Travis County Commissioners Court
September 4, 2007
Item 19
19. A, discuss employee health benefit fund quarterly report through June 30, 2007 and take appropriate action; and b, discuss and take appropriate action to amend chapter 17, employee health benefit rule of the Travis County code, to create an employee health benefit stabilization reserve.
>> good morning, judge.
>> good morning.
>> we are here to present the quarterly report on the health plan through June 30th. Of 2007. Goodupdate on the employee health care fund. It also provides financials, as well as performance. It reports on the last nine months of the plan, the last time we came to you was the first quarter. To be quarterly reports, though, I that I probably twice a year I think that we've matured enough to be able to report twice a year to you. But this report reports on the status of the health care fund as of June 30th of 2007. I'll ask you to turn to -- to turn to page 1 at the bottom of page 1 you should -- you see the data as of June 30th for individuals that were covered under the plan. We had active employees, a number of -- 3,730, we had retirees of 445, retirees, we have cobra participants, these are participants that for whatever reason leave the county and still have -- have I think 18 months is it? 18 months to continue on the plan, they pay full coverage for -- full premiums for their coverage. Total membership was 4,189 plus then dependents. We cover spouses and children and domestic partners, also, for total participants of 7,285. Participants in our plan. We provide helpful health coverage to all of those individuals.
>> okay. And as of June 30th, one of the things that -- that we follow is how many people have excess claims of 150,000, plus people that have a -- claims that are in excess of 50,000. Those are the two -- those are the two data points that we follow. The 150,000 we follow because we pay up all -- our health care plan pays up to 150,000 of the first major medical coverage for employees and dependents. Then we have a stop loss insurance provided by united health care that covers the rest up to two million. And we had 8 employees that -- that had exceeded the 150 stop loss and we had 31 employees that had exceeded the -- over $50,000 in claims. All financials are -- are -- reports are prepared using generally accepted accounting principles. I'll go ahead and cover those.
>> how much of the 26.9 million comes from Travis County?
>> if you look at page 6, judge, it's -- there's a breakdown there. Active -- active employees contribute three million -- look in the middle where it says contributions. That has a breakdown. Active employees contribute 3,827, 780. The county contributions for please are 20 million -- almost 20.5 million. So the majority of it comes from Travis County. And the premiums that are paid by the county for employee and dependent health care.
>> okay.
>> okay.
>> we talked about high dollar claims. Let me go ahead and take you to the -- to the financials. Look on page 9. That will give you a synopsis of the financials where it has internal service funds. Actual. That is the insurance premiums and operating expenses and look at -- at the very bottom of that where it says total net assets ending. That's your 29,723,994. That is what the ending fund balance as of June 30th. I think it's expected to be about 30 --
>> 31.
>> 31 million at the end of the year.
>> the recommendation from the actuary, between 15 and $18 million. We will get into that later, that is the recommendation so clearly we are overfunded in this particular budget and have a couple of suggestions on how to reduce that in a measured way, which was the -- the exact words that were used by the actuary.
>> this is internal service funds, but that's the same as reserve?
>> yes. Uh-huh.
>> okay.
>> reserve. One of the things that -- that I would like to point out is if you recall several years ago, we started shifting from epo because it pays 100% of all major medical care and it was getting rather expensive. Trying to shift our population over to ppo and the co-insured epo. We achieved that. There has been a reduction in the number of people that are going into the -- the -- the epo and shifting over to the ppo and if you look at page 13, that has health insurance benefits enroll amount of fy 20082008. After opening enrollment. You can see the epo shifted, the percentage in fy '07 was 26%, now 22% and before that -- it was even higher, so we are achieving a gradual shift of employees from -- from being totally dependent on a health care plan to cost sharing in a 90/10 and 80/20 health care plan. You will see charts later on that show you the co-insured epo, which is the 80/20 plan was especially devised to allow and make it affordable for families, especially families with a number of children, to still provide good health insurance for themselves and their families at an affordable rate and we have achieved that because we have a lot more families in that particular plan. I'm going to turn it over to -- to dan and cindy to go over the --
>> the other plans are also showing additional shifting, too?
>> yes, the ppo is the largest -- people are going from epo to ppo and then you are having a large amount of families -- the -- the adult plus one and then adult plus family going into that co-insured epo, the 80/20 plan, is an excellent plan, but much more affordable for larger families.
>> cindy?
>> [one moment please for change in captioners]
>> the active medical is 66 percent of the overall cost and the retire ee med equal --medical is ten percent of the over alcost. You can see the pharmacy as well. The next page is comparing the plans to each other, ppo to epo and coinsured pp o. You will notice that the epo has 27 percent of the expenditure on the medical and the epo pharmacy has eight percent. The ppo medical has 36 percent of the expenditure. You would expect that since we have more people in the ppo now. You can probably remember when the epo had much higher expenses. Those have gone done a little bit. In the coinsured epo had 13 percent of the medical expenses this year. Last year it was very very small but you can tell there's more people in there now so their expenditures are so going up a little bit. On the next page, page 18, we're looking at contrasting how much on the different types of services. For facility in patient hospital bills, it's 2 is percent of the overall spend. Facility outpatient is 12 percent. A lot of outpatient surgical procedures and outpatient diagnostic testing in that category. The physician services is 27 percent. That's the doctor's office visits, our highest category, and surgeons bills. Managed pharmacy is 22 percent and mental health, chemo therapy chiro practice --practor, all that under allied health. On page 18, this is a chart for the actives, the paid claims by plan and tier. If we wanted to know under the actives how much of the money that we are spending is just on the employees themselves, you could look down there and see is that it was 16 million nine, almost 17 million spent on the actual active employees. If you wanted to know how much was spent in the tier that includes adult you can look under that or child, go on down the line like that. Be careful when you look, this doesn't mean like the second category, employee plus adult, that --6.5 million was spent on the spouse. That means it was spend on the tier including the employee that covers the spouse. We don't have a chart yet that shows exactly how much was the spouse expenditure and the employee's expenditure. That's for the tier.
>> this is the chart if you look at the active medical co-epo and the par chart in the pink, which is the largest in that particular category, is family. That is employee plus family. So that is how one of the indicators that we know that families are really taking advantage of providing solid healthcare for their employees, especially if they have more than one child.
>> right. That tells us that people in that category, the employee and family category, are spending the majority of the spend in the coinsured epo, not just employee only cat gorks it's the family category. If you go on to page 20, this is a chart you have not seen before. This is a comparison of membership versus paid claims. Show the blue, the blue bars tell you the percent of membership of the overall plan, what percent of membership is in the epo, which is 25 percent. Ppo has 57 percent and coinsured epo has 18 percent. If you look at red bars that tells you percent of the overall claims cost, 35 percent attributed to epo, 49 percent to the ppo and 16 percent to the coinsured epo. I thought it was kind of interesting how the claims cost compared to the percent of membership. Page 21, we have been looking and kind of doing estimates for retire ees. If you look at the next chart, as of 2006 we had 711 retirees out there, not on our plan but 711 that were getting their annuity from tcdrs. For year 2007 the pink line shows that you we have 497 employees that are eligible to retire at any time. So we basically have 500 people that are eligible to retire that could walk out the door at any time as retirees. So if you combine the 497 plus the 711 you will notice that that will give you close to 1200 people at any given point. So the pink line is kind of a projection of how many--
>> potential.
>> yeah, how many people are going to be eligible to retire as of the year through 2010. Doesn't mean they will all retire but that is when they are eligible. I think this has ramifications not only on the benefits side by management side as well. We need to prepare for these people to retire and a lot of upper management are going to be included in these numbers. So I thought it was kind of interesting to see where we were at, just kind of a nap shot in time.
>> we will look of course to this graph especially when it goes sharply up as potential participants in the plan.
>> retirement eligibility is determined by the rule of 75?
>> three ways to retire. The rule of 75, which is the years of service plus age when that equals 75 you are eligible to retire, or age 60 with eight years of service, or 30 years of service. There's three triggers at Travis County that will allow you to become eligible to retire.
>> do we assume that any one of those three means age? That people are 65?
>> no. At age 60, if you have eight years of service, you can be eligible to retire. If you have rule of 75, you can be eligible to retire. And most of your long-term employees will hit rule of 75. Like me, I was a little older when I came to work at Travis County so I'll use the age 60 with eight years of service. So the vast majority of retirees will hit one of those two triggers. 30 years of service is also out there but most people don't hit that, they hit one of the others first.
>> okay.
>> okay and then--
>> are those determined by the retirement plan, state law, Travis County policy or what?
>> tcdrs determines by legislation. It's state legislation. Barbara?
>> actually, it's state law and tcdrs, which option you can chose. They give us the option. The court had the opportunity to select among various options. These are the options that we selected for Travis County.
>> okay.
>> all right. That's all of the charts that we're going to go over today. Do you have anything to add, dan?
>> I was going to say, the significant part is that some of the educational programs we did put on throughout the account --county did have an fect on the ppo expected over the neck couple years that we will still see some mig out of the epo into the other plans. I think the other chart that cindy did show shows that epo doesn't cover its cost of claims. So we'll still bring that back. At least I'll bring that back several times.
>> but if you are an employee with children, likelihood that you would need to access healthcare is much greater than if you were an active employee without children. Right?
>> that would be a true statement.
>> plus if you have a medical condition, some sort of chronic illness and you know you are already in need of medical care, then the epo plan sort of makes a lot more sense. Although there is sort of a mandatory monthly deduction, you know exactly what that is and it's automatically taken out. Whereas 80/20, you don't know what the 20 percent is until you see it.
>> but do you have a stop loss. You have an out of pocket maximum each year.
>> right.
>> there's a safety net of $150.
>> when I looked at that, I guess my initial reaction was that, you know, it's foreseeable. When I made my decision, that the sort --that is sort of what I looked at, the likelihood of expenses seeding --exceeding whatever that amount is. Since I know I'm taking medication and seeing doctors regularly, the question is what would I pay under epo versus ppo. It turned out to be advantageous ppo, as long as the stat question continues--status quo continues. My point is that if you are a county employee with five kid, especially if they are kind of young and in need of medical attention, seems to me the epo makes all the sense in the worl.
>> I think what we tried to convey to employees, if you are paying in a certain amount of premium and you can take that and set it aside and not pay it into the fund to put it into an account, and, that might offset the 20 percent, 10 percent coinsurance plus the $200 or $400 deductible. I think that is the message we try to get across. Obviously there are exceptions when the epo would be advantageous.
>> right.
>> this last enrollment period, I think the deadline was August 23, I think.
>> yes.
>> did we effectively give all the--get all the county employees involved as far as getting them under our health plan? Was there any default situations that cropped up?
>> there were some defaults. We defaulted 16 people16 people defaulted.
>> yes, 1 people defaughted. There's always a variety of explanations.
>> last year we ended up defalting about eight or 9 people it's a little higher this year. There was a variety of explanations why.
>> it wasn't that they weren't aware of the notification.
>> I only had one of those people say they weren't aware. The other people were aware. Had they just got sidetracked and didn't finish in time or didn't think they needed to do anything.
>> okay. But in the default situation, the point is they don't really lose insurance opportunities totally. They just end up being designated to one that they may not have had a choice.
>> they end up being placed employee only epo and life. The coverage that the county provides is where they are put.
>> if they have tamly situation, that is just the employee only.
>> right.
>> that is the default.
>> right.
>> it's very critical I think for everybody to realize.
>> it's important for employees to take the time to do their open enrollment.
>> thank you.
>> that concludes our particular report. We can move on to item b unless there's questions on the healthcare fund report.
>> okay.
>> item b is establishment of an employee health benefit stabilization reserve. As we reported, the reserve for the plan, the healthcare plan, is estimated to be at about 31 million as of September 30. And our actuary has said that that is really, the consensus is that over the last three years reserve has ground in the amount that cannot be supported by the claims history. Therefore, what he recommended was a measured reduction in the reserve to about 15 to $18 million. To that end we are recommending the creation of an employee benefit stabilization reserve of about a million dollars. If you turn to page 24, 24 and 25 gives you. Synopsis of the money that has been deferred. This is a good time to discuss since we are going into budget mark-up, so you are fully aware of of the amount of money that has dropped the ending fund balance or is recommended to put into reserve from both the healthcare fund. And I went ahead and included risk fund so give you a picture of it.
>> let me ask a question.
>> yes, sir.
>> can this particular reserve be altered during the course of the year if necessary? Altered meaning if you need more than reserve, want to take from the reserve, whichever the case may be. Can it be manipulated during the course of the year. If the reserve is established, then do we have to bind ourselves to that amount that we agree upon?
>> the best method to address the growth in the reserve is really not to put money into it. Once you put money into it--
>> I understand.
>> --it's very difficult to take it out. Indeed, have you a chapter 17 and you have legislation also that protects the reserve to be used only for health benefits of employees and retirees, very strict reserve criteria. And barbara, do you want to address that further?
>> thank you.
>> when you talk about what you have.
>> in the reserve.
>> when you talk about reserve, you are not talking about the new reserve you are establishin.
>> that's correct.
>> this is the old.
>> okay. The way that the fund is set up from the standpoint of both accounting and law, it's a separate entity from the general fund.
>> right.
>> and whenever the court makes a decision and establishes something like this, the court still has the authority to change it. But, I mean, you could decide not to have a self-insured plan at all and you could just move out of it. So you have that drastic option. But if you are planning on it going from an ongoing plan and you're planning on living by the rules you set up for the fund, then you need to put in an amount that's adequate to meet the actuarial needs of the plan.
>> right.
>> and you need to restrict your use of that according to the uses that are listed in chapter 17, which are very limited. And that is healthcare claims basically. I mean, that's the quick and easy. There's some other thing like the administrative cost of the plan, but that is a very small portion of what comes out. The portion of salaries of three of the peach at the table there come out of it but not all of the salary of all of them because some of them do other things besides healthcare plan.
>> but barbara, state law, the statute restricts.
>> it says they have to set up an order to say how the money will be used of they have done that. They can change that but it's not, it's a very drastic thing to pull something out of there contrary to the rules and regulations that you have set u.
>> just wanted the know if there was any--
>> does that answer your question, Commissioner?
>> yes, that answers it. Thank you.
>> if we turn to, yes, 24. One of the recommendations is in fy '07 you were supposed to have 3,023,113 go into the healthcare fund. From deferral, deferral is transferring further county contributions for retirees healthcare. What is being recommended, and you see that transition in page 25, what is being recommended of that 3 million plus, that 2 million go into the ending fund balance, generally --general fund balance, and one million be used to establish a health benefit stabilization reserve. That would be a general fund, and a more flexible fund for the court. It would be used for retiree and health and wellness activities and would require an amendment to chapter 17. But it would be more flexible than the 30 million that you have in the proper healthcare reserver.
>> okay. Then you go to discontinuing general fund transfer vacant slot money, hospitalization savings. We budget every year vacant slots in the appropriate budget, departmental budget for vacant slots or healthcare costs for vacant slots. And as opposed to deferring that which is 2,424, 000, that was part of the money that you saw that was used in the compensation when we put together the list of funds that could go into compensation to be used for compensation, that was part of the money. What you saw before was 2 million but pbo has estimated that that fund is really going to be 2,424,166, so we changed that.
>> all right.
>> the total not to be placed into the healthcare fund reserve because it is too high now, would be 5,477, 4000, 5.5 million. I also wanted to remind the court that we are reducing the risk funds reserve by 1.2 million. Readopted this plan last budget year. It was a four-year plan. The first was in '07. Then it will be in fy '08 we will also reduce the amount going into the risk reserve by 2 million. We are very fortunate this year that we are able to recalculate the workers' comp funding and reduce that by 400,000. Again, it is our training programs and awareness programs that have really paid off in the reduction of number of accidents and workers' comp claims. So the total reduction to the risk fund is 1.6 million, which gives you a total in fy '07 of 6.6 million. From both healthcare fund and risk management dropping to the ending fund balance, and then in fy '08, a potential of 8.9, even though I will point out that fy '08, the top number, 4,892,000, that will remain in the budget and we can go through this process again next year if it is deemed that we don't need to transfer any money, will you have that money available.
>> you think we have communicate that had to employees, that the training that prevented accidents now makes more money available for compensation?
>> uh-huh.
>> you think we have communicated that?
>> I think we need to continue to communicate that. I know dan has had a lot of real good meetings with the sheriff. You heard that from them too. They were one of the larger departments that had some of the workers' comp claims, and they have really reduced those. So we are very thankful for that awareness I think you are right, Commissioner, we need communicate that.
>> prevention pays.
>> yes. The other good thing to mention is that we had no healthcare increases this year at all. No increased premiums at all. In fact, we had a reduction for retirees. That's a real real good thing when it comes to realizing any pay increases that someone gets, it doesn't have to go out of the other pocket for healthcare funds.
>> alicia, the 8.9 million in fy '08, lookinging at the note, it's the recommendation that 1 million of that be put into the, should be used to create the health benefits stabilization reserve. Correct?
>> the one million comes from the three million really. If you look at page 25, that kind of shows it. It's from the 3 million. One million goes into healthcare stabilization reserve and then another, the other 2 million. Then in the next year we're looking at perhaps adding from the 4 million maybe 2 million, I think we said, or so, from that 4 million to the healthcare stabilize ation reserve. Again, the good thing is that we can decide this every year without having a crisis that we don't have enough funding in that particular reserve, which we have experienced before. And this feels much better.
>> and for clarification, the last box, general fund savings as a result of not transferring to retire ee contribution insurance fund, can you give me some examples of that so I understand that better.
>> that's the 4.8 million in '08. There's budget for retiree health insurance. If bee don't transfer that, what that note is saying is that we should consider adding to the million dollars in the health stabilization reserve.
>> okay. That's just to say, you know, the suggestion is put a million of the three million in fy '07 into creating health benefits stabilization and in fy '08 sta a look again.
>> we may add some of that if we don't transfer it to the health fund.
>> okay. Good. (inaudible)
>> no, every person at 4.8.
>> all right.
>> and so on a quarterly basis or bi annually, or semiannually, we take a look at claims, we take a look at high cost claims, we take a look at retiree and retiree claims. And those are the areas that we take a look at to see, okay, how much more can we save than next year because our reserve has reached an amount that really is beyond what is recommended by the actuarial. Part of this I think has happened by design. We have, as you know, an employee healthcare committee. We have worked over the last five years. We worked very, very well together. We have very good representation. Very high participation also from all involved, the very engage group. Everyone has their contribution, including ascme, other union representatives also that contribute and are watching this fund pretty closely.
>> good news.
>> on page 24 where we have the dates up there, those dates simply indicate when the action was taken?
>> right, fy '07.
>> preparing for the '08 budget is there yes, the budget in '07 or the budget in '08 is what it refers toyes. What we are saying, what the recommendation is, not to transfer those funds. Usually these transfers happen at the end of the year. Go ahead, travis.
>> the pbo, the amount that alica refers to in that box has already been included in the auto tor's revenue estimate, the latest ones. What we did, we budgeted approximately one million of that 3 million savings in the allocated fy '08 preliminary budget allocated reserve. So we could bring this item to your attention so you could decide whether or not you wished to use that $1 million already in the allocated reserve either for the stabilization reserve the way alica proposed or to leave it in the allocated reserve.
>> that was addressed in the preliminary budget, the creation of the stabilization reserve and putting the million in the allocated reserve in anticipation of creating the healthcare stabilization reserv.
>> so the three plus million in allocated reserve, the million of that is--
>> that's correct.
>> real really two million dropped in.
>> it's not three more million dollars out there.
>> that's right.
>> it's already been included in our revenue estimate with the available balance that you have before you for tomorrow for your mark-up.
>> and the 2.4.
>> the 2.4--
>> it's part of the compensation. You're right. That's part of the compensation amount.
>> so in total it's a 17 million drop in our reserve. Correct?
>> yes.
>> that will drop it to roughly 23 million?
>> no, no.
>> that's money that won't be transferred that would have been if we don't take this action.
>> oh.
>> how it impacts the actual number of the reef serve will depend on the claims costs in fy '08 and the revenues and things like that. But certainly this would be 7 million more that would have been added to the reserve ant insurance fund if we didn't take this action.
>> so reserve is still standing at roughly 30 million.
>> right.
>> so we're just looking at reducing it by attrition.
>> right. We want to be conservative and because next year we may see, right now we have seen the reserve go up every quarter as we have done our financials. Next year we may see it start to drop down because of the additional funds have not been in transfer.
>> okay.
>> in order to create the healthcare stabilization reserve there is an order also attached that would amend chapter 17. And dan and barbara, do you want to address that?
>> well, the chapter 17 currently holds that the reserve cannot be withdrawn for other purposes. And barbara drafted the amendment. I'll let her give you a legal explanation.
>> I think that I'm getting confused in this discussion because when I look at chapter 17, there is no reference to a reserve in there. That's a way that we aportion money within the accounting context. And once it goes into the fund, it's in the fund. What is being suggested here that is within 17 we actually use the word reserve and that this reserve not be part of the fund but that it be a reserve in the general fund that, actually, it's kind of like a subset of your allocated reserve. You have all indicated reserve and then you have health allocated reserve, so to speak. Except that we are memorializing it within chapter 17 so it has a little bit more life than if you just may or may not allocate something within the allocated reserve to health. It gives you have the flexibility, because it's in the general fund and not in the health fund, for you to use it for things that the fund could not be used for. So the wording in this suggests that it still stay within the concept of health related things that so like many of the activities that the wellness program has wanted to do are not within the restricted funds of the fund, but that this reserve could be spent for those if the court chose to use it for that. So it gives you broader scope for how you use the money and yet kind of keeps it there in case we have some sort of a pan demic that results in catastrophe within the fund itself.
>> so the 17.035 provides an alternative for employees to cover that kind of stuff like wellness program stuff? It doesn't relate strictly to healthcare benefits packages.
>> the way that the chapter 17 is written, it talks about payments being limited to claims for health treatment, healthcare that sort of thing. This is broad enough that if it's related to your health, even if it doesn't relate to a claim, you can get there with this.
>> that sounds appropriate.
>> okay.
>> how did we arrive at a million dollars?
>> it was just an amount that we thought was conservative enough yet meaningful enough to put aside. It could be more. It could be less. Out of the 3 million, 2 million, when we had earlier meeting with pbo said 2 million. We would like to go to the general fund ending fund balance. And one million can be set aside. So it was just one of three. It was a budget concern next year that we have 4 million, could be 2 million or one million. Again depend on the particular needs of the court and early planning. I have just been informed that we'd like to hold the establishment or amendment of chapter 17 one week in order to allow further review the auditor's office would like to review. They haven't an opportunity to do that. Other numbers, those remember reviewed and are a consensus or recommended to you on a consensus by pbo, the auditor's office and administrative operations.
>> you want to be back on next week?
>> on the stabilization, healthcare stabilization.
>> you want to be back on next week sh.
>> yes.
>> one week or two weeks, judge?
>> one week, I guess. Unless there are significant issues. We'll know that by next week too right?
>> yes, sir.
>> after all this is done, 29 million in healthcare will still be 29 million?
>> it will be around 30, 31, yes sir. That the ha is what is projected by the end of the fiscal year.
>> if our healthcare experts to whom we pay big dollars, have suggested, I guess there's more than one, that we get down to the 15-18 million range, why is it that we're not doing that? When we say measured reduction, measured over how many years?
>> that depends on your healthcare claims. That is why they say measured, because it's not as predictable as one would like to think that it is. It's not that our healthcare claims have been reduced. They just haven't gone up as high as was projected. And one of the things that we'd like to do this coming year is have melleman and maybe engage another official to look at exactly how it is. There's two parts to healthcare claims. One is the cost of medicine and cost of medical care. The other is the usage or the claims. We'd like to break those down to see what is it that was really affected, how did our clinic services come in to play and have a further analysis, and also then work with uac to project, well, the cost of medical care, the contracts that they have, are they stabilized or do we anticipate that those will increase. I think that will help us better get at the question that you're asking, judge, in terms of how much how soon. I thing is, once money is in there you can only take it out for health claims. That is very restricted. What you do, you just don't put money and try to reduce it that way. And this is the money that we had that, you know, was available not to put in.
>> from a historical perspective we're one of the governments that has been very successful in self management risk in he will. One of the reasons that is we have tried to keep fairly healthy reserve so you don't have massive swings. Because if it happens in the middle of the year, you don't have money for that, you've got, then have you to see what you are going to cut in the rest of the budget. So those funds have been very successful because of the healthy reserves. Alician is exactly rightlve once you get them in those funds, not only are their legal restrictions, Commissioners court restrictions, but there are accounting restrictions as to whoever put it in need to get it back. If you take money out.
>> the beneficiary.
>> that's right. So what they are doing is suggesting that the reductions are from general fund not going in. So there is no question about, well, so and so should have gotten money back or whatever. The point about reducing that reserve, we all think it's too high. There's no question about that. But the estimates are not very accurate. I mean, you know, this is one of the gsaby 45 . Even for one year they are not terribly accurate. You can have a number of claims that hit quickly and start eating up your money very fast. From just a general strategy, what we thought is one way to kind of still have our conservative nature is to not put so much money in those. Those that we think we don't need at all, they dropped into the fund balance in the general fund and that ought to be gone. But to the extent that we can gradually be moving reserves over to the general fund instead of that health fund, it does give us, I think, the best of all worlds where we have money set aside if we have a problem but we are not tide up into an inflexible situation where we can't use the money. That's kind of an overriding strategy that meets kind of the law, what you all have done in chapter 17, and the accounting for it. So that's kind of the thinking. And judge, the million was just kind of a guess, you know what I mean. Going into those are all estimates.
>> if you take a look at page 24 ran look over a two-year period, the total that you will, if you don't put all those funds into the employee benefits health fund, will be approximately 5.5 million in fy '07, 7.3 million in fy '08, for a total of almost $13 million over a two-year period. That's pretty significant.
>> it is.
>> yeah, it's pretty significan.
>> but even so, that is money that is deferred.
>> uh-huh, yes.
>> money we're in the --not add to go the reserve.
>> right.
>> because we don't need to.
>> simply atrophying to a level more appropriate.
>> natural attrition of the funds, of the diminishing of the funds. They will still be paying claims. If we have a high claim year that fund will go down pretty significantly. We have just been fortunate we have not done that. Like I said, they haven't really gone but we have stayed since '03 about 22 million, '03 22 million, in claims, '05 23 million, '06 23 million. So we've gone only a million up from '03 until the end of 2006, only gone up a million in claims. That's pretty significant in terms of that trend. That's why many of us want, again, a further analysis to see what were the factors contributing to the stabilization.
>> almost feels like that is today. But we don't know what it's going to be two weeks or six months from now.
>> how much has the reserve increased annually since '03.
>> in '03 it was a million dollars, went from that to seven to 14 to 23. So it has increased pretty--
>> I thought you said the reserve today is 30 million.
>> 23 and then '07, 29,7, so 30 million.
>> judge, the actuiekeer they were trying to project 6 po years out because we have seen that even one year out, extremely difficult to project. It could have been the other way that they projected. They could have been short.
>> susan, that was true when we went back out with blue cross blue shield and then we decided to go to self fund.
>> yeah.
>> because it was going to be just extremely tough for blue cross blue shield to cover us because we were very ill.
>> yeah. And that's what they are sing. D e premiums wereset on tt that. You know, I wolike to think that t health clinics and the focus on health has had some positive impact there.
>> uh-huh.
>> those tend to be lonterm. Hopefully we will have me of that as we go on, as we inve in wellness, see this. And thadntage for the emoyeeis that thepremiums ve bn flat this year. That's abig nefit for our employs. What ware trying to do is just take a prudent stance on at money beuse once it's gone and en you're with some big claims, it's gone. One year, I can't rember now whicyear it was, but we were ort 2.3 million n the middle of the year. We had ney set ase for employee raises but th dn't get them beuse we need that 2.4 to drop into that fu immediaty. So aft that we sort of got real conservative and said we have oth tngs we can't control like e jailtion. So these things that really are teibly unpredictable, you need to have good rerves. But we all agree it togh anwe're taking sort of a measured approach.
>> that's why we included that chart in page 21 on retirees, because it's not, next year or maybe the year after, but starting in '09 and 10 you see the marked increase in retirees. We always worry more about those under the age of 65 because those are the ones most dependent on our healthcare right before they get to medicare, under the age of 65. En we do have a lot of those. It's about 50-50 of our retirees that are over age 65 and under.
>> those claims are higher than usual in that age group.
>> of the ones that we add minister now as far as our retirees, how many of those are, that we will lose with this particular strategy that will no longer be, do we know how many of those we lose if we go with this particular policy and things like that, that they will no longer be a part of what we are doing? I understand there will be additional ones coming in, but as they get to age 65, they go into the medicare situation, and once into medicare we lose them, per se.
>> we keep them.
>> they are still on the plan.
>> we don't lose them at all? Once on the medicare? I thought we lost some of them.
>> .
>> when they are 65, during that time period, we pay a hundred percent of any claims that they get. But the way we set up the plan is to say that once you are eligible for medicare, have you to sign up for it. Medicare pays--
>> how much?
>> about 80 percent. Medicare pays approximately 80 percent and we pick up the 20 percent.
>> okay, 80/20. I guess my point is trying to get the reduction. I know that there is an impact as far as what we have to pay out.
>> right. We pay less on the over 65. The county pays less. And the actual retiree pays less because we realize they have to pay the medicare premium. So their premium goes down substantially when they turn 65 and the county contribution goes down.
>> that's what I was driving at.
>> yes.
>> my question, though, is still how many of those folks do we have track of that we know that will probably be going into that in the range of what we are looking at here?
>> right now we have about half of our people that have 65 and half that are under 65. I don't know the exact numbers that are fixing to turn 65.
>> it's been 50 percent over and under 65 for several years. I think that is a measure that you can go by.
>> a couple weeks ago in tcdrs, which is very interesting, in general the trend has been people are retiring early. They are seeing that turn around. It was getting lower and lower and it's start to go creep back up. I think one of the reasons it's creeping up is the high cost of health insurance when you are not on medicare and people are having to figure that out into their retirement plan. And well they should. What the plan costs. Our actual claims costs, premiums for under 65, is at 1250?
>> the county contribution?
>> it's 1170.
>> for under 65 the county contribution is $13,440 a year compared to over 65 which is a little bit under 4,000. Quite a bit of difference.
>> and you'll plan.
>> quite a bit of difference.
>> I think those are the things people are looking at as they are living longer, projecting out, rightfully so, how early can you afford to retire when you look at costs of healthcare and other costs going up. I thought that was interesting that they are seeing that turning.
>> thank you.
>> we'll have feedback next week.
>> did you want approving of 19 a.
>> yes, acceptance of the report.
>> so moved.
>> second.
>> discussion? Approvel of 19 a. All in favor. That passes by unanimous vote.
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Last Modified:
Wednesday, September 5, 2007, 18:30 AM