Agenda - 09-22-2008 - 3 - Laserfiche WebLink

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healthier employees have a higher quality of life, are more productive, and require less health care, wellness activities will continue to be an important benefit for County employees and retirees. 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 2008-09. In the past, premiums for the PPO plan have been higher than the premiums for the HMO. 2009 reverses that pattern, and the premiums for the HMO are more expensive, because of the high volume of claims and because it provides a greater benefit to employees. PPO employees will continue to pay higher out of pocket expenses because members must pay 10% co-insurance costs up to $1,000/year per member (to a maximum of $3,000 per family) for services such as hospitalization and diagnostic medical services. Option 1 Buy up Plan. This option delivers the same plans, but requires employees to pay an additional premium for the higher priced plan. Because the HMO would be the higher priced plan, employees who choose to remain in the HMO would be required to pay the difference (buy-up) between the premium for the PPO and the HMO. Costs to the County would stabilize because the contribution for all employees would be the same. There would be no difference in what the County paid for each employee. 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 2004-05, and dependent premiums would be priced out of reach of many employees. Implementing a "buy-up" plan in a year when employees received a 2.25% increase COtA and have seen increased gas prices would not be well received, however, 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 2008- 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, allowing all members to access providers both in and out of network. This plan would require all employees with major medical expenses (surgery, hospitalizations, diagnostic services, etc.) to pay 5% co-insurance, to a maximum of $500 per member ($1,500 for a family) per year. This is an improved benefit for current PPO members, who currently have a $1,000 per member co- insurance maximum, but reduces the benefit for current HMO members who are accustomed to $0 co-insurance. Option 2 would result in an increase for the County of approximately $195,660 for FY 08-09. The effect on employees with dependent coverage would be a smaller increase than renewing the plan with no change. Descriptions of the current plans, the renewal and option -plan designs are shown on Attachment 7. Attachment 8 provides a detailed breakdown of the premiums for the current