Item R2
Revised 3/99
BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: Auqust 21.2002
Bulk Item: Yes D No XX
Division: Manaqement Services
Department: Administrative Services
AGENDA ITEM WORDING: Discussion and approval of proposed chanqes to the Group
Insurance Proqram in order to reduce ad valorem costs and non ad valorem costs.
ITEM BACKGROUND: Durinq the budqet workshops of Julv 2002. the Board of County
Commissioners were advised of the larqe increases necessary in the qroup insurance
fund in order to cover proiected claims. Staff is recommendinq various chanqes to
reduce the ad valorem impact of the risinq cost of health insurance.
PREVIOUS RELEVANT BOCC ACTION: The last maior presentation on Group
Insurance was on September 5.2001.
CONTRACT/AGREEMENT CHANGES: Not applicable
STAFF RECOMMENDATION: Approval.
TOTAL COST: Fiscal Year 2003 Ad
Valorem SavinQs $896,000
BUDGETED: YesD No D
COST TO COUNTY:
REVENUE PRODUCING: Yes D No D
AMOUNT PER MONTH
YEAR
APPROVED BY: COUNTY ATTY 0 OMS/PURCHASING 0 RISK MANAGEMENT 0
l"' --J\'~~
DIVISION DIRECTOR APPROVAL' r/ ~
DIVISION DIRECTOR NAME: . James L. Roberts
DOCUMENTATION: INCLUDED: D TO FOLLOW: D NOT REQUIRED: D
DISPOSITION:
AGENDA ITEM #: ~c-/
Agenda Item
Discussion and approval of proposed changes to the Group Insurance Program in order to reduce ad
valorem costs and non ad valorem costs.
The rising cost of Group Insurance is a critical issue throughout this country. Methods to reduce costs
involve an adjustment to benefits and/or additional cost sharing by participants. Staff proposes the
following options as a means of lowering the ad valorem impact on the taxpayers of Monroe County with
the least impact on our ability to attract and retain employees.
Proposal A - Rate Adjustments for Dependent Coverage
Adjust current rate schedule by $10 per pay period ($22 per pay month); for additional dependents
add $20 per pay period per dependent (about $23 per dependent per pay month). Group Deductible at
$300 per year per person, no family cap. Approval to annually increase dependent rates the same
percentage as the county departmental rate for group insurance. Implementation January 1, 2003.
Dependents:
Currently per month
Proposed per month
One
Two
Three
Four
Five
Six
$238
$282
$282
$282
$282
$282
$260
$303
$347
$390
$433
$476
Annual Savings $250,000
Annual ad valorem Impact $218,000
Fiscal Year 2003 ad valorem Impact $163,000
Background Information
We asked Arthur 1. Gallagher & Company to propose a rate change for us that would give us a
rate where the County would subsidize the dependent care by 30%. (Currently the county is subsidizing
dependent care from 60-70% of the cost).
They explored two options. One would be to split the cost on industry standards of the
relationship of child dependent to employee and adult dependent to employee. They have advised the
following two rate changes. The second is based on the claims date of participants in Monroe County's
plan.
Dep.
Current Cost per month
1. Industry Norm
2.BOCC Norm
1
2+
238
282
322
598
424
714
We are not recommendinl! either of these options.
Proposal B - Mandatory Generic Program
Multi-Source Drugs with a generic available. Patient will be responsible for 100% co-pay if they
do not take the generic. Implementation January 1, 2003.
Annual Savings $36,000
Annual ad valorem Impact $31,000
Fiscal Year 2003 ad valorem Impact $23,000
Proposal C - Change Participation Rate from 80/20 to 70/30
Participants would pay 30% of covered costs. At the Board of County Commissioner's meeting
on March 13,2001, the Board authorized the changing the $10,000 cap on the 20% portion by 10% a year
until we reach $20,000. We are currently at $11,000; Calendar Year 2003, we will increase to $12,100. .
Implementation January 1,2003. (There is an agenda item for the approval ofa nationwide network on the
Agenda to implement a greater disincentive for utilization of out of network providers).
Annual Savings $400,000
Annual ad valorem Impact $350,000
Fiscal Year 2003 ad valorem Impact $260,000
Proposal D - Modify Benefits
Eliminate County Dental and Vision as a part of our program and replace with a Section 125 plan
where employees could purchase one or both options through payroll deduction. School Board, City
of Key West and Keys Energy Do Not Pay for Employee Dental and Vision. Implementation January 1,
2003.
Annual Savings
Annual ad valorem Impact
Dental
Vision
$
600,000
90,000
690,000
$600,000
Fiscal Year 2003 ad valorem Impact $450,000
Total Annual Savings is $1,376,000, ad valorem is approximately
$1~199,000. Total Fiscal Year 2003 ad valorem Impact for the above
proposals $896~000
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Administrative Services Department
1100 Simonton
Key West, FL 33040
(305) 292-4537
MAYOR Charles "Sonny" McCoy
Mayor Pro Tern, Dixie M. Spehar, District I
George Neugent, District 2
Bert Jimenez, District 4
Murray E. Nelson, District 5
MEMORANDUM
Date:
Thursday, August 15,2002
To:
All Active and Retired Employees
Constitutional Officers
From:
James L. Roberts
County Administrator
Subject:
Presentation on Group Insurance -'August 21,2002
The tentative budget we presented the Board of County Commissioners in July anticipated an
increase in group insurance costs in excess of $1,800,000 for claims and required reserves.
Group Insurance costs are primarily funded from ad valorem taxes. In an effort to control the
cost to the taxpayers of Monroe County and not severely impact our ability to recruit and retain
quality employees, we are proposing a number of changes to the Board. That proposal is
attached.
Agenda Item
Discussion and approval of proposed changes to the Group Insurance Program in order to reduce ad valorem costs
and non ad valorem costs.
The rising cost of Group Insurance is a critical issue throughout this country. Methods to reduce
costs involve an adjustment to benefits and/or additional cost sharing by participants. Staff
proposes the following options as a means of lowering the ad valorem impact on the taxpayers of
Monroe County with the least impact on our ability to attract and retain employees.
Proposal A - Rate Adjustments for Dependent Coverage
v
Adjust current rate schedule by $10 per pay period ($22 per pay month); for additional dependents add
$20 per pay period per dependent (about $23 per dependent per pay month). Group Deductible at $300 per year
per person, no family cap. Approval to annually increase dependent rates the same percentage as the county
departmental rate for group insurance. Implementation January I, 2003.
Dependents: Currently per month Proposed per month
One $238 $260
Two $282 $303 3$"'0 C7"
Three $282 $3~
Four $282 $390 a/I f-s ..f-
Five $282 $433
Six $282 $476
Annual Savings $250,000
Annual ad valorem Impact $218,000
Fiscal Year 2003 ad valorem Impact 5163,000
Background Information
We asked Arthur J. Gallagher & Company to propose a rate change for US that would give us a rate where
the County would subsidize the dependent care by 30%. (Currently the county is subsidizing dependent care from
60-70% of the cost).
They explored two options. One would be to split the cost on industry standards of the relationship of
child dependent to employee and adult dependent to employee. They have advised the following two rate changes.
The second is based on the claims date of participants in Monroe County's plan.
Dep. Current Cost per month
1. Industry Norm
2.BOCC Norm
I 238
2+ 282
322
598
424
714
We are not recommending either of these options.
Proposal B - Mandatory Generic Program
Multi-Source Drugs with a generic available. Patient will be responsible for 100% co-pay if they do not
take the generic. Implementation January 1, 2003.
Annual Savings $36,000
Annual ad valorem Impact $31,000
Year 2003 ad valorem Impact $23,000
Fiscal
Proposal C - Change Participation Rate from 80/20 to 70/30
Participants would pay 30% of covered costs. At the Board of County Commissioner's meeting on March
13, 2001, the Board authorized the changing the $10,000 cap on the 20% portion by 10% a year until we reach
$20,000. We are currently at $11,000; Calendar Year 2003, we will increase to $12,100.. Implementation
January 1, 2003. (There is an agenda item for the approval of a nationwide network on the Agenda to implement
a greater disincentive for utilization of out of network providers).
Annual Savings $400,000
Annual ad valorem Impact $350,000
Year 2003 ad valorem Impact $260,000
Fiscal
Proposal D - Modify Benefits
Eliminate County Dental and Vision as a part of our program and replace with a Section 125 plan where
employees could purchase one or both options through payroll deduction. School Board, City of Key West and
Keys Energy Do Not Pay for Employee Dental and Vision. Implementation January 1,2003.
Annual Savings
Annual ad valorem Impact
Dental
Vision
$
600,000
90,000
690,000
$600,000
:55-, u/,) /' /1
S-. - /~, ,-' P' '/1
f
Fiscal Year 2003 ad valorem Impact $450,000
Total Annual Savings is $1,376,000, ad valorem is approximately $1,199,000.
Total Fiscal Year 2003 ad valorem Impact for the above proposals $896.000
Rug 15 02 04:14p
Monroe Count~ Group Ins 3052924452
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Lg.J UUL
August 20, 2002
To the County Commissioners,
The proposal to considerably ilncrease our out of pocket
expense when our "raise" will sometimes not even cover the
difference disturbs me greatly. ] realize that we are not in the
best of financial times throughoUlt the country but I believe we
. need some stability and consisteltlcy in the Keys. We could
achieve that by keeping the good people that we have and
reduce the turnover. That could be better accomplished by
looking at the priorities we hav(~ set for our allocated funds.
Although we are a "tourist" area and gear the focus to that, we
still need to avoid driving our residents out with higher
expenses and incomes that are not competitive with other
areas. If there are cuts to be made in the budget why not look
in other areas such as the money allocated for Fantasy Fest?
We need to attract tourists but (Jlur priority should be to take
care of our full time residents and employees.
The proposal to d.oop dent311 and vision covel'age is
counterproductive. In some cases the dental benefit is the only
thing that makes it conducive for sonle to get necessary
treatment. Neglect of dental problems can cause many other
health problems. Examinations of the eyes and mouth can
lead to detection of more serious problems in other parts of the
body.
The majority of M.C.S.O. employees are unhappy with the
proposals nlade. Thank you for your consideration in this
matter so that our raises will count for as much as they can.
Catherine Hisko
Monroe County Sheriff's Office
C.l.U. Secretary /. Records Assistant