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10 <br />Attachment 2 Page <br />The County currently pays 100% of the monthly premium for individual coverage for both the <br />HMO and PPO plans. The County also subsidizes the premium cost for the employee's <br />dependent coverage at 52%, based on the lower priced plan (which is the PPO plan). This <br />practice was established several years ago to provide affordable and thus, accessible health <br />insurance coverage for dependents (spouse, domestic partner, and/or children) to employees. <br />This is particularly attractive to lower salaried employees for whom dependent health insurance <br />coverage is a significant percentage of salary. Continuation of this level of subsidy maintains a <br />"family friendly" feature that is highly valued by the 40% of employees with dependent coverage. <br />Employees with dependent coverage will see an increase of 6.5% in their premiums this year. <br />For 2010, the national health care trend (percentage increase in claims costs that actuaries <br />expect to see in the next 12-month period) has continued to increase at a rate of 10% over the <br />previous year.. The trend in North Carolina has been 12%. Because of lower claims experience <br />over the last 18 months the Orange County increase was trended to be closer to 7%. Based on <br />this trending, the FY 2010-11 budget included a 7% increase for health insurance. The renewal <br />rate from the NCACC for the same health insurance plans, with minor plan design changes, has <br />resulted in an overall increase of 6.5% effective January 2011. <br />Two enhancements are recommended to the plan design, and have been included in the <br />renewal rates for both the HMO and PPO plans. The County pays the employee premium as in <br />previous years, for both plans. Both HMO and PPO plan designs are renewed at the same <br />level as 2010 including enhancements: <br />a) Coverage for up to $1,000 per year for hearing aids; and <br />b) Coverage for dependents up to age 26 regardless of student or marital status as <br />specified by health care reform legislation. <br />Elimination of the CIGNA Health Advisor program is recommended because this fee program <br />duplicates many of the components of the chronic disease management program provided by <br />Alere, as part of the NCACC health insurance. <br />Renewal: The County contribution formula for the employee premium .and dependent coverage <br />remains at the same rate as previous years, for both HMO and PPO plans. Orange County <br />remains fully-insured for health insurance with the increased premiums remaining in effect for <br />the full 2011 plan year. Costs are based on an annual premium per member based on <br />coverage level, and those premiums cover all administrative costs, medical and prescription <br />claims, and additional stop loss insurance. <br />In considering the renewal, Staff and consultant Mark III reviewed the cost of self-insured <br />funding focusing on the claims costs and the amount of risk the county is willing to take, the <br />cost of stop loss insurance, and cost of employees' premiums for dependents. Costs to Orange <br />County include the actual claims and administrative fees, which includes the cost of specific and <br />aggregate stop loss insurance. Specific stop loss insurance provides protection when individual <br />claims exceed a certain dollar amount, such as $50,000. Aggregate stop loss insurance <br />provides protection should the total claims cost exceed the anticipated amount, such as 125%. <br />Based on the strong renewal for fully-insured coverage, the County would not benefit by making <br />a change to self-insurance. <br />