AGENDA REQUEST

Sponsor:

Board of Supervisors Meeting Date: 

Paul S. McCulla, County Administrator

April 14, 2005

Staff Lead:

Department: 

Anthony I. Hooper, Deputy County Administrator

County Administration

Topic: 

A Resolution to Adopt the Employee Health Care Plan and Rates for FY 2006

Topic Description:

The Health Care Advisory Committee has met on a regular basis to monitor the employee health care plan and to consider options to mitigate increasing costs. Attached is the report of the Committee that has been presented to and recommended by the Joint Personnel Committee. In addition, the School Board and Board of Supervisors has reviewed this report during the FY 2006 budget process.

 

The new year plan proposes benefit changes while maintaining the current contribution levels for full time employees. Rate changes are recommended for special categories and dually-employed spouses, as shown on the attached documents.     

Requested Action of the Board of Supervisors: 

Consider adoption of the attached resolution.

Financial Impacts Analysis:

The FY 2006 health care costs are expected to be addressed through a combination of budgeted funding and benefit plan adjustments.

 

 

Identify any other Departments, Organizations or Individuals that would be affected by this request:

All departments and employees.


 

RESOLUTION

 

 A RESOLUTION TO ADOPT THE EMPLOYEE HEALTH CARE PLAN

AND RATES FOR FY 2006

 

WHEREAS, the Health Insurance Advisory Committee has presented recommendations to the Board of Supervisors and the School Board concerning the employee health care program; and

 

WHEREAS, changes in the benefit plan are necessary to control the increasing costs of health care, now, therefore, be it

 

RESOLVED,  by the Fauquier County Board of Supervisors this the 14th day of April 2005, That the attached report and rates be, and are herby, adopted for FY 2006.

 

FY 2005 Health Insurance Rates

 

 

Employeer

Employee

Employeer

Employee

Retiree &

 

 

Monthly Rate

Full Time Per.

Full Time Per.

Part Time Per.

Part Time Per.

COBRA

ERIP

KeyCare 10

 

Contribution

Rate

Contribution

Rate

Rates

Rate

 Employee Only

$481

$451

$30

$307

$174

$490

$256

 Employee + Child

$558

$451

$107

$307

$251

$569

$333

 Employee + Spouse

$734

$451

$283

$307

$427

$748

$509

 Family

$815

$451

$364

$307

$508

$831

$590

Keycare 15

 

 

 

 

 

 

 

 Employee Only

$466

$451

$15

$307

$159

$475

$241

 Employee + Child

$538

$451

$87

$307

$231

$549

$313

 Employee + Spouse

$704

$451

$253

$307

$397

$718

$479

 Family

$775

$451

$324

$307

$468

$790

$550

Healthkeepers 10

 

 

 

 

 

 

 

 Employee Only

$456

$451

$5

$307

$149

$465

$231

 Employee + Child

$516

$451

$65

$307

$209

$526

$291

 Employee + Spouse

$674

$451

$223

$307

$367

$687

$449

 Family

$741

$451

$290

$307

$434

$756

$516

Healthkeepers 20

 

 

 

 

 

 

 

 Employee Only

$451

$451

$0

$307

$144

$460

$226

 Employee + Child

$474

$451

$23

$307

$167

$483

$249

 Employee + Spouse

$622

$451

$171

$307

$315

$634

$397

 Family

$684

$451

$233

$307

$377

$697

$459

 

 

 

 

 

 

 

 

 FY 2006 Health Insurance Rates

 

 

Employeer

Employee

Employeer

Employee

Retiree &

 

 

Monthly Rate

Full Time Per.

Full Time Per.

Part Time Per.

Part Time Per.

COBRA

ERIP

KeyCare 10

 

Contribution

Rate

Contribution

Rate

Rates

Rate

 Employee Only

$508

$478

$30

$325

$183

$518

$269

 Employee + Child

$585

$478

$107

$325

$260

$597

$346

 Employee + Spouse

$761

$478

$283

$325

$436

$776

$522

 Family

$842

$478

$364

$325

$517

$859

$603

 

Keycare 15

 

 

 

 

 

 

 

 Employee Only

$493

$478

$15

$325

$168

$503

$254

 Employee + Child

$565

$478

$87

$325

$240

$576

$326

 Employee + Spouse

$731

$478

$253

$325

$406

$746

$492

 Family

$802

$478

$324

$325

$477

$818

$563

Key Care 300

 

 

 

 

 

 

 

 Employee Only

$482

$478

$4

$325

$157

$492

$243

 Employee + Child

$540

$478

$62

$325

$215

$551

$301

 Employee + Spouse

$691

$478

$213

$325

$366

$705

$452

 Family

$754

$478

$276

$325

$429

$769

$515

 

 

 

 

 

 

 

 

Healthkeepers 20

 

 

 

 

 

 

 

 Employee Only

$478

$478

$0

$325

$153

$488

$239

 Employee + Child

$501

$478

$23

$325

$176

$511

$262

 Employee + Spouse

$649

$478

$171

$325

$324

$662

$410

 Family

$711

$478

$233

$325

$386

$725

$472

 

 

 

 

 

 

 

 

 

 

 


 

COUNTY OF FAUQUIER
OFFICE OF THE COUNTY ADMINISTRATOR

 

 

PAUL S. McCULLA

County Administrator

 

 

 

 

ANTHONY I. HOOPER

Deputy County Administrator

 

10 Hotel Street, Suite 204

Warrenton, Virginia  20186

PHONE 540-347-8680           FAX 540-349-2331

E-mail:  paul.mcculla@fauquiercounty.gov

 

 

 

 

CATHERINE M. HERITAGE

 Assistant County Administrator

MEMORANDUM

 

 

TO:                  Joint Personnel Committee

 

FROM:             Anthony I. Hooper, Chairman

                        Health Insurance Advisory Committee

 

DATE:             March 10, 2005

 

SUBJECT:        Fiscal Year 2006 Health Insurance Renewal

 

            The Health Insurance Advisory Committee has been meeting regularly to monitor health care costs and to consider options for providing coverage for Fiscal Year 2006.  In the current fiscal year (04-05), we are experiencing an increase in health care costs above the amount projected in the budget.  The program adopted in March 2004 projected health and dental expenses for the 04-05 fiscal year in the amount of $11,896,492.  Based on expenditures through January 2005, it is now estimated that health and dental expenses will be approximately $12,471,000 at the end of the fiscal year.  Thru January 2005, expenditures were running 20% above the levels of the previous fiscal year.  See Chart 1 for more detailed information.  If this trend continues, it will be necessary to utilize a larger portion of the Health reserve funds than originally anticipated to cover the projected shortfall for the 04-05 fiscal year.

 

            The Committee received information from Anthem in January that projected the cost of the existing health insurance program for Fiscal Year 2006 at $13,644,841.  This represents a 20% increase above the level of health insurance that was the basis for Fiscal Year 2005 budget ($11,394,494).  With an allotment for dental services, this would require a health and dental budget of $14,344,841 for Fiscal Year 2006.

 

            The Committee is concerned about this magnitude of increase.  A summary of expenditures for health and dental services is shown below:

 

1999          11.4%

2000          7.7%

2001          8.0%

2002          10.9%

2003          18.7%

2004          16.6%

2005          20.8% (estimated)

2006          20.6% without changes in benefits (estimated)

2006     12.3% recommended plan

 

            The Committee members believe that the current benefit plan could not be supported financially given the increasing level of funding required.  The Committee discussed options encompassing a reduction in benefits and/or an increase in employee contributions to support the plan.  The Committee opted to recommend a change in benefits as a more effective means of controlling costs in that our current plan provides more generous benefits than that provided by other communities.  It is recommended that steps be taken to reduce the rate of increase of health care costs.

 

            There is a need to address employee contributions in that our current cost-sharing plan has disincentives for employees to select less costly alternative plans.  This issue will be reviewed for the 06-07 Fiscal Year.

 

            In order to develop a health benefit plan within the level of funding provided in the County Administratorís proposed budget, the following plan changes are recommended:

 

o        Change from current Key Care 10 to Standard Key Care 10 plan

o        Change from current Key Care 15 to Standard Key Care 15 plan

o        Replace the Healthkeepers 10 plan with a Key Care 300 plan

 

                                    A summary of these benefit changes is shown in Chart 2.

 

o        Prescription Drug Changes

o        Change the current prescription drug benefit by installing a deductible for the year ($150 per member/$300 per family) for second and third tier drugs.  First tier drugs are typically generic and would only require the $10 co-payment.  For second tier drugs once you have met your deductible, you would pay the co-payment of $20.  For third tier drugs (typically higher cost brand name drugs) once you have met your deductible, you will pay the greater of the third tier co-payment $35 or 20% of actual cost. For example, if the drug were to cost up to $175 the employee would pay $35 for drugs above $175, the employee pays 20% of the costs up to $200 per prescription.  There is a $3,500 per member, per calendar year, out-of-pocket maximum.

 

            If these changes are implemented, then the funding provided in the County Administratorís proposed budget may still not be adequate for the 05-06 Fiscal Year and a draw against reserves in the amount of $282,587 is anticipated. The budget is based on utilizing 98% of the estimated health insurance costs provided by Anthem.  Since major changes in benefits are proposed, there may be some migration to other plans which makes the anticipated costs more difficult to estimate.  There will also be approximately two months of bills to be paid based on the current health policies.  A summary is shown below:

 

Project Revenue

County/Schools

 

Adopted 04-05

 

Revised 04-05

 

Budget 05-06

Budget Allocation

$ 8,934,541

$ 8,934,541

$ 9.931,413

Employee Health Contributions

$ 2,578,860

$ 2,975,000

$ 3,000,000

Employee Dental Contributions

$    113,568

$    117,000

*

Employee Growth

$    152,523

 

$     151,000

Draw on Reserves

$    117,000

$     444,459

$     282,587

Total Revenue

$11,896,492

$12,471,000

$13,365,000

 

 

 

 

 

 

 

 

Project Expenditures

 

 

 

Projected Health Costs

$11,394,494

$11,801,000

$12,665,000

Projected Dental Costs

$     656,998

$    670,000

$     700,000

Total Project Expenditures

$11,896,492

$12,471,000

$13,365,000

* Will be based on bid.  Projected costs above $700,000 will be covered by employee premium.

 

           

            An update of the Health Care Fund and reserves is shown as Chart 3.

 

Other Topics:

 

            Dental Insurance:

 

Fauquier County has been dissatisfied with the current dental plan in that there are a declining number of participating dentists in the Anthem Plan.  Bids for dental services will be received on March 1, 2005.

 

The budget proposal allocates $700,000 toward the cost of dental services.  It is expected that employees who wish to participate in this program will provide a monthly premium share to fund the enhanced program.

 

Information and options will be provided once a dental program has been selected and premiums become established.

 

            Cost Sharing:

 

It is also recognized that a revision is needed in the current cost sharing relationships between employees and the County.  The current approach does not accurately reflect the cost of the various insurance plan options.  The committee plans to address this component of the plan next year. 

 

Adjustments to the cost sharing policy for part-time and special categories of participation are recommended to be revised in accordance with the policy adopted last year.

 

One other change recommended for the upcoming year pertains to the benefit provided to families when both spouses are employed by the County.  At this time, there is no charge for any health coverage based on the theory that the total funding provided by the County to each employee is sufficient to cover the cost of family coverage. The new proposal would require both employees to pay the monthly minimum for the individual rate for whatever family coverage plan is selected.   


 

Chart 3

 

Health Care Fund

 

  1. Reserve Requirements:

 

FY05

Projected FY06

Projected FY07*

Projected FY08*

Projected FY09*

$3,118,000

$3,341,000

$3,709,000

$4,117,000

$4,570,000

 

        * Based on 11% growth

 

  1. Status of Health Insurance Reserve:

 

7/1/04

$4,393,416

Actual

7/1/05

$3,948,957

Projected

7/1/06

$3,666,370

Projected

7/1/07

$4,117,000

Supplement to reserves required

7/1/08

$4,557,000

Supplement to reserves required