Agenda - 06-19-2012 - 7b - Laserfiche WebLink

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ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: June 19, 2012 Action Agenda Item No. --7_ % SUBJECT: Amendment to the Orange County Personnel Ordinance Article IV, Section 28 -36, Health Insurance DEPARTMENT: Human Resources PUBLIC HEARING: (YIN) No ATTACHMENT(S): 1. Current Orange County Personnel Ordinance Effective with the FY 2011 -12 Budget: Article IV, Section 28 -36 2. Amended Orange County Personnel Ordinance Effective with the FY 2012 -13 Budget: Article IV, Section 28 -36 3. Additional Employee and Retiree Data INFORMATION CONTACT: Sharon Goode Laisure, Interim Human Resources Director, 245 -2552 Annette Moore, Staff Attorney, 245 -2317 Diane Shepherd, Benefits Manager, 245- 2558 PURPOSE: To consider and approve an amendment to the Orange County Personnel Ordinance Article IV, Section 28 -36, Health Insurance regarding retiree health coverage for employees hired on or after July 1, 2012. BACKGROUND: Orange County provides health insurance to retirees who have completed a specific number of years of Orange County service, described in the current Personnel Ordinance, Attachment 1. At age 65, retirees enroll in Medicare and leave the County's group health insurance. The cost for Medicare supplements is typically less than 50% of the cost of the group health premium, but the County will pay up to 100% of the cost of the group health premium for Medicare supplements. The combination of increased health care costs, greater longevity among retirees, and higher numbers of retirees has resulted in a County liability for unfunded future retiree health insurance of almost $63 million. Without intervention, the cost of retiree health benefits will soon exceed the cost of active employee health care as more employees retire AND the cost of the benefits increases. In 2012, the Board of County Commissioners discussed retiree health insurance liability at the March 1, April 24, and June 7 budget work sessions. In 2008, the Personnel Ordinance was amended to stop subsidizing the cost of retirees' dependent health insurance. The current Personnel Ordinance (Attachment 1) includes highlighting of the areas that are proposed for changes. The amended Personnel Ordinance (Attachment 2) incorporates the proposed changes, which would apply only to employees hired on or after July 1, 2012 and would: o Increase the eligibility requirement from a total of ten years Orange County service to twenty continuous years of Orange County service for a retiree under age 65 retiring with a service retirement;