Agenda - 09-09-2008- 4 - Laserfiche WebLink

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4 12% over the 2008 rates. Because Orange County's actual medical experience in health care claims in FY 07-08 was under this 10-12% trend, staff was able to negotiate the renewal rate to a lower rate than the annual trend. Considerations used in preparing the renewal rates, including claims information, is provided at Attachment 4. The County currently pays the entire monthly premium for employee and retiree only coverage for both the HMO and PPO plans. The County also subsidizes the premium cost for the employee's dependent coverage, based on the lower priced plan (which has been the HMO plan for the past several years). One of the issues facing the County is the pricing for the HMO has not kept pace with actual claims expenses. The result has been much higher increases for the PPO, resulting in higher increases for the County and for employees with dependent coverage. Staff has reviewed the current plan and two options for the 2009 calendar year renewal. These are: Renewal of Current Plan Design-No Changes. Renewing with no change to plan designs results in an increase to the County of approximately $262,960 for FY 08-09. The County and members of the PPO with dependents pay a substantially higher proportion of the premiums compared to the amounts paid per employee for the HMO. PPO employees will also continue to have higher out of pocket expenses because this plan has a maximum out of pocket cost of $1,000/year per member (to a maximum of $3000 per family). Option 1 Buy up Plan. This option delivers the same plans, but requires employees to pay an additional premium for the higher priced plan. For the first time, the HMO would be the higher priced plan, and consequently, if employees currently in the HMO wished to continue in this plan, they would have to pay an additional premium. Costs to the County would stabilize and the existing gap between pricing would be rectified. Because of the low claims in FY 07-08, this is a good year to consider actions that will close the gap between the HMO and PPO pricing. Should the County be faced with a high claims year, the cost of premiums could easily jump to over 25%, as it did in FY 04-05, and the dependent's premium would be priced out of reach of many employees. Implementing a "buy-up" plan in a year when employees received a 2.25% increase COLA and have seen increased gas prices would not be well received, but it would help the County control its health insurance costs. This option would result in an increase for the County of approximately $224,000 for FY 08-09. The increase in premiums for employees would be $79,510, assuming that only 25% of employees (based on NCACC projections) chose to stay with the HMO and pay the additional monthly premium. Currently 93% of employees participate in the HMO. Only those employees who chose the PPO would see a smaller increase in premiums, but they would see higher out of pocket increases, if such services were required. Option 2 One Plan. This option is a renewal with only a PPO plan. It eliminates the HMO plan, and all participating employees would be able to access providers both in and out of network. This plan would affect employees with major medical expenses by requiring a 5% co-insurance, up to a maximum of $500 per member ($1500 for a family) per year. This is an improved benefit for current PPO members, who currently have a $1000 per member co-insurance maximum, but less of a benefit for current HMO members who have $0 co-insurance.