Clinton County officials discuss insurance policies

April 02--CLINTON -- Clinton County is considering the next steps to take for the county health insurance plan for fiscal years 2019 and 2020 and beyond.

True North Benefit Advisor Sam Hammes suggested the county consider a spousal carve-out due to the current landscape of the healthcare industry, stating there is nothing to suggest costs being reduced. Hammes said the spousal carve-out could be implemented with an extra premium being paid to have a spouse on the county plan or not offering the plan for spouses.

"We have companies that we work with that strictly no spouses are allowed to be participants on their plan," Hammes said. "We have plans where the employer will charge that spouse an extra premium if they participate on the plan. So if I have coverage through my own work and I can get access to that I would pay some sort of surcharge to have coverage through the plan here."

Hammes said medical claims show 53 percent of the county's expenditure is coming from employees. Thirty percent of the expenditure is coming from spouses. He added dependents are required to be allowed to participate in the plan even if the county implements a spousal carve-out.

True North Benefit Advisor Tim Kearns said there are situations an individual may take the county plan because it's a richer plan than what they have access to with their employer. He said the spousal carve-out, if implemented, would offer the potential to shift the cost and risk away from the county plan to someone else in the situation they have access to other coverage.

"We're not saying that spouses cannot be on your plan necessarily," Kearns said. "You may want to structure it in such a way that they can. But if they have access to other coverage through an employer arrangement then they take that as their primary coverage rather than taking your coverage as the primary coverage. Again, they can remain on your plan. That's one way to structure it. I think that's probably the kinder, gentler way to actually structure it."

Hammes also suggested for the upcoming fiscal year the county look at moving from a two-tiered structure to a four-tiered structure. The county's health insurance is currently offered at an employee and family rate. The current rates for 2017 and 2018 are $750.97 for the single rate and $1,530.25 for the family rate. Hammes said moving to four-tier rates would lead to increases of 3.24 percent for the single plan, 11.5 percent for the spouse rate and a 16.5 percent increase in the family rate. The employee child rate would decrease from the current rate.

Hammes suggested the county for fiscal year 2020 consider increasing deductibles and coinsurance. He suggested the county consider offering a dual option for employees consisting of a base plan of a $1,500 or $2,000 deductible. The employees could have the option to keep the current plan by paying a premium to have a richer plan.

"Everything goes toward deductible and coinsurance under a high deductible health plan," Hammes said. "But the money that is set aside for employees is not taxable. So if you decided to put money in there the county would save obviously on any money you put in there to help employees pay for the deductibles. In addition to employees if they were incentivized to put money into their Health Savings Account as well to pay for those expenses. They wouldn't be taxed on that money as well. The money stays with those employees. If the employee comes, works here and they put money into their Health Savings Account it's not like a flexible spending account where the money is lost at the end of the year. Once that money is in that employee's account the money stays with them."

Hammes said the current plan offered to county employees is a great plan, especially when compared to employers of the county's size. He said government entities such as city, county or school districts typically have more rich benefits and contribution strategies for employees.

"But long term is that sustainable and what does that look like going forward?" Hammes asked.

Clinton County Auditor Eric Van Lancker said the recommendations for the next two fiscal years were made by True North after hearing recommendations from the board. He said Kearns and Hammes split the changes into two years because if the county proceeds with a high deductible plan it would require employee education required with open enrollment in May.

"We always tell people you need at least six months on a high deductible health plan in advance of implementation date to educate," Kearns said. "You don't do it through one meeting. You do it through a series of meetings.

"Fiscally, you're still very fiscally sound. You're not in what I would call in a panic mode at this particular point in time. But I do believe based on what we see, what we've been seeing in terms of what's happening with healthcare costs that we need to begin to plan today not just for 2020, really 2020 and beyond. Because this isn't going away. This isn't going to get changed. This isn't going to get better overnight. It's going to be a long-term process."

Hammes said more companies are adding additional options for plans to give employees a choice when selecting the health insurance plan they want for themselves and their family. He did not see having multiple plans as a negative effect, stating it gives employees more options when selecting a plan best for them in their situation.

Clinton County Supervisor Dan Srp said when the county was in the process of setting salaries for county employees, he considered the cost of the increase of health insurance for employees to provide that as part of the compensation package. He was supportive of the recommendation for a two year process for the county insurance plan, stating he did not feel making a change to the insurance package this year is an option he was willing to put on the table.

He also wants Human Resources Director Dawn Aldridge to be involved in reviewing the options and making a recommendation.

"I think that benchmarking would be good," Srp said. "I've always kind of looked at cost of an employee as an employee benefit package as opposed to just salary. So I think it's important that we maintain that mindset when we work through this. Because if we were to make substantial cuts to the benefit package then that is a negative move for all those employees. I don't want to see that be the outcome."

Clinton County Attorney Mike Wolf cited the stop loss review, which the county is at 104 percent this year even though historically being at a 55 percent loss ratio. Wolf stated he did not want the county to take action on one abnormal year. Van Lancker said a spike in the numbers can happen at any time making it difficult to predict the trend of the group's poor health.

"When we have a spike like this I look at it when we talk about these things that's like a reminder that we can cruise along for eight years like we have been and then all of the sudden we could have one to two people have a difficult year and that affects our bottom line," Van Lancker said. "So I think to me when I look at that I look at well that's a worst case scenario. We had some good years in here and that's a worst case. So then when the board wants to look at a plan what could work for both of those instances. I don't know if I look at that so much as a trend as more of a reminder."

Wolf referenced the spousal carve-out, where the spouses of county employees may be required to pay a premium for the county plan. He suggested the county get input to determine how many spouses of employees would participate in the county plan. He expressed concern the Supervisors will make a decision without knowing how many employees would decide to opt for the county plan instead of the plan offered at their employer.

Van Lancker said that input would be based on a survey. He said the county would need to get everyone to participate in the survey, adding things could change for the spouses by the time the county changed the health plan.

"We're just really trying to figure out based on the 23 percent rate increase from Wellmark how do you begin to establish risk where risk ought to be?" Kearns said. "I understand what you're saying in terms of would it be nice to get a better feel for it? Would somebody be there? I can also share with you I think if you go from a two to a four rate structure and what that does to the family premium you will begin to move some of those spouses off this plan that would rightfully go to their employer and put that risk in their bucket. That's what we were trying to to do most immediately. Yes, it would take some communications. It would take also some action and to have it done in fairly quick order. But again, we're trying to mitigate a 23 percent rate increase and we thought this was just one way we could do one, have some discussion, and try to facilitate it."

Clinton County Supervisors in February voted to set the county contribution at 6 percent for fiscal year 2019. The increase was approved after county officials were made aware the county insurance plan went up 24 percent this year.

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