Trends in health insurance may have employers moving away from covering families.
Tami Laska, Crow Wing County human resources director, reported recent input on health insurance trends. Employers may move to covering a worker only or adding children but not spouses who can be covered by their own workplace or on an exchange. It’s all in effort to reduce costs.
Facing an insurance hike, Crow Wing County is looking at ways to control costs for 2015. A major concern is paying fully funded retiree health benefits, which the county board enacted in 1974. None of the current commissioners qualify for subsidized retirement benefits. The benefit plan ended in 2003-2004.
With the past benefits some employees with 25 years with the county had their retirement fully funded, those benefits decreased for those who worked for fewer years.
Currently the county pays about $93,000 a month for retiree health benefits. The county has worked with bargaining units and retirees to shave millions off costs.
“We are all looking at trying to reduce these costs,” Laska said.
The county is facing a 22 percent increase in health benefit renewals for 2014 and a 30 percent increase in 2015. Those increases are not sustainable, Laska said. One of the reasons for the increases comes from higher claims than anticipated.
Laska reported the percentage increase for 2014 translates to a cost of $800,000.
One option to control costs is to move early retirees to a Medicare supplement from a high cost plan with a low deductible known as Comprehensive Major Medical or CMM. The county has had success in moving active employees to a high deductible plan.
Strategies for this year included moving retirees age 65 and older from the CMM to the Medicare supplement. Seven of 22 did move saving $200,000. There are 57 retirees on the CMM plan and $300,000 was saved moving them to a health savings account (HSA). Of active employees, 69 participants, 46 moved to the HSA and 23 remain on the CMM for a savings of $250,000.
Laska said the county was successful in getting two retirees to enroll in Medicare saving $1,400 a month per couple.
For 2015, Laska presented the board with the recommendation of terminating the high cost CMM, which is called a Cadillac plan, which would affect 23 employees and 57 retirees, and replacing it. With the Affordable Care Act, Laska said the county will face a $36,000 additional tax for having a Cadillac plan in addition to its annual premium.
The county needs to have a suitable solution as a replacement and Laska said she thinks they found it. With retirees covered by earlier agreements, the county needs to let them stay on its plans indefinitely.
Administrator Tim Houle reported the CMM plan was the county’s major plan but almost all retirees and employees have migrated to a high deductible health plan. Until now, the county hasn’t forced the move.
Laska said moving retirees from the CMM to a Blue Cross Blue Shield 0ff-Exchange Plan provides a solution with comparable coverage and saves 40 percent. And the CMM would be replaced with a health savings account.
The changes will need to be negotiated with the unions. Laska said the unions understand the gravity of the situation and have been good partners in reining in costs.
“I’m optimistic we will have success,” Laska said.
Commissioner Paul Koering said the $93,000 a month for retirees coming from levy dollars from property taxes is enough to give him panic attacks.
Laska said she believes they have made significant progress to keep renewal costs much lower than they could have been.
The board voted to authorize the county to seek to eliminate the CMM plan.
Laska pointed to an interesting pilot program with Sanford Health where people with high risk conditions of diabetes or heart conditions are given free checkups with a certain provider with costs based not on the number of procedures but on the outcomes.
Commissioner Paul Thiede said he thinks there are huge looming issues as no one knows yet what the exchanges are going to do or what will happen with costs and care.
Laska said: “The exchange is so new we really don’t know what it will produce.”