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| ARF- 3121 |
Regular Agenda Item 2. J.
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| Regular BOS Meeting |
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| Information |
| Request/Subject |
| Establish employee contribution rates and benefit changes for employee and family coverage for FY 2016 for Arizona Local Government Employee Benefit Trust plans. |
| Background Information |
Gila County joined Arizona Local Government Employee Benefit Trust (AZLGEBT) on July 1, 1999. AZLGEBT provides medical, prescription, dental, vision, disability and life insurance coverage, as well as a wellness program for eligible Gila County employees and dependents. Over the past 16 years there have been various changes and modifications to the plan and to the County’s responsibility for administering of the plan. New and future changes mandated with Health Care Reform will continue to add layers of complexity to our administration of our self-insured trust.
In FY 2015, the AZLGEBT added a High Deductible Health Plan (HDHP), Health Savings Accounts (HSAs), and a buy up dental plan. Additionally, Gila County established one contribution rate for all employees, with the exception of freezing the lowest of the old rates (Tier I) for the ten employees at that rate at that time. It was determined that those ten employees would automatically move to the standard rate when their pay exceeded $21,611.20 per year.
For FY 2016, the cost of the health insurance premiums will increase approximately 2.25%, about $11 per month for employee only coverage and $24 per month for family coverage. AZLGEBT is also offering Flexible Spending Accounts (FSAs) to the plan options for FY 2016 to better serve the employees and covered dependents. |
| Evaluation |
For the past several years, particularly during the five years (2010-2014) when there were no base salary across-the-board adjustments, Gila County absorbed the increases in premiums. The exception to that was in 2012, when all rates increased by $20 per month, with the opportunity for a $20 per month earned reduction for those employees who chose to participate in the Wellness Program's annual Health Risk Assessment (HRA). The actual result of restructuring of rates was that employee contributions either remained the same or went down.
For FY 2016, there will be no increases to deductibles or medical co-pays. Sharing the premium increase between the County and employees will limit the financial impact to both Gila County and the employees. While other government employers in the area have experienced 15% increases, the 2.25% increase in AZLGEBT speaks to how well managed the plan is. One of the cornerstones of a well managed plan is the shared cost between employers and employees.
AZLGEBT has added Flexible Spending Accounts (FSAs) which further expands the options and benefits to employees. The FSA package includes three types of FSAs.
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Full Purpose FSA - used for eligible medical expenses including dental and vision. This option is "tied" to the PPO plan and, by federal law, is not allowed for those in the HDHP plan. Maximum pre-tax dollars that can be deposited for 2015 are $2,550.
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Limited Purpose FSA- used for eligible dental and vision expenses only; can be used in conjunction with the HDHP plan and for those that have a Health Savings Account (HSA). Maximum pre-tax dollars that can be deposited for 2015 are $2,550.
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Dependent Care FSA- used for eligible dependent day care expenses. Maximum pre-tax dollars that can be deposited for 2015 are $5,000.
FSAs do not carry over balances from year to year, and are a "use it or lose it"' account. Employees make pre-tax contributions through payroll deduction, but there is no matching County contribution to FSAs. Gila County has had a vendor who has offered FSAs for a few years. With this addition to the plan, the vendor provided FSAs will no longer be available. With the continued complexities of health care, and the federal laws and regulations relating to FSAs, HSAs, HDHPs and the various limitations, providing both FSA and HSA accounts through one plan will limit the possibility that an employee will inadvertently choose plans that are not compatible or allowable.
Once again, Open Enrollment for the AZLGEBT plan will take place in May and will be a ''passive enrollment." Employees who wish to change their benefit selections or add other options will be able to make those changes during Open Enrollment. Unlike 2014, this will not be a "positive"' enrollment, where every employee has to reelect to receive coverage. HR will be providing information to all benefit eligible employees about Open Enrollment and informing and the new plan options. In addition, Gilsbar, Erin Collins and Associates and Smartben employees will be in Gila County holding informational meetings for employees on May 18 and 19, 2015, in both Payson and Globe. The final meeting schedule will be released later in April. |
| Conclusion |
The additions and changes to the offerings with AZLGEBT will continue to allow Gila County to provide a very affordable benefit package to Gila County employees and their families. As health care continues to become more complex, AZLGEBT has continued to strategically expand options for members.
To remain fair and consistent with the employee contributions to the cost of premiums, sharing the increase is a prudent financial step for the County. Employees have received consumer price index (CPI) adjustments to their pay, and salary adjustments, which more than offset the proposed increases to employee contributions of $5 per month for employee only coverage, and $10 per month for family coverage. This proposed increase in employee contribution rates will also apply to the former Tier I employees (currently 3 employees) to keep rate differentials between the two groups even and fairly distribute the increases.
Adding FSA accounts as an option for employees within the AZLGEBT offerings will assist employees by limiting the possibility of an employee inadvertently choosing plans that are not compatible or allowed by health care laws, and simplifies the processes for employees when choosing various benefits. |
| Recommendation |
Staff recommend the following :
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Increase employee contributions for medical insurance coverage by $5 per month for single coverage, and $10 per month for family coverage for both the Preferred Provider Organization (PPO) and the High Deductible Health Plan (HDHP). New combined rates will be $65 per month for employee only coverage, and $306 per month for family coverage, with a continuation of the $20 per month discount for all employees who participate in the annual Health Risk Assessment (HRA). Increase former 'Tier 1' rates to combined rates of $55 per month for employee only coverage and $296 per month for family coverage with the continuation of the $20 per month discount for all employees who participate in the annual Health Risk Assessment (HRA). For FY 2016, there are three employees in this category. New employees hired after the HRA Screening dates will continue to receive the HRA reduction for the first year on the plan, until they have the opportunity to participate in the HRA Screening.
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Approve the addition of Flexible Spending Accounts (FSAs) to the plan options for Gila County employees beginning July 1, 2015.
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Reconfirm the Gila County base contribution rates for the Health Savings Account system (HSA) at $10 per month for single coverage and $25 per month for family coverage.
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Reconfirm the dollar-for-dollar matching contribution into the Health Savings Account system up to an additional $40 per month for single employee coverage, and $75 per month for family coverage.
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| Suggested Motion |
| Information/Discussion/Action regarding changes in the Arizona Local Government Employee Benefit Trust for Gila County's employee insurance and benefit plans to be effective as of July 1, 2015, as follows: 1) Adopt Schedule A - Employee Insurance Contributions FY 2016 (attached to the agenda item); and, 2) approve the addition of Flexible Spending Accounts to the insurance and benefit options available to employees through the Arizona Local Government Employee Benefit Trust. (Jacque Griffin) |
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