Travis County Commissioners Court
May 8, 2007
Item 30
Number 30 is to consider and take appropriate action on group benefits health plan, a, maintaining or eliminating e po, which is the clikes you have provider organization for fy '08. B, active employees health insurance rates and subsidi subsidies, c, retirees health insurance rates and subsidies, d, health reimbursement account, and e group life insurance, increased basic life from 25 000 to 50,000, e 2, increase retiree life from 10,000 to 15,000, and e 3 is to increase maximum supplemental life from 2 200,000 to 250,000.
>> good afternoon judge and Commissioners. We are here today to get direction and a vote on several of the issues surrounding benefit for fy '08 for Travis County employees. I will refer you to this booklet and the booklet has the issues outlined, and I'll refer you to the appropriate tabs as we discuss them. The agenda changed a little bit because we divided active employees and retiree employee rates so you can take as separate items. Let me go ahead and start. I have cindy here to answer any questions that you may have on any of the plans or services that we provide. As the court is aware, we provide health insurance to insurance Travis County employees. Two of the plans are without premiums, the ppo and the co coinsured po plan. We also have a premium plan called epo which is 100 percent coverage for major medical expenses. Every we're we set premiums for the plans. Last couple of years we have been discussing the elimination of the epo. As we have shared with the court, that is the most expensive medical insurance coverage that an employee can get. It's expensive for the, the only one that employees only pay for. They pay $91 a month for the plan, and then it has also premiums for the dependents. The other side of the expense, other than the employees paying premium, is that the expends are claimed paid by epo are higher than in the other two plans, and I think I shared some of that information with the court. In one year's time the claims per per capita were about 4500 compared to 4,000 for ppo and 2200 per year per capita for the coinsured epo. So we have been discussing eliminating it for the last couple of years. The benefits committee had a we work with very closely looked at this item, and their recommendation is to maintain epo for one more year. The reasons for the recommendation is that we have heard from a lot of employees that are willing to pay the higher premiums in order not to have any out of pocket expenses other than copay for office visits and the rx copay. One, peace of mind, I think Commissioner Daugherty mentioned that. The other is that some employees find it hard to save up the $1500 needed for out of pocket, much easier to take it from their paychecks quice a month than to be save. And again, just peace of mind knowing they are fully covered if they have any major medical insurance needs. The second reason that the employee benefits committee is recommending maintaining the epo is that there is a protected revenue loss from the premiums of the thousand or so employees that are on epo. And there is a reduction in cost but the net is about 1. 1.2 million that would be lost to the fund. And 1.2 million that the fund would then have to pick up if they wanted to maintain.
>> revenue.
>> revenue, yes. Revenue. Revenue of 1.2 million.
>> move that we follow the benefits committee recommendation and maintain epo for one more year.
>> second.
>> and that we keep up the effort to educate the employees about the many advantages of the ppo during the enrollment process. We tried to do that last year. They should know that the county judge was a nonbelief nonbeliefer this time last year but after one year, several months, on ppo, I'm convinced that financially it was the right decision to make, and I think that if you sort of take your own experience from the previous year and look at the real facts if you had had ppo, virtually all employees, we think, financially would be better off with the ppo. But if you do that with your own set of medical facts, it's a whole lot easier to understand than us just telling you, you are better off with the ppo than epo.
>> yes.
>> this would be basically for us to just continue epo another year, this time next year look at it for fy '09.
>> yes.
>> seconded by Commissioner Davis. Discussion?
>> is there a way that you could take and do your flex money and use it.
>> for your out of pocket ?
>> for the out of pocket? Which would be the thing that would offset.
>> that's what this is for.
>> I know, but as it applies to this. I realize you don't think of insurance when you are thinking of the flex. You are thinking of the teeth cleaning and cough medicine and all that stuff. But if you really, I am trying to find way to connect to people. If what we really want to do is get them to really understand that there is a financial benefit for them to do the ppo.
>> you can take the epo payment you are making now and just put it in the flex account.
>> that is what I'm saying. That is the thing you have to let them know.
>> yeah.
>> because that is maybe the way to connect it. Otherwise, we're going to be back here next year with the same report. Guess what? Everybody wants one more year of epo. Because you are never going to get there unless you really --
>> just like last year.
>> unless you draw a real simple design and say okay, here is the way you need to do this. If you really want it taken out of your check, which is effectively what you are telling us. Okay, then let's take it out of your check and put it into your plex account, and then use that -- flex account and then use it for that purpose.
>> I don't know.
>> if it costs us revenue of 1.2 million, that is, that makes forcing it less beneficial financially.
>> no question.
>> might also end up costing us $1.2 million next fiscal year when we discuss eliminating it ?
>> depends on the claims. In fact, the $1.2 million project shun could be eroded.
>> if some one on ppo had a catastrophic illness, it would wipe out.
>> we if you are the adverse selection where you only kept really, really sick people in epo, then the trend would go up. I will share with the court that if we followed just the trends of the medical increase, that epo would go up about nine percent to what it is now, to over $100 $100. The committee decided not to do that because we had had such good lower costs in our ppo of over 12 percent down that if you averaged it, we ended up having like a negative three percent. So they said, for one more year we'll watch it. But if you have the same trend, trend of increase of ten percent or more, you're going to have toin carries the premium. Increasing the premium process told us if you increase to 110, are you going to have more people out of the program because it really, then they are really going to feel the pinch of paying the premium.
>> is it fair to say that we have the $1.2 million because the folks in the epo pool have been healthier than projected? For the fiscal year ?
>> I think--
>> judge, it's not tt th have been healthier in the sense that they haven't incurred claims. I think where you are seeing that, it's part of the margin that is built in, that was built into the rates. The margin in the epo is 13 percent. That is what we have. The mayor gin in the ppo -- the margin in the co coinsurance and ppo is 37 percent. While you have that money in the epo, you have far greater amounts in the other two plans.
>> okay.
>> regardless of the reason that people stay in the epo, they are still paying for it.
>> they are paying for it now, but next year, in order to pay for it, the premium may go up substantially.
>> of course.
>> yeah.
>> so in order to stay in it next year, you're going to have to pay more in the premium in order to be in ep epo.
>> chances are it's going to go up because everything has just been going up.
>> but we are the ones that set that rate. Correct ?
>> yes.
>> it would come to us for a vote of whether to raise it above $100.
>> yes, absolutely.
>> or whether the county picks it up or not.
>> right. That is the other piece.
>> there are healthy reserves.
>> right.
>> it's not like we have a small reand are at great risk of exceeding it.
>> we are in an enviable position now with two years of good experience and a hefty reserve, which most most--entities cannot say.
>> it would make sense for us to put together the kind of financial analysis for ep epo and ppo between now and adoption of a budget, where we may well want to say, okay, now we have been educating in two or three years. This year we do it. Not '08 by '09 we do it. So get ready for it. And know now that here are different ways to deal with it. That way we can say, well, we gave you not only two or three years to get ready, but we gave you one year to look at your individual circumstances and get ready. And we laid out other option options for you.
>> yes.
>> we are also going to try to implement before open enrollment an online cost calculate that are would allow people to enter their expenses like from this year and calculator would help them see what best financial financially for them and expenses under the plan.
>> my guess is most people in open enrollment think about it greatly throughout the year except when you do your small copay, and it's small compared to the total bill.
>> the calculator does include the flex feature . That would be positive.
>> one of the other dividends of the flex account, I have found, it makes me, and I imagine other people who use this as well, much more mindful of how much healthcare I'm consuming each year.
>> yes.
>> it's a very good plan. You can also even before you put all the money in, you can borrow from it if you have large expenses early on in the year.
>> motion is to maintain epo for fy '08. All in favor. Show Commissioners Davis, Gomez, dougherty, yours truly, voting in favor. And against, Commissioner eckhardt. B.
>> b is active employee health insurance rate and subsidies. And if you turn to tab 3. This is just for active employees, not retirees. The recommendation from the subcommittee was to have no rate increases in fy '08. Like I said, overall we experienced a negative three percent, or reduction of a little over three percent in our healthcare claims, compared to the nationalage of 8-9 percent increase. So we are doing very, very well. But the committee decided that we would take a wait and see attitude before any reductions in rates were recommended. So what we decided was the safe course, just not to have any rate increases. This is the first time in at least 12 years that I'm aware of, that we have not increased health insurance.
>> I'll move the recommendation.
>> second.
>> that is to leave the rates as they are currently.
>> yes.
>> for active employees.
>> yes, sir.
>> seconded by Commissioner Davis. Discussion? All in favor. That passes by unanimous vote. C.
>> good, thank you. I will direct you to tab 4, to discuss retiree premium. On retiree premiums, the benefits committee has two options for the court to consider, and that is no rate change, which is the option that they recommended no rate change for under age 65 and no rate change for retirees over 65. The other option, which is b 2, and that is under tab 5, would increase the subsidy provided by the county to retirees by $200, and $100 for retiree plus one child. For all retirees under the age of 65. And we have about 230 retirees under the age of 65 that are enrolled in our plan. And that would reduce what they pay by $00. 00--by $200. If you look in the middle of the page, epo would go from $898 for an employee and one adult, to $698 per month premium. The ppo would go from 619 to 419 for employee and adult. And on the coinsured epo, it would go from 501 to 301. And on for the other tiers, the rates are there. The idea was to provide some relief, or when we discussed this and came up with this optionrb just to provide some relief for retirees under the age of 65 because you will hear, probably, from them during the employee hearing, and we have also heard from them, and some of the premiums are steep when you are talking about $900 a month almost.
>> the benefits committee recommended no increase.
>> yes.
>> so who recommends the $2 $200 decrease ?
>> it's just an option that we looked at. And since there was a lot of debate and a lot of discussion, usually when we are that close in vote on options, we bring them both.
>> okay and so we can afford the $2 $200 decrease for retirees under 65, and to be honest, during recent years, that is the category of our participants that really has received a big hit in terms of increased premiums.
>> right.
>> expensive part too.
>> yes.
>> the ones that really--
>> yes.
>> then gen, medicare comes in after 65.
>> after 65.
>> so it starts to take a big share of the load. I'd like to move approval of this.
>> right. This option also includes a $40 decrease for over 65.
>> I'll second that.
>> okay your motion is option b of c which is 200 decrease for 65 and hundred. 40 decrease for over 65.
>> right.
>> leroy, were you at the benefits committee meeting when this was discussed?
>> I certainly was.
>> part of the lively debate.
>> I would just recommend that with the healthy reserve in the health fund, that if in fact the court desires to reduce those under 65 and those slightly over, that we fund it out of the reserve, than we not continue to add to that very very very--healthy reserve.
>> that is parts of the recommendation ?
>> yes.
>> and part of the.
>> anymore discussion? All in favor. That passes by unanimous vote. There will be a lot of retirees under 65 that will view this as very good news. And the d is health reimbursement account.
>> yes. I'm going to turn that over to dan.
>> the health reimbursement account, others wise known as hra, is a modification to the wellness program by which employees who participate in wellness programs have reached certain goals that were set for them particular to their medical and healthcare needs could be recognized both financially and otherwise. It's a means to help them in the prevention and manage management of disisdisease lead to go a healthier lifestyle that brings claim costs down, and shows them a way to become discerning healthcare consumers. It is unlike a hsa where you have high deductible. There would be no plan changes, just a modification of the current wellness program. What we would like to do if the court gives us direction to do so, is to bring back a more comprehensive outline of some of these goals for individuals that suffer from certain diseases in our high cost categories as well as some of the more energized employees who want to participate in the walking program leading up to some of the races that we participate in.
>> I move that we pursue the creation of a health reimbursement account.
>> second.
>> take steps to bring back a detailed proposal for our review at the appropriate time in the future. Before we adopt the budget.
>> that is what I meant.
>> anymore discussion? All in favor. That passes by unanimous vote.
>> okay.
>> good motion, Commissioner.
>> e has to do with.
>> with your help, judge.
>> --with the group life insurance that we provide employees. Right now we provide all Travis County employees with basic life insurance of $25 $25,000. That amount hasn't changed for over 20 years. We could count or the tenur tenured employees, anyway, told us. The recommendation is to have that go from 25,000 to $50,000 for basic life for Travis County employees. That would have a cost of about $155,000 additional in fy '08.
>> the last time we increased it was when ?
>> over 20 years ago. That was the tenure of the employees that we had on the committee, was 20 years. They said we have been here 20, 22 years, it hasn't changed since then.
>> that also comes of reserves ?
>> not healthcare reserves. That would be augmented by the general fund.
>> 155 ?
>> unless we decided to reduce the reserve.
>> there is an abate of financing.
>> we will be bringing you probably some recommendation recommendations that have effects, positive effects on the general fund. I mean, we could offset some of the things being transferred from the general fund into the healthcare to at least cover the 155 and perhaps larger numbers, if you like. Those will be coming in the future to you.
>> in other words, he has our back on that one, Commissioner.
>> good. The healthcare fund is just restricted. Can you only just that money for certain things. You do have more ability in the money you put in there for fy '08.
>> move the motion.
>> second.
>> e 1. Discussion? All in favor. That passes by unanimous vote.
>> the other two are covered by retirees and employees but number two is increase in retiree life insurance from $10,000 to 15,000, that is paid for by retirees, and they have been asking for an increase.
>> move approval.
>> second.
>> if they are paying for it why wouldn't we take it to 20,000 ?
>> that is a carrier issue. We do have our representative here. Do you want to come up ?
>> okay. There's good reason why.
>> with the retirees, a lot of times it becomes more after cost issue because the retirees are included with the supplementel coverage, kind of in a package for employee supplemental.
>> okay.
>> quite frankly, most of the claims you obviously have are retiree claims. They just die more often than the employees. Bottom line.
>> you insurance guys.
>> I didn't say killed, which I used in some of the other meetings.
>> dyinging more often.
>> exactly. Old folks die more often.
>> that is what you are saying ?
>> if you look at that, a little background on that. We increased the retiree amount, I guess four years ago, from 5,000 to 10,000. At the time there was no charge increase to the retirees. Not per thousand rates, the 1.54 per month stayed there when we went from five to ten.
>> okay.
>> that actually was supposed to have a slight increase but through negotiations we were able to keep it at the 1.54. The increase from ten to 15 incrementally, we would have expected it to go up about 78 cents or so, and it did not. I think we got a very, very good rate on that for retirees, going up about 54 cents. Once you start looking at adding 20,000 plus the retirees have an option of another 10,000 on top of that, you start getting to bigger numbers to where the carriers get a little nervous on the flat ire ee amount.
>> so in your expert opinion we should increase from 10 10,000 to 15,000 as recommended.
>> I think the retirees would be very happy.
>> and they pay for it anyway.
>> yes.
>> on their own, they can exceed this amount but it costs more.
>> correct.
>> there is a $10,000 openings over openings-- openings--option over and above the 15,000.
>> it's it's yun it's under underwritten by the carrier.
>> we do have a motion and more discussion? All in favor? That passes unanimously.
>> three is increase in maximum supplemental life insurance. We provide the option for employees to increase their life insurance. The maximum that is being recommended that from 2 200,000, which is maximum now, to 25,000. Again, this is paid for by employees at their option.
>> the increase still has to go up 25,000 annually right ?
>> normally that is how it works. When we do a jump like this, say if some one is at 2 200,000 right now, they can make the jump to 250 as long as their veil supports it. It can't be more than four times the salary. They can goo
>> [tkpo] 225 or 250 if they are already at 2 200. Everybody else can keep going up in the increments of 225. We do that when we implement a jump.
>> and the employee pays for it.
>> yes.
>> move approval.
>> second.
>> discussion? All in favor. That passes by unanimous vote.
>> thank you.
>> thank you very much. We will have the information distributed and sent out to employees that. That way, it's really the earliest that we have ever adopted the plan. It's good news and we'll get the information out to them.
>> thank you very much. We appreciate the committee committee's hard work. Mr. Unum representative, thank you for coming.
>> thank you.
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Last Modified:
Wednesday, May 9, 2007, 8:00 AM