Travis County Commissioners Court
July 5, 2005
Item 17
17-a, consider and take appropriate action on additional strategies to fund employee and retiree health care benefits for f.y. '06. 17-b, direct staff to proceed with open enrollment with rates and benefit plan 7.
>> good morning, judge and Commissioners. We were asked last week or two week ago to take a look at the rates being charged for employee independent premium, specifically the employee p.p.o. Plan and the retirement plans. Several members of the employee benefits committee met with judge Biscoe and there was a compromise on the rates to be charged this year. And we wanted to present that to the court today for approval since we have open enrollment coming up shortly. And that basically is to reduce the employee-only increase or the e.p.o., plan, from $34 to $20. It's a reduction of $14. Per month.
>> that would cost us how much?
>> 306,000.
>> $306,000.
>> [inaudible].
>> that would come from the reserve. The reserve is healthy, and I don't think this would be a raid on it, but it would be a reduction. When I looked at the -- if we do the 2%, which everybody has indicated is a good thing, if you make $20,000, that's $400. The 34 a month would exceed that.
>> yes.
>> so my goal really was for us to try to assist employees who take the e.p.o. And at the same time shift some of the additional cost to them. The thing that's become clear to me over the last two to three weeks is that our employees, including the county judge, really ought to look more closely at the other options. The e.p.o. Is not the only one and for a lot of us it probably is not the best one. So if you were to take the same amount of money you were to contribute under the e.p.o. And set it aside to meet your deductible, even if you are in the 80/20, unless you have excessive costs, then you probably could cover them. The other thing is that we've got the $1,500 in place and the 3,000 for the family, right?
>> that's correct.
>> I don't think most of us are mindful of the maximum out of pocket no matter what options you have. So if your bill is $100,000, even under the 90/10, you don't pay 10% of the $100,000 because your maximum is $1,500, right?
>> thaerlts.
>> -- that's right.
>> when you put the math to it, I think a lot of the other options are a lot more attractive than the e.p.o. What I think we ought to do if we go with this, and I recommend it myself, we ought to try to come up with some examples of the p.p.o. And the --
>> co-insured.
>> co-insured of real live situations where there have been medical bills in the 10,000 range, 20,000 range, 30,000 range and we show our employees exactly how those plans would work. What they would be out of pocket on the e.p.o. Up front and what it would cost later on and let them make the call. My recommendation would be put those examples in place and distribute them with the payroll, which would be Friday of next week, right?
>> yes.
>> and early enrollment starts when?
>> July 21st.
>> so that would be -- at least give them a week. And also human resources is checking around for departments that want in-person visits.
>> that's right.
>> to explain --
>> we're scheduling training as we speak.
>> [inaudible].
>> the other thing is that no matter what plan you're on, it doesn't affect the pharmacy, right?
>> that's correct.
>> those are the ones that kind of hurt as well. But I think also in all of the plans, and I think you are right, judge, that I think most of us could make a change to another plan and -- because it really comes down to following doctor's orders too. You get your medications and you need to take them, but you also need to make some changes in diet and physical activity, exercise and all of that. And I think that's the way to make an impact on your costs as well.
>> sure.
>> and -- but the pharmaceuticals don't change no matter what plan you are under.
>> that's right.
>> that needs to be explained as well.
>> cindy, you have some training schedules in the courtroom.
>> yes, I do.
>> why don't you tell the court those dates.
>> well, if I knew the dates off the top of my head, I would tell them.
>> sorry.
>> I will be sending out e-mails to all the departments involved. There will be I know two trainings in the courtroom for many of the departments in this building, and really if anyone wants to attend that's fine because we're going to try to hold it in their department.
>> I think I need to attend one of those so I can fully understand each one of the plans.
>> i'll make sure everyone is notified of when and where.
>> I think too that for the transportation department, if we could get the supervisors sort of educated on the various options, just to get those explained would I think make a lot of difference. The other thing we did that I think is important is for the retirees under 65 in the e.p.o., the recommendation is to reduce the increases by $100. And that would cost $73,200. Their increase really is -- was a big amount, 89%, 79%, 113% and 98% to all of those in the e.p.o. Options. $100 doesn't matter a whole lot, but it is $1,200 over a whole year so it matters some. Even for those, and when we look at the ones, looks like most of them are the employee only, which would be the retirees only, I guess.
>> there are 121 retirees under the age of 65, and of those 61 have spouse coverage.
>> [inaudible].
>> 121, and 61 of those have a spouse covered or I think it's like two or three that have a child as well.
>> now, I知 looking at the 61, and 38 of them fall in the top category, which is employee only.
>> that's correct.
>> and the other one is retiree plus one adult. What I think we should urge them to do is understand the other options because maybe they ought not be in the e.p.o. It's their choice, but if it's a financial decision, I think they ought to take a good look at the p.p.o. And the co-insured --
>> e.p.o.
>> co-insured e.p.o. I mean because I think the numbers look a lot more attractive in the other options. Unless you really are one of those catastrophic situations and then I think you should look at what the maximum would be, maximum out of pocket no matter the insurance bill. So or plan picks up -- our plan picks up a whole lot of the costs anyway, and what we tried to do was shift more of the cost to those who were generating the costs. But at the same time some of these hits really are real big overnight. The other thing that I did not know is that apparently the benefits committee has been discussing the -- ongoing feasibility of p.p.o. Anyway.
>> right.
>> so I really think that after October 1, we ought to start taking a real good look at that and maybe take several months to educate employees about insurance decisions that have to be made, what the options are, how they impact individual employees. My guess is most employees are kind of like me, once they go through open enrollment, they don't think about insurance until it's time to go through it again, which is nine or ten months later.
>> we need to do that, judge, because part of it is if you have been on a h.m.o. All the time you are not accustomed to filing a claim, not used to seeing the explanation of benefits coming and that can be somewhat overwhelming. And I think many employees don't think there's the 1500 out of pocket if you are seriously ill and people are worried about that and rightfully so. So I think that you're exactly right, we need to train now, but we need to go to some indepth training throughout the year so if people are afraid to go off it this year, they may see next year that's the thing to do. The other thing is you can work effectively with your flexible spending account to account for some of those things too. So that if you put some money away in that account, that can help, you know, some of the out of pocket and some of the co-pays and things like. That but I think another thing, when we look at our plan, there have been many, many places have got the coverage of the plan. And you have held the coverage. So if you are sick, our plan is an extremely good plan in terms of covering you. And so you can't just look at what you pay because what many employers have done is they've increased what people have paid significantly, they have also decreased the coverage at the same time. That's kind of invisible until you need it. And I think you all have done a really good job of holding very good coverage for our employees. So if you are sick, you have good coverage, good selection of doctors, and I agree, I think it's an education, it is an education issue.
>> if you are only making your co-pay at the doctor's and co-pay on the insurance, you really don't see the much bigger numbers later on.
>> right.
>> if you are never using the insurance, I guess making the spelled epo payment, once you make it you don't think about it a lot. But under the other options you don't have to make that payment in advance.
>> that's right. And you can do financial planning to see even if you did this, you would have this left over. I think what it is, it's a -- I know in my own department, people are afraid of the risk. It's a risk aversion and part of it some people have never been on a plan other than a h.m.o. Where you really weren't thinking of those things and it is a big step. Most organizations are moving away from that e.p.o. And call it a h.m.o. So I do think it is an education on training and work through some financial scenarios for people.
>> you know, we're talking about the rate increase, I think it's important to state this year it would be -- in fiscal year '06, employees will pay $980 for their coverage.
>> if this is approved.
>> if this is approved. Even with the reduction. That's a significant amount of money that can be -- as susan said, put into a flex account. Really works out to much less than that because it's pre-taxed. When you look at the whole dollars, it's a significant amount.
>> so we would urge those if you choose one of the others where it's zero advance payment, you need to set that money aside in the event that you need it sometime later in the year.
>> that's right.
>> can they set that aside with the county or are they on their own?
>> well, if they think they are going to spend it, the smart thing is put tonight a flex account. Like if you have recurring prescriptions or, you know, you know you are going to go to the eye doctor or the dentist so many times or your family -- so if you think you are going to spend it, put it in the flex account. Otherwise just put it in an individual savings account. Really after two years, you've got more than that deductible saved up if you didn't have a major medical situation. And it takes an awful lot to get that 1500. It just seems like it doesn't. I mean people are just risk averse and I get that.
>> we talked with barbara last week about what would happen to flex account funds if you did not spend them during the calendar year.
>> yes.
>> so for us it would be the fiscal year.
>> that's right.
>> September 30th -- October 1 through September 30th. What happens to that now, today?
>> if -- if they don't spend it on an approved expense within the allowable time, whether we expand the time by two and a half months or leave it as is, they do not have any access to it in the future, which is one of the reasons why some people will not want to go into a flexible spending account. But we can assist the employees in their savings because there is the option to put money directly into a savings account, deduct it from your paycheck and put it into a savings account in the credit union so that you don't ever see it, and yet you can still have access to it if you need it. It's not gone if you didn't incur the expense during the year. You can make it painless for the employees without them taking the risk of losing the money. If they think they are going to have expenses like one of these days I知 going to have get new classes, in that year I should put it in the flex account and I know which year because I decide they look disreputable. But in other years, putting it into a savings account gives you full access to it forever and takes it out of your apparent money that's available to spend.
>> are we set up to do the savings account option now?
>> no, not the health savings. If you are speaking of the health savings account, we're not.
>> credit union.
>> credit union. Open an account and I think you have to have $25 to open an account. You put that in there and then you can have -- go to payroll and you can get a payroll deduction and they will take that out of your paycheck. So if you wanted to put that in an account or maybe even just half of the savings in a -pbgt, you could do that and it would be at the Travis County credit union. Or you could put it in your own savings account if you didn't use the credit union. Everyone has access to the credit union, but you could do that in any --
>> it could be sort of without you thinking about it and it's like the money is gone kind of a thing more than if you do it yourself because if you do it yourself, then every payday you've got the temptation not to do it.
>> do the savings account route, this is pre-tax dollars.
>> no.
>> flexible spending on to get the pre-tax value you have to go to [inaudible] and risk losing it. To just get it put away for yourself so you don't have to go through the pain of do I want to take it and put it in my savings account this time for not.
>> but we can work with employees to determine how much they may want to put in a flexible savings and how much they would put into their savings account because then you at least have part of the tax savings and you may not want to put the whole amount into flex because of the losing feature. We can work with employees as open enrollment is ongoing to help them understand and make those decisions.
>> could, so I know annually what I pay. But I really need to know what the county and I pay to get my total so I can figure out what the 10% or 20% would be. So am I able to call and say, okay, now, how much did I -- what was my total health bill in '05.
>> yes.
>> I can do that?
>> or you can get on my u.h.c. And print it out or set up your confidential pass word and print out what bills have been paid so you can even print out individual explanation of benefits if you wanted to see how much your co-pay was on each and every one of them.
>> what I had in mind was one big number for a year.
>> and for the flex, judge, people could just write down like one thing employees that are listening should do is sit down and write those things that you know are recurring. Like if you take high blood pressure medication every month, for instance, you know what that costs, write that down. You know you are going to pay that. That's a good thing to put in flex. You know you are going to get that. Like barbara said, if you know you go to the eye doctor every year, you know, $35 co-pay, put that in your flex. If you get eye glasses or go for a dental checkup, just put that in so if people just plan what things you know, that's a good place to start. Very good place to start.
>> it is. And also something the employees should remember is that over-the-counter medications, not vitamins, but aspirin, ant cid tablets could be claimed against flexible spending, not just prescription drugs. We have a lot of education to do. There's no question about it.
>> I think this is not a whole lot of relief, but this is some relief.
>> I think it is.
>> and I think this is relief that we can live with. I do think the education component, though, is important in us getting done the best we can between now and the end of enrollment, and then after the beginning of the next fiscal year start working on the education. Looks like the insurance issue is not going away.
>> no, sir.
>> and really all the reports seem to suggest that the situation is getting worse, not better, right?
>> yes, sir. Not only for Travis County, but on a national level.
>> right.
>> let me ask, dan, can you tell me what are we doing to prepare for the upcoming open enrollment toward dealing with not only our retiree employees, but those employees that we have in-house now as far as this education piece, some of the same things we are talking about right now where they can make a decision, well, maybe e.p.o. Is not the best thing, maybe p.p.o. Is with the particular incentives or whatever you want to call it. I want to get a sense of that because I知 still hearing from some retired folk that they have not been in the process or tied into what we are doing here and they are not as close to the issue as they would like to be. They feel like outsiders to some degree. I want to make sure that doesn't happen or occur. So what are you and your staff, what are you all preparing to do to make sure that this education piece is in place to ensure that everyone here, every Travis County-related employees and retired employee have access to the most adequate information, the latest and the greatest type stuff? With a can we do to ensure the employee -- what can you do or what are you all going to do?
>> it really began before the employee public hearing when we mailed out notices to all the retirees. Even if they weren't on the plan at the time, they received a notice about with just the retirees on the plan that what the proposed rates were going to be, what the coverage changes were. I think we mentioned there were no coverage changes. But we sent notices out before the public hearing, and during open enrollment, we always have a week that we kind of identify as retiree appreciation week where retirees can come in, they can sit down with our staff and we'll walk through each and every plan and explain the benefits. There is no question that the rates for the under 65 is going up as much as they did raised a lot of concern, and we tried to explain to the retirees, because they've called our office as well, that it's really the cost of the programs that drive the premiums. And that that is a high cost category and that's really the reflective of the cost of overall claims in that particular class of employees or retirees. We'll continue to send notifications out once the vote is taken on whatever proposal is approved today, we'll be sending out another notification to retirees informing them of the decision and offering them one on one opportunities during enrollment.
>> what we usually do is send the information to the last known address. That works 98% of the time. If indeed -- and it's very -- not too common that we have retirees that move around a lot, but there have been some instances where a retiree may move and we do not have their last known address. So it is also the responsibility of each individual, especially retirees where you are not working in the organization, to contact Travis County and make sure that we have all the information. We usually go through that at open enrollment with all the retirees that show up. But if there are retirees that are not getting information or have moved, say in the last year, then they really need to update their files with us.
>> okay.
>> we're approaching enrollment time for next year so they need to contact us if they haven't done so already, especially if we don't have a current address for them. Once the deadline is here, they miss that opportunity, right?
>> that's right.
>> and we will be sending out one more packet of information to the retirees with the final rate and additional plan information, kind of like we always do. Because sometimes it takes more than one packet for someone to work their way through it and even decide what questions they have.
>> the last question is, last year and probably the year before, for as many times as we've been dealing with providing health insurance, there's been an area whereby if an employee does not participate in the health insurance program, they may be at risk to default, in other words at a default situation where they won't have an opportunity to participate in the program. And I don't never -- I really don't feel that it's ever too early to mention that as we're going through this process because some folks at various reasons do not participate and they are at risk of being placed in a default category. So are we continually reminding employees that you must enroll by a certain date or you jeopardize not only yourself but your family members and everybody else when you do not participate in the program?
>> and notices that are sent out to the employees before open enrollment and via our presentations to the court, the retiree employee committee, the personnel liaisons are benefit staff. Employees are notified. We've sent notice -- we will send notices via e-mail and also in checks about the open enrollment period. If an individual, and we have every year several of them, even though they've really gone down, and these are the individuals that fail to register, the default will be co-insured e.p.o., and it will only be for the employee. Not for family members. And this is very, very important to -- for employees to understand is that if you have a dependent child, a dependent adult, whether it be a spouse or you're guardian for a parent and they are on the health insurance, if you do not enroll for the health insurance, that individual will be dropped. And only the employee will be covered and they will be covered under the co-insured e.p.o., which is the 80/20 plan where the plan covers 80% of the costs for major medical and the individual will cover 20% with a $400 deductible. If retirees do not enroll, they will be dropped from the plan
>> and they will lose their option of enrolling in any future years.
>> I think that really needs to be stressed a lot because there may be opportunities --
>> it's kind of been all over everything you sent them, but you are right, it can't be expressed enough because we want people to make the right decisions for themselves.
>> thank you for that update and what you are doing. Thank you.
>> any down sides that we need to know about? That we maybe haven't mentioned today?
>> we just want again to remind the court that the gasby 45 issue is going to be coming up where liability has to be established and it's established on the usual plan that you are offering or the accepted plan. So we don't want to modify too much of what we're doing at any time because that then becomes the plan that we evaluate liability against. So we need to be cautious in that area.
>> when is that effective?
>> f.y. '08, but the financial ramifications are so large, I mean we're working very hard out. Dan is right, and one of the important things to remember and the committee has grieved over the discussions is that we can't have people who have not contributed in the plan and have not really been on the plan suddenly when they are sick have the option of coming back on. That's called adverse selection. The reason for that is then everyone's rates get so high that most people can't afford it anymore. And so what we're trying -- I mean we're going to be narrowing who can be on it, what your options are, and then also working on a predictability for employees. So that you can plan. You can say if I want to retire early, I know I知 going to have to pay this for, you know, my plan will cost approximately this. If I retire when I知 65. So that they can make an informed decision. So we're working on all of that, but dan is exactly right.
>> the other point we wanted to raise, last week when the court approved option 7, there were composite rates of $609 for active employees, 1010for under 65 retirees, and $286 for over 65 retirees. With the modifications that have been recommended or discussed here, those composite rates will not change.
>> my motion basically is to approve the changes set out in ms. Bettis's June 30, 2005 memo, and basically we would mofidy option 7 which we previously approved by reducing the employee contribution under the e.p.o. Plan from $34 per month to $20 per month, and we would look at the retirees under 65 in the e.p.o. Category across the board and just apply a $100 less action, right?
>> that is correct.
>> so the amounts we have for employees to pay monthly -- no, for retirees under 65 across the employee category would be reduced by $100.
>> in each of the tiers.
>> in each of the tiers. And that amount would be picked up basically by the county from the insurance reserve.
>> that's right.
>> just one other thing. And the financials yet on that would be for the e.p.o. Active employees, $306,600, and the $100 for retirees under 65 would be 73,200.
>> correct.
>> that's right.
>> you quoted in terms of going down from 34 to 20 represent the amount of the increase, not the amount that they will actually pay.
>> increase. Because up to this point they have paid 60, right?
>> yes.
>> so instead of paying 94, it would go from 60 to 80.
>> correct.
>> and I guess the best way to say the active -- the retirees under 65 would be in the distributed material when you look at the retirees' contribution, it would reduce that by $100.
>> that's right.
>> across the e.p.o. Tiers.
>> that's right.
>> the other part and I guess we may as well put it in the motion is that we do plan to increase the employee education and retiree education as to all the option as best we can between now and the end of open enrollment.
>> yes.
>> and there's only so much we can do. Employees have to take an active interest in trying to find out what the options are about in how they apply to them. And I think -- I mean i'll risk it, i'll go out on a limb and say these options really are a lot more beneficial than I thought they were because I had never taken an interest enough to look at them. And like most employees, I think once open enrollment is over and I have my insurance, next time I think about it really is next year. This year let's take a good look-see.
>> as we get older, we get nor expensive.
>> Margaret, did you second that?
>> yes.
>> discussion?
>> I would just like to say that I think this motion will get it started in the direction as we go to our benefit year. Looking at the overall things. But, however, I think, again, education is the key and I think the judge stressed that in his motion again. And as far as making sure that the employees have and also retirees have an opportunity to really look at the particular things that we're bringing forth and look at the health benefit plan and study it and see if it is the best and we'll have to make decisions. The bottom line is you do have some choices and opportunity to review those choices. Again, we'll all have to work together as far as getting the word out. Anything we can do to help and assist because we do get calls in our offices individually and of course we send them to dan or whomever else in h.r. To take care because we do get referrals, we really do.
>> absolutely.
>> we want to make sure that they go to the right sources to get the right information. So again, I知 glad that's included in the motion as far as the education is concerned. Thank you.
>> any more discussion? All in favor? That passes by unanimous vote. Thank you all very much.
>> I would just like to thank the court for your investment in the health plan for employees. You combine that with the wellness clinic, again, if you are not sick, you don't realize it, but you have always supported the health and the benefits pore the employees and I just want to thank you for that.
>> thank you.
>> thank you. Were you urging me to go to the next item?
>> yes, sir.
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Last Modified:
Wednesday, July 5, 2005 7:59 PM