included:
• Analysis of whether the County should obtain re-insurance (stop loss), based on large claim
payment history; BOCC decided not to seek re-insurance (stop loss)
• Minimum legally acceptable number of months of reserves vs. Gallagher recommended number of
months of reserves since the County has no re-insurance (stop loss) to protect against large claims;
BOCC decided to set a policy to maintain 6 months of reserves as long as fund has no re-insurance
(stop loss)
• Analysis of employee subsidies;
• Analysis of dependent subsidies;
• Analysis of department rate, based on projected fund balance deficiencies;
• Analysis of what makes up the County's Department rate of$790 per employee per month ($448
Employee Medical; $25 Employee Life/EAP; $99 Dependent Medical; $218 Retiree Coverage).
Note: The department rate of$790 is not adequate and currently assumes a portion of fund balance
is used annually;
• Analysis of Patient Protection and Affordable Care Act(PPACA), commonly referred to as
Obamacare, compared to the County's Health Insurance Plan and their benefits;
• Benefit comparison of the County benefits to other communities in South Florida.
On May 1, 2014 the BOCC requested additional information from Gallagher related to employee
subsidies, dependent subsidies, and department rate, based on budget projections which as been
completed as follows:
OPTION 1. FY 1511-1-15 Health insurance contributions based on salary bands, equalizing
dependent coverage to 50% subsidy.
Employees who earn $49,999 or less would pay$20 per month
Employees who earn between $50,000 and $74,999 would pay$39 per month
Employees who earn $75,000 and up would pay$59 per month
Dependent coverage would also be based on the salary of the employee
This scenario would yield an approximate loss to the fund: FY 15: $1,623,045; FY 16: $2,752,222;
FYI 7: $3,954,921.
i � l Health Insurance contributions by employee with 95% subsidy for
/1
employees/50% dependent coverage.
All employees would pay$25/month
Dependent coverage would be based on a 50% subsidy
This scenario would yield an approximate loss to the fund: FY15: $1,398,403; FY16: $2,306,058;
FY17: $3,352,539.
To make the health insurance fund whole, under this scenario, the Department Rate should be adjusted
from $790 per employee per month to $881 per employee per month beginning October 1, 2014. This
would cost the FY 15 budget$1,336,743.
If you further want to decrease the max out of pocket from$6,350 to $4,500, the Department Rate
should be adjusted from$790 per employee per month to $928 per employee per month. This would
cost the FYI 5 budget$2,025,891.
OPTION 3: F'Y1511-1-15 Health Insurance contributions by employee with 90% subsidy for
employees/50% dependent coverage.
All employees would pay$50/month
Dependent coverage would be based on a 50% subsidy
This scenario would yield an approximate loss to the fund: FY15: $1,128,216; FY16: $1,919,454;
FY17: $2,937,858.
To make the health insurance fund whole, under this scenario, the Department Rate should be adjusted
from $790 per employee per month to $863 per employee per month beginning October 1, 2014. This
would cost the FY15 budget $1,066,557.
If you further want to decrease the max out of pocket from $6,350 to $4,500, the Department Rate
should be adjusted from $790 per employee per month to $909 per employee per month. This would
cost the FY15 budget$1,742,089.
OPTION 4: Is an option for FY16 Health Insurance contributions by employee with 80% subsidy for
employees/50% dependent coverage.
OPTIONS #and FY17 are projections that show varying lower subsidies,mainly for consideration for
future years.
In an effort to decrease the revenue loss to the Health Insurance Fund, several scenarios have been developed
for discussion and direction by the BOCC to staff for implementation in the FY15 budget. The attached
summa . table (2 pages)demonstrates possible changes to the amount of subsidy the County provides for
employees and their dependents, as well as the amount the department rate would need to increase to maintain
the amount of reserves currently in the fund.
PREVIOUS REVELANT BOCC ACTION: N/A
CONTRACT/AGREEMENT CHANGES: The Group Health Plan and Summary Document will be
revised if appropriate.
STAFF RECOMMENDATIONS: Direct staff to include a $25 per month payment for employees
hired before 5/1/12. Maintain the $50 per month payment for employees hired on or after 5/1/12.
Subsidize dependent coverage by 50% for each level of dependent coverage. These changes will be
effective January 1, 2015.
Adjust the Department rate from $790 per employee per month to $835 per employee per month, which
should yield approximately$668,371 additional revenue for FY 2015. If this change is made, the
approximate projected loss to fund balance would be approximately$699,201*. This change will be
effective October 1, 2014.
* Does not include exact estimate for employees contributing $50 per year now to be included in
revenue so $699,201 is slightly higher than may occur
Note: Staff was able to meet with four out of the six Constitutional Officers and all were opposed to basing employee
premiums on salary. All Constitutional Officers said that they did not support staffs recommendation of mandating that
all employees who do not currently contribute towards their health insurance pay a premium of$25.00 per month, however-
they would not he opposed to it.
TOTAL COST: N/A INDIRECT COST: BUDGETED: Yes No
DIFFERENTIAL OF LOCAL PREFERENCE:
COST TO COUNTY: SOURCE OF FUNDS
REVENUE PRODUCING: Yes No AMOUNT PER MONTH Year
APPROVED BY: County Atty OMB/Purchasing Risk Management
DOCUMENTATION: Included X Not Required
DISPOSITION: AGENDA ITEM#
FY14 FY15 FY35-OPTION I-Salary Banded Employee Contributions FY35-OPTION#2.95%EMp/50%DEP FY15-OPTION#3-90%EMP/50%DEP FY15-OPTION
Current Current Predicted Actual $0 to $50,1X0 to $75,1X0 Proposed Proposed Proposed Proposed Proposed
Subsidy Payment Casts $49,999 $74,999 and Up Average Subsidy Payment Subsidy Payment Subsidy
60%Subsidy 45%sobsidy 11%sobsidy 1/1/2015 1/1/2M5 1/1/2015
Em I.,ee c 5/1/12 100% $0 95% $25 90% $50 85%
Em la ee,5/1/12 90% $50 $492 $20 $39 $59 $30 95% $25 90% $50 85%
Spouse 47% $353 $664 $266 $365 $465 $318 SIM $332 50% $332 50%
Spouse child 51% $470 $959 $384 $527 $672 $459 50% $480 50% $480 50%
Spouse+2 or mare children 62% $529 $1,254 $502 $689 $879 $6M SIM $701 50% $7M 50%
One child 19% $238 $295 $118 $162 $207 $141 50% $148 50% $148 50%
Two children 53% $282 $590 $236 $324 $414 $282 SIM $295 50% $295 50%
Three children 60% $351 $885 $354 $486 $621 $424 50% : $443 50% $443 50%
Four children NA $468 $11180 $472 $"a $828 $565 SIM $591 50% $591 50%
Five+children NA $529 $1,475 $590 $810 $1,M5 $705 50% : $738 50% $738 50%
Retirees(Average) 85% 85% 85% 85%
Amount of gam/lass in reserves if
subsidy changes are NOT made H14 ($513,647)
Amount of
gain/lass in
es if subsidy See Note Below on Impact of Contributions by Salary Band
cha nges ARE made
H15 ($1,623,045) ($1,623,045) ($1,39E,403) ? ($1,128,216)
H16 ($2,752,222) ($2,752,222) ($2,306,058) ($1,919,454)
H17 ($3,954,921) ($3,954r921) ($3,352,599) ($2,937,858)
Department Rate for
Waivers $320 1 1 $320 $320
Department Rate Change
to Eliminate Loss $790 $881 $863
Employee Medical $448 $475 $457
Employee Uife/EAP $25 $25 $25
Dependent Medical $0 $113 $113
Retirree Medical $218 $268 $268
Department Rate Change
to Eliminate Loss $928 $909
Department Rate Change
to Eliminate Loss $962 $942
Comments on Salary Banded Employee Contributions
The structure shown above we developed to be revenue neutral-it is a reallocation of premiums rather than an increase or decrease.However,the ecru.l contributions would be more or less depending on how employees react to the change.
Since lower paid employees would see a decrease in premiums,there is no reason to think any of those would drop dependent coverage.Higher paid employees would see an increase so there is potential that some may look for other coverage.
If we wound up with more low earners covering dependents(at lower rates)end fewer higher earners covering dependents(at higher rates)we would see a net loss to the plan.
Gallagher estimates that a change in the mix of dependents covered by salary bend could effect annual employee contributions by$200,000 to$250,000 in either direction in any one year.$1,623,045 r.Wd became$1,823,045
Proposed Proposed
STAFF RECOMMENDATION: Subsidy Payment
1/1/2015
Employeec 5/1/12 95% $25
Employee,5/1/12 90% $50
Spouse 50% $332
Spouse+1 child 50% $480
Spouse+2 or more children 50% $701
One child 50% $148
Two children 50% $295
Three children 50% $443
Four children 50% $591
Five+children 50% $738
Retirees(Average) 85%
**Does not include exact estimate for employee
PROJECTED LOSS IN FUND BALANCE IF SUBSIDY CHANGES ARE MADE BASED ON STAFF RECOMMENDATION ($699,20L.36)$699,201 is slightly higherthan may occur
I
DEPARTMENT RATE IF STAFF RECOMMENDATION IS ADOPTED $836
Monroe County Board of County Commissioners
Analysis of Salary-Related Health Plan Contributions
Protected Monthly Actuarial Rates-2014/15 Plan Year
Employee $492
Spouse $664
Child $295
Illustrative Salary Bands
Illustrative Monthly Contributions
Average Assumed Contribution%s Assumed Monthly Rates
Salary Range Count Salary % EE SP CH EE SP CH
$0-$49,999 704 $39,367 57% 4% 40% 40% $20 $266 $118 0.f
$50,000-$74,999 399 $58,387 33% 8% 55% 55% $39 $365 $162 0J
$75,000+ 123 $94,036 10% 12% 70% 70% $59 $465 $207 0J
Total/Average 1,226 $51,041 6.1% 47.9% 47.9% $30 $318 $141 0.1
Comparison to Current
Illustrative Effective 1/1/2015
$0 to $50,000 to $75,000
Tier Current $49,999 $74,999 and Up Average
Employee $0-$50 $20 $39 $59 $30
Spouse Only $353 $266 $365 $465 $318
Spouse+1 child $470 $384 $527 $672 $459 Employees with Dependent coverage wou
Spouse+2 children $529 $502 $689 $879 $601 to pay the Employee premium
Spouse+3 children $529 $620 $851 $1,086 $742
Spouse+4 children $529 $738 $1,013 $1,293 $883
One child only $238 $118 $162 $207 $141
Two children only $282 $236 $324 $414 $282
Three children only $351 $354 $486 $621 $424
Four children only $468 $472 $648 $828 $565
Five+children only $529 $590 $810 $1,035 $706