Agenda - 10-14-2008 - 1 - Laserfiche WebLink

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5 have .higher out of pocket costs for services compared to employees in the HMO. The cost of buying up employee-only coverage would total $245.76/year for employees choosing the HMO, which is below the cost of living salary increases for all employees received July 1, 2008. The employee cost of $20.48 is the difference between the cost of Individual Coverage for the PPO and the HMO, but the cost of "buying up" can be higher or lower than $20.48. If the cost of buying up was reduced to $10.24 each month, .each employee choosing to buy up would pay less than $5.00 per pay period for the HMO because the tax savings would reduce the total cost. The cost of living salary increases which all employees received July 1, 2008 exceeds the $10.24 cost per month ($122.88/year). Option 2 One Plan. This option is a renewal with one plan for all--a PPO plan. All members have access to 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% (in- network) co-insurance, to a maximum of $500 per member ($1,500 for a family) per year. Out of network benefit requires 25% co-insurance to a maximum of $1,000 per member ($3,000 for' a family). While this is an improved benefit for' current PPO members who currently have a $1,000 (in-network) per member co-insurance maximum, it reduces the benefit for current HMO members who have not had any co-insurance. Option 2 would result in an increase for the County of approximately $230,910 for FY 08-09 ($395,844 for 12=month plan year). The effect on employees with dependent coverage would be a smaller increase than renewing the current plan with no change, $48,040 for FY 08-09 ($82,350 for 12-month plan year). (See Attachment 5C.) The option with the least negative impact on all employees and particularly lower-compensated employees is the renewal of current plan with no changes. Although projections show the cost for dependent coverage increases more with the renewal, employees with dependents can choose the lower cost plan to reduce their premium cost. The renewal allows the County to continue paying the full cost of coverage for employee only coverage, thereby impacting fewer employees. FINANCIAL IMPACT: The 2009 Benefit Recommendations all meet the County budget for FY 08-09. A chart showing benefit costs from FY 04-05 to FY 07-08 is on Attachment 7. Dental: There is no budget impact in the FY 08-09 approved budget. Premiums will remain the same for 2009. The proposed changes will reduce the balance in the dental account over time. Projections for the use of funds for the next five years are provided in Attachment 2B. No administrative increases are anticipated. Flexible Spending Account: Cost is within the FY 08-09 approved budget. There is a potential for tax savings, based on the amount of contributions employees make, of a minimum 7.65 cents savings for each $1.00 contributed for both the County and the employee. Losses are possible when an employee claims and receives funds prior to making the full contribution and then leaves County employment prior to fulfilling their obligation to the Flexible Spending Account for the plan. year. The potential loss depends on the number of employees who enroll, their level of participation, and how many employees left County employment prior to contributing the amount of their reimbursement. Past experience indicates that funds not used are substantially greater than losses.