Retiree benefits also under scrutiny
In the future, Macon County may offer its employees an option when they sign up for the county’s insurance program. During the a mid-year work session on Jan. 29, the board of commissioners discussed the possibility of adding a Health Savings Account (HSA) plan to the county's program that would be optional for employees. At the same meeting the board also discussed possible modifications to the current employee policy regarding retiree benefits that could affect post-retirement insurance benefits for future county employees.
An HSA is pre-taxed medical savings account that is available to individuals enrolled in high deductible health plans (HDHP). In most such plans, unused funds roll over and accumulate year to year. HSAs are owned by the individual and may be used to pay for qualified medical expenses and medications at any time with federal tax liability.
Commissioner chairman Brian McClellan explained the option at the meeting, saying that if established, the county would contribute matching funds to HSA accounts. “This would just be an option, and employees could keep what they currently have if they choose,” McClellan said, adding that a high deductible plan may be more cost effective, particularly for younger employees.
Currently, the county offers no options but has one plan, a selffunded program in which county and employee contributions are funneled into an insurance reserve fund administered by a Third-Party Administrator (TPA). The TPA, currently the Asheville-based Crescent Health Solutions, determines whether or not medical expenses are covered and then pays them before billing the county. County Manager Jack Horton explained that the county has stop-loss coverage that is only activated in the event an employee exceeds $75,000 in claims in a given year.
“This would just be an option, and employees could keep what they currently have if they choose.” — Commission chairman Brian McClellan
Commissioner Kevin Corbin, who is an agent with Blue Cross Blue Shield, strongly recommended the HSA system. “Actuarially, if you have that high deductible, insurance companies will cut your rates way back,” he explained. The HSA could be made available for the first $5,000 to $10,000 in employee claims. “It’s a win-win situation,” Corbin said. “It’s a win for the employee because basically you’re doing away with deductibles and co-pays.”
“In a lot of cases, the HSA will be beneficial, especially to younger employees that don't have a lot of medical claims,” agreed Horton. “That money is pre-taxed, and it stays with them forever. Even if they change jobs, they take it with them.”
In 2009, the county assembled a task force to look at various health insurance options for the county, including the HSA/HDHP arrangement. McClellan recommended that the county reconvene the task force and set a deadline for presenting recommendations to the board that would allow time for the county to inform and educate employees before open enrollment begins in April of 2012.
According to Horton, while the task force found that an HSA system could be feasible for the county, it was not decided how to deal with upfront costs of setting up accounts. How the HSA would be funded and on what schedule funds would be deposited are among the considerations that should be deliberated by the board, Horton said.
Horton laid out the main questions before the board, saying, “Do you want to take the money out of our insurance reserve to pay for claims and give it to people to put in an HSA account that haven’t had any claims yet? If you do that, that’s going to take a chunk of money out that could have been used for claims. Or do you want to come up with additional money outside of the fund that we have set aside in order to get the HSA started?”
Horton reported that due to good administration by the county finance officer and the fact that there have not been a substantial amount of large claims in recent years, the county's insurance reserve fund has remained stable. The current insurance program uses a network system similar to an HMO. According to the county’s personnel director, Wilma Anderson, the majority of doctors in the area are in the network.
The county also has a Wellness Program administered through the Health Department which gives incentives to employees to participate in preventative health programs such as annual check-ups and screenings as well as fitness programs, nutrition programs and others. The county sees the Wellness Program as cost effective in so far as it is able to limit claims.
“The healthier our workforce, the healthier our insurance pool is,” Anderson explained. She also noted that the county had not had to fund any premium increases in recent years which has helped keep the fund stable.
Anderson noted that there is a trend in the insurance industry toward high deductible HSA plans, but noted that it would be up to the board of commissioners to decide if it would be a cost effective for the county to offer such an option. Its impact on the current system would depend largely on how the board would chooses to fund the option.
Retiree benefits policy discussed
Commissioners also discussed possible amendments to the county’s personnel policy regarding retiree benefits. Currently, for all employees with 15 years of service or more in the county, the personnel policy allows for uninterrupted insurance coverage until the individual becomes eligible for Medicare. Although the state Local Government Retirement System sets limitations on minimum age and years of service required for retirement, the current policy allows for the possibility of retirement as early as 50 years of age.
Anderson explained that when the policy was initially established, it sought to make standard allowances for law enforcement officers to retire with 15 years service at age 55. The policy does not outline any additional minimum age requirements and does not make any distinction between law enforcement officers and other employees. Though rare, the county has seen employees take a service retirement as early as 50 years of age, obligating the county to provide insurance coverage for an additional 15 years, Anderson said.
Anderson recommended that the board consider amending the benefits policy and adjusting the minimum retirement age. She added, however, that the changes should not affect currently vested employees. “It needs to be looked at, but if you are vested in the system right now, nothing should change,” she said. “This should be only for new hires and going forward.”
“You can’t change the rules in the middle of the game,” Chairman McClellan agreed. McClellan noted that, though the county’s insurance pool is currently well-funded, rising healthcare costs in the future could put more strain on it which the adjustments would help to compensate for. “We do need to address this and probably bring it in line with what you see more commonly,” he said, adding, “It’s certainly not something the board will take lightly. We will do a lot of homework on it and get a lot of information together, look at some future projections for the county. What are the anticipated costs if we don’t do anything? How we might be able to make it more viable and long term for the county?”
McClellan recommended setting a goal of Nov. 1 to come to a consensus on any possible amendments to the personnel policy.