Rate increases, reduced revenues prompting action.
While presenting his proposed budget for the 2014-15 fiscal year, Macon County Manager Derek Roland informed commissioners that next year could be the last year that Macon County would operate under the current structure of the county’s health benefit plan.
Roland made commissioners aware of substantial changes that are to be expected during the coming fiscal year regarding revisions to the pay plan brought on by steadily increasing claims, combined with decreasing county contributions into the health insurance fund.
For the county’s health insurance fund, the net position is the amount by which assets exceed liabilities. Net position acts similarly to the county’s fund balance in the general fund. All profits made in the health insurance fund increases the net position, but when expenses exceed revenues, the net position decreases.
"Since 2009, the net position of the health insurance fund has declined by 70 percent as our expenses have constantly exceeded revenues,” said Roland. “Since the 2007-08 fiscal year, employee contributions to the fund have remained constant, while county contributions have declined substantially.”
During the 2007-08 fiscal year, the county contributed monthly amounts of each category of $850 for employees only; $1,027 for parent/child; $1,220 for employee/spouse; $1,220 for employee/children; and $1,251 for family accounts. The following year in 2008-09, the county made the decision to decrease every account by $200 across the board. The county’s contributions continued to decrease, with a $150 decrease across the board in 2009.
Since the 2009-10 fiscal year, county contributions have remained stagnant at the following levels: Employee only $500; parent/child $677; employee/spouse $870; employee/children $870; and family $901.
“This substantial decline in revenues combined with increasing expenses had resulted in a net position that will have a limited life span in terms of supporting our current plan structure,” explained Roland.
Beginning in 2009, an average of $818,233 was allocated from the net position fund to cover the difference between expenses and revenues associated with county employees’ health insurance fund. At the close of the current fiscal year, the net position is projected to be $1,830,991, however in 2014-15, $1,232,233 will be appropriated from net position to cover the projected deficit.
“If all the appropriated funds are used, only $598,758 or 13 percent will remain in net position heading into the 2015-16 fiscal year,” said Roland. “Although this is a worst case scenario, we must keep in mind that in changing our plan structure, we will come under the provisions of the Affordable Care Act (ACA) as proposed and implemented by President Obama.”
Roland informed commissioners counties similar in size in North Carolina have seen an average annual insurance rate increase of 10 percent due to the implementation of the ACA, while some, such as Bessemer City, have seen as high of an increase as 31 percent.
“Because of this, it remains crucial that when changing our plan structure, we have the healthiest net position possible which will allow us to adapt for any unforeseen expenses,” said Roland.
Moving forward, Roland informed commissioners that county staff will closely review the county’s insurance plan and work with the county’s insurance broker to explore all available health insurance options to ensure county employees retain quality, affordable health benefits. “As a five year employee of Macon County myself, I understand the value placed on these benefits by all employees,” said Roland. “For this reason, I assure you that employees will be made aware of all options we are considering and will have a chance to provide input and voice their opinions throughout this process.”