Agenda - 03-21-2023; 6-b - Recommendations for Employee Health Insurance and Other Benefits

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1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: March 21, 2023 Action Agenda Item No. 6-b SUBJECT: Recommendations for Employee Health Insurance and Other Benefits DEPARTMENT: Human Resources ATTACHMENT(S): INFORMATION CONTACT: Attachment 1: Projected Health and Dental Brenda Bartholomew, Human Resources Insurance Rates for FY Director, (919) 245-2552 2023-24 PURPOSE: To approve the Manager's recommendations regarding employee health and dental insurance effective July 1, 2023 through June 30, 2024. BACKGROUND: The County provides employees with a comprehensive benefits plan that includes participation in robust health and dental insurance plans for employees and their families. Each year, the Board of Commissioners is asked to review and approve health and dental insurance rates in advance of the annual budget so that open enrollment can be completed prior to the beginning of the plan year which starts on July 1. Health Insurance The Board of County Commissioners approved Orange County's participation in the North Carolina Health Insurance Pool in FY 2018-19. From that time until FY 2022-23, neither health nor dental insurance costs increased due to stable claims experience. In FY 2022-23, the health insurance plan experienced an increase in the overall number of claims and higher costs per claim incurred than prior years, which resulted in a drawdown of reserves. As a result, the Board approved an increase of 5% to the health insurance plan for both active employees and pre-65 retirees. That increase was fully paid by the County and not passed on to employees. Funding for the health plan is based on estimated premium equivalents rates that are necessary to pay for incurred claims, administrative and reinsurance costs, and the expected liability of claims incurred but not reported (IBNR). The plan also carries a reserve balance which ensures the County's ability to pay claims. The reserve policy ranges between 1.5 and 3.0 over IBNR to ensure the ability to pay for future claims based on current claims experience which currently are higher than expected. The County's current reserve ratio is 1.1 through January 2023. In FY 2023-24 and beyond, that reserve amount is recommended to be two (2)times the expected IBNR liability. Although the plan is projected to have a positive year-end balance of$833,090, additional funding is necessary to cover projected total plan costs for FY 2023-24 and to continue to build reserve