Crow Wing County authorized a number of health care plan changes in response to a 22 percent, or $800,000, increase in insurance rates for 2014.
“A 22 percent increase is just not sustainable for our organization,” said Tami Laska, human resources director.
Claims are driving the renewal increases, Laska said. The county’s health insurance benefit costs for employees and retirees is more than $5.8 million annually.
“In 2012, we exceeded our expected claims by 126 percent that means we overspent what we paid in by $845,000,” Laska said. “So we had a very high claims year.”
The next step was to look for options to reduce the premiums. Laska said they started by looking at the county’s most expensive plan — a $200 deductible for singles and a $400 deductible for families. But, she said, raising the deductible to $500 for a single and $1,000 for a family barely moved the needle. The cost changed by $66 per month, or 3 percent. Laska said they were looking at too large of a number to reduce to nibble at it. Even larger deductibles of $1,000 and $2,000 didn’t make enough of an impact. So she took the problem back to the benefits committee to come up with ways to erase an $800,000 cost increase for 2014.
Their recommendations were:
• Save $200,000 by moving retirees from the high cost Comprehensive Major Medical (CMM) plan to the Medicare Supplement Plan, Senior Gold. Eligibility for the CMM plan ended as a benefit in stages through 2003 to 2005. About 29 retirees older than 65 are still on the CMM plan. Eligibility for the CMM plan ended as a benefit in stages through 2003 to 2005.
Laska reported the move saves money and gives the retirees better coverage and reduces out-of-pocket costs. And in the new year CMM premiums will rise to $2,047 per month per family and $818.50 per month for singles. The Medicare plan offers a monthly premium of $606 retiree and spouse and $303 for retiree only.
• Save $300,000 by moving early retirees younger than 65 to a health savings account (HSA). The HSAs were created in 2003 for those with high-deductible plans. Mayo Clinic reports the idea was people will spend more wisely if they are using their own money. The HSA acts like personal savings accounts. Money in an HSA is not taxed and is used to pay health care expenses. There are about 60 people in this group.
• Save $250,000 by moving active employees on the CMM plan, about 69 people, to an HSA. Next year, Laska said the county could ask for voluntary transition to the HSA by prefunding the employee accounts up front instead of putting in monthly contributions at no cost to the county as a transition incentive. However, once the money is in the health savings account the county can’t withdraw contributions should an employee leave their job before the end of the year.
The county’s HSA plan has a $2,600 deductible for singles and $5,200 deductible for families. About 80 percent of the county’s employees are on that plan.
“It’s a good value for us as an employer and it’s a good value also for the staff, because often times they don’t use everything they have in that health savings account and they get to carry it forward from year to year,” Laska said.
Employees may contribute about $6,000 a year to the plan. Collectively, county employees have more than $1 million in their health savings accounts. Upon retirement, employees may use their accumulated money to offset their Medicare supplement premiums, dental expenses or eye glasses, etc.
“There are a lot of good uses and it makes tons of sense why this is the wave of the future, the high-deductible with the health savings account,” Laska said.
In addition, the county has two retirees who are eligible but who have not enrolled in Medicare Part B. For every year they don’t enroll after being eligible there is a 10 percent penalty. If the county requires them to enroll in Medicare, Laska said it would be less expensive for the county and less expensive for the retirees. Laska proposed the county pay the late Medicare enrollment penalty as a way to help move the two employees to the plan. Moving those two retirees would save the county $13,240, Laska said.
Commissioner Paul Thiede said he knows both retirees and their skepticism of Medicare and whether it was a worthy investment that would be sustained. Thiede said he kind of harkened to that healthy skepticism of government saying: “I can help you and trust me.”
“Now that affordable care is the law of the land, sort of, and we’re kind of debating whether or not it will be, I see the same thing happening down the road again, so on one hand I just wanted to say I’m understanding of people who resisted this,” Thiede said, but he said he expected Laska will find acceptance. “I can’t resist the opportunity to say, affordable care is next in line right behind Medicare and affordable care is going to have impacts like this ... for the next 25 years when our successors are going to say why did we get into this the way we got into it. I am pontificating ... but I’m pontificating on the fact that I’m happy to see some people do resist the government saying, ‘I’m here to help you, you ought to just go along with it.’”
The recommendations were to seek a voluntary transition by retirees and employees to the HSA in 2014 and to eliminate the CMM plan in 2015.
“That low-deductible, high-cost plan, we don’t think we can sustain it,” Laska said.