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| ARF- 3727 |
Regular Agenda Item 2. I.
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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 2017 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 17 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. There is currently one employee left in this closed group. In FY 2016 AZLGEBT added a Flexible Spending Account (FSA) option to the plan.
For FY 2017, the total cost of the health insurance premiums will increase approximately 5.66%, or $29.19 per month for employee only coverage and 4.81% or $59.77 per month for family coverage. |
| Evaluation |
For FY 2017, there will be no increases to deductibles or medical co-pays. Due to ever increasing costs associated with prescription medications and the increase in usage of specialty medications, there will be a 5.00 increase in the co-pay amounts for medical prescriptions. 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 year over year, the average 5.24% 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.
Once again, Open Enrollment for the AZLGEBT plan will take place in May and will be a ''passive enrollment" utilizing the SmartBen web portal. Employees who wish to change their benefit selections or add other options will be able to make those changes during Open Enrollment. The Human Resources Department will be providing information to all benefit eligible employees about Open Enrollment. |
| Conclusion |
As health care continues to become more complex, AZLGEBT has continued to strategically expand options for members, while continuing the commitment to provide an affordable benefit package to Gila County employees and their families.
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 $3.50 per month for employee only coverage, and $14.50 per month for family coverage. This proposed increase in employee contribution rates will also apply to the former Tier I employees (currently 1 employee) to keep rate differentials between the two groups even and fairly distribute the increases. |
| Recommendation |
Staff recommend the following for FY 2017:
- Increase employee contributions for medical insurance coverage by $3.50 per month for single coverage, and $14.50 per month for family coverage for both the Preferred Provider Organization (PPO) and the High Deductible Health Plan (HDHP). New combined rates will be $68.50 per month for employee only coverage, and $320.50 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 $58.50 per month for employee only coverage and $310.50 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 2017, there is one employee 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.
- 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.
- 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, 2016, as follows: Adopt Schedule A - Employee Insurance Contributions FY 2017 (attached to the agenda item). (Jacque Sanders) |
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