Agenda - 05-10-2011 - 3 - Laserfiche WebLink

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ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: May 10, 2011 Action Age 3 Item No. SUBJECT: Employee and Retiree Health Care Coverage DEPARTMENT: Human Resources PUBLIC HEARING: (Y/N) No ATTACHMENT(S): INFORMATION CONTACT: 1. History of Participation and Costs for Katherine Cathey, Interim Human Employee and Retiree Health Resources Director, 245-2553 Insurance Diane Shepherd, Benefits Manager, 245- 2. Employee Health Care Benefits 2558 Provided by Local Government Employers 3. April 2011 Employee Survey Results 4. Options for Lowering the Costs of Employee and Retiree Health Care 5. FY 2010-11 Budgeted Personnel and Fringe Benefit Cost PURPOSE: To receive information on employee and retiree health care for 2012 and to provide feedback to staff regarding options related to employee and retiree health care benefits. BACKGROUND: Each year the Manager's Recommended Budget includes recommendations specific to employee and retiree health care. The FY 2011-12 Manager's Recommended Budget includes funds for up to a 15% increase ($552,598 for six months) in health insurance premiums for employees and retirees. A 15% increase in premiums equates to a 19% increase ($1,046,704) over the FY 2010-11 budget for employee and retiree health insurance. (The FY 2010-11 budget included funds for paying health insurance premiums at the 2010 rate for the first half of a fiscal year and premiums at the 2011 rate for the second half of the fiscal year.) When annualized, the amount budgeted in FY 2011-12 for increases in the County's health insurance cost is equivalent to a 3% salary increase for all permanent employees. In September 2010, the County retained the services of a benefits consultants, Mark III, to assist with the County's entire benefits package, including health insurance. As a specialist in public sector employers, Mark III has worked with numerous counties and cities to reduce health insurance costs. Mark III has begun to review potential new carriers for the County and will assist in designing health insurance plan(s) that meet the needs of County employees. Based on County employee and retiree claims data, Mark III has predicted a 20-25% increase for premiums beginning January 1, 2012, regardless of the carrier. Health insurance costs are growing more rapidly than the cost of living. Attachment 1 provides a history of health insurance costs for the past five years and the projected cost for 2012. With these rising costs, the County must have a clear strategy in place to manage the costs