Health Insurance Funding Health Plan Change Recommendations FY - - PowerPoint PPT Presentation

Health Plan Change Recommendations FY 2016/17 & FY 2017/18

Health Insurance Funding

 Provides coverage for following groups:

 County employees

~650

 Constitutional Officers

~650

 Retirees

~250

 Plus: eligible dependents (spouses, children)  Total members ~3,600

Highlights

 Self-insured fund  “Grandfathered” status under ACA  No plan changes since 2010  PPO  Administered by Florida Blue

Highlights (continued)

 Prescription drug prices up 13.6% for 2015

(Milliman)

 Medical trend up 9.0% for 2015, forecast of

9.6% for 2016 (Wells Fargo Ins.)

 Healthcare costs = 17.5% of GDP in 2014 (Up

5.3% from 2013)

 ACA additional costs - $236,275 fees plus

Rising Costs

IRC Healthcare Expenditures

$6 $8 $10 $12 $14 $16 $18 $20

2009 2010 2011 2012 2013 2014 2015

$18.07

Millions Fiscal Year

7% trend – 2015 = $20.5 million

Health Ins. Fund Net Revenues/(Expenses)

• $3
• $2
• $1

$0 $1 $2 $3 $4

2009 2010 2011 2012 2013 2014 2015

Millions Fiscal Year

Historical Premiums per Month

Fiscal Year Single Coverage Family Coverage Employee Employer Employee Employer 2006/07 $0 $505 $202.50 $745 2007/08 $0 $525 $217.50 $765 2008/09 $0 $525 $217.50 $765 2009/10 $0 $495 $217.50 $735 2010/11 $0 $495 $217.50 $735 2011/12 $0 $495 $217.50 $735 2012/13 $0 $475 $217.50 $715 2013/14 $0 $475 $217.50 $715 2014/15 $0 $475 $217.50 $715 2015/16 $0 $505 $217.50 $745

Monthly Premium Comparison – Surrounding Local Governments

$963 $1,944 $1,688 $2,337 $2,016 $1,620 $1,517 $1,828 $1,912 $1,106 $1,882 $1,036 $904 $792 $1,846 $1,699

$0 $500 $1,000 $1,500 $2,000 $2,500

Total Monthly Premium Family Coverage

Average - $1,608

Monthly Premium Comparison – Surrounding Local Governments

$505 $586 $508 $701 $774 $632 $514 $581 $608 $497 $593 $561 $490 $429 $615 $566

$0 $100 $200 $300 $400 $500 $600 $700 $800 $900

Total Monthly Premium ‐ Single Coverage

Average - $577

Health Ins. Fund Net Revenues/(Expenses)

• $4
• $3
• $2
• $1

$0 $1 $2 $3 $4

2009 2010 2011 2012 2013 2014 2015 2016 2017

$3,032,903 $1,761,580 $1,250,302 $993,336 $484,193

• $1,375,479
• $2,763,495
• $2,300,000
• $3,900,000

Millions Fiscal Year

FY 2016/17 Recommendations

Item Description

• Est. Annual

Amount

• Est. Annual Loss – FY 2016/17 (Status Quo)

$3,900,000 Less: Savings from Recommendations Blue Choice Health Plan ($320,000) Kannact Diabetes Management ($105,000) International Prescription Provider ($110,000) Change Coverage Effective Date ($150,000) Employee Premium Change ($490,000) Employer Premium Change ($1,630,000) Subtotal: Cost Saving Measures ($2,805,000) Estimated Annual Loss – FY 2016/17 ($1,095,000)

1.

Change from Blue Choice to Blue Options

a)

No change in copays, deductibles, out-of-pocket

b)

More current cost containment measures

c)

• Est. cost savings of 2% or $320,000

Proposed Changes – FY 2016/17

2.

Kannact Diabetes Management Program

a)

Plan costs last year ~ $1,050,000

b)

Comprehensive system to manage diabetes

c)

Health coach, real-time monitoring, and support

d)

• Est. cost savings of 10% or $105,000

e)

Employees feel better, are healthier, and more productive

Proposed Changes – FY 2016/17

3.

International Prescription Provider

a)

Stories of people driving to Canada for lower cost meds

b)

Voluntary program, employees contract with IPP directly

c)

Import meds from “Tier 1” countries (e.g. Canada, U.K., Australia

d)

• Est. cost savings to County - $110,000 (25%

participation)

e)

$0 Copay for employees – est. savings of $25,000

Proposed Changes – FY 2016/17

4.

Post Employment Health Plan

a)

IAFF has expressed an interest

b)

Tax advantaged vehicle to fund healthcare costs in retirement

c)

Employee saves FICA & income tax - County saves FICA

d)

County est. savings ~$44,000 (based on 2015 payouts)

e)

Participation is mandatory, but can be separate by bargaining unit

f)

Staff recommends explore through collective bargaining

Proposed Changes – FY 2016/17

5.

Employee Premium Adjustment

a)

Survey of surrounding local government rates

Proposed Changes – FY 2016/17

Monthly Premium Comparison – Surrounding Local Governments

$218 $233 $179 $385 $136 $299 $777 $457 $541 $307 $464 $583 $451 $339 $374 $227

$0 $100 $200 $300 $400 $500 $600 $700 $800 $900

Employee Monthly Premium Family Coverage

Average - $383

Monthly Premium Comparison – Surrounding Local Governments

$0 $46 $35 $85 $38 $119 $25 $0 $27 $0 $0 $108 $37 $0 $49 $0 $0 $20 $40 $60 $80 $100 $120 $140

Employee Monthly Premium ‐ Single Coverage

Average - $38

5.

Employee Premium Adjustment

a)

No premium increase since 2007/08

i.

In light of lack of raises during downturn (09/10 – 12/13)

ii.

Employee raises for last 3 years

Proposed Changes – FY 2016/17

5.

Employee Premium Adjustment

b)

Recommend policy to split premium as follows

i.

Family coverage – 75% County/25% employee

ii.

Single coverage – 90% County/10% employee

c)

2 – Year phase-in to ease burden on employees

d)

Increase $30/ month each

e)

• Est. savings - $490,000

Proposed Changes – FY 2016/17

6.

Change Effective Date for New Hires

a)

Currently 30 days after date of hire

b)

Same as 30 day open enrollment window

c)

Difficult & time consuming to administer

d)

Propose first day of month after 60 days from hire

e)

Reduce administrative burden

f)

• Est. $150,000 savings based upon 10% turnover

Proposed Changes – FY 2016/17

7.

Employer Premium Adjustment

a)

$150/ month employer contribution used for budgeting purposes

b)

This has created great strain on FY 2016/17 budget

c)

After measures recommended above, increase employer contribution by $100/ month

d)

Generates additional revenue of $1.6 million

Proposed Changes – FY 2016/17

Health Insurance Monthly Premiums – FY 2015/16 vs. 2016/17

Coverage Type Premium FY 2015/16 FY 2016/17 Increase Single Employee $0.00 $30.00 $30.00 Employer $505.00 $605.00 $100.00 Family Employee $217.50 $247.50 $30.00 Employer $745.00 $845.00 $100.00

Summary of FY 2016/17 Recommendations – Financial Impact

Item Description

• Est. Annual

Amount

• Est. Annual Loss – FY 2016/17 (Status Quo)

$3,900,000 Less: Savings from Recommendations Blue Choice Health Plan ($320,000) Kannact Diabetes Management ($105,000) International Prescription Provider ($110,000) Change Coverage Effective Date ($150,000) Employee Premium Change ($490,000) Employer Premium Change ($1,630,000) Subtotal: Cost Saving Measures ($2,805,000) Estimated Annual Loss – FY 2016/17 ($1,095,000)

• 8. OPEB Advance Funding
• Accounting for Post Employment Benefits Other

than Retirement

• GASB Statement 45 – implemented in FY

2007/08

• Recognizes cost of benefits when they are

earned

• Previously accounted on a pay-as-you-go basis
• County established OPEB Trust in FY 2007/08
• This allowed for funding of OPEB obligations
• County ended explicit subsidy for employees

hired after 2/1/06

OPEB – similar to Pensions

Employer and employee contributions during employment Pension Payments to retirees after retirement Pension Fund

OPEB – similar to Pensions

Employer contributions during employment Payments to cover retiree healthcare costs OPEB Trust Fund

OPEB

OPEB – Historic Funding Levels

• 2

4 6 8 10 12 14 16 2008 2009 2010 2011 2012 2013 2014 2015 Millions Fiscal Year

Net Assets

OPEB – Historic Funded Ratio

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 2008 2009 2010 2011 2012 2013 2014 2015 11.4% 20.5% 32.4% 37.0% Fiscal Year

Funded Ratio

Flow of Funds – FY 2014/15

Employer contributions = $2.9 million into OPEB Trust $1.9 million Payment to Healthcare Fund OPEB Trust Fund

OPEB

OPEB Trust – Historic Inflows & Outflows

$0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 2008 2009 2010 2011 2012 2013 2014 2015 $2.6 $2.9 $1.0 $1.9 Millions Fiscal Year

OPEB – Breakdown of Annual Required Contribution

$634,849 $2,461,562

Breakdown of ARC

Normal Cost Amortization of UAAL

OPEB – Impact of $9 million advance payment

$634,849 $2,461,562

Breakdown of ARC

Normal Cost Amortization of UAAL $9 million advance contribution decreases ARC by ~ $900,000

8.

OPEB Advance Funding

a)

$1.9 million from OPEB Trust to pay retiree health costs

b)

Without OPEB payment, Health Insurance loss would have been much larger

c)

Additional contribution of $9 million recommended

d)

Reduces annual contribution by $900,000

e)

After $400,000 increase due to rising costs, net decrease

• f $500,000

Proposed Changes – FY 2016/17

Summary of FY 2016/17 Recommendations – Financial Impact

Item Description

• Est. Annual

Amount Current Budgeted Health Insurance Increase FY 2016/17 $2,400,000 Less: Savings from Recommendations ($800,000) Proposed Health Insurance Increase FY 2016/17 $1,600,000 Less: OPEB Annual Contribution Savings ($500,000) Net Impact on FY 2016/17 Budget $1,100,000

1.

Increased Wellness Measures

2.

Employee Wellness Clinic Investigation

3.

Stand-Alone Pharmacy

4.

Other Health Plan Adjustments

5.

Continued Phase-in of Employee Premium

6.

Continued Employer Premium

7.

Pharmacy PPO implementation

Potential Changes – FY 2017/18

Staff recommends that the Board

• f

Commissioners approve the proposed changes (Nos.1-8) for FY 2016/17. Staff also recommends that the Board approve the Potential Changes for FY 2017/18 for further exploration. Final recommendations will be presented next fiscal year.

Staff Recommendation

Questions, Comments, Direction, etc.?

Health Insurance Monthly Premiums – Percentage Split Employer/Employee

FY 2015/16 Coverage Type Premium Amount Percentage Single Employee $0.00 0.0% Employer $505.00 100.0% Family Employee $217.50 22.6% Employer $745.00 77.4% FY 2016/17 Coverage Type Premium Amount Percentage Single Employee $30.00 4.7% Employer $605.00 95.3% Family Employee $247.50 22.7% Employer $845.00 77.3%