13 - Health Benefit Contribution Costa Mesa Sanitary District …an Independent Special District Protecting our community’s health and the environment by providing solid waste and sewer collection services. www.cmsdca.gov Memorandum To: Board of Directors From: Scott Carroll, General Manager Date: September 25 , 2014 Subject: Health Benefit Contribution Summary The District offers its full -time employees a variety of benefit plans through a “Cafeteria Bucket”. Each employee receives a “bucket” of funds to select and pay for desired benefits and levels of coverage. The current monthly bucket s are $799.00 for Employee Only and Employee plus One Dependent or $1,199 for Employee plus Two or More Dependents . The current bucket allowance is adequate to pay for health plans for employees who are on individual plans; however, employees who are only covering one other de pendent (Employee plus One Dependent) have much higher premium costs and experience a large out of pocket expense. It would be fair to all members of the organization to provide three (3) levels of benefit buckets, in alig n ment with the three (3) levels o f premiums paid for insurance coverage. Staff Recommendation T hat the Board of Directors approve s a “Cafeteria Bucket” for Employee plus One Dependent health plans in the amount of $999.00 per month. Analysis To recruit and retain high quality employees, many public agencies must offer a variety of health benefit plans that include medical, dental and vision insurance, short term and long term disability, and life insurance. Many agencies will pay the full pre miums for short term and long term disability plans as well as the life insurance plan. ITEM NO. 13
Board of Directors September 25 , 2014 Page 2 of 4 In 2010, the Board recognized a need to adopt another tier “Cafeteria Bucket” so that employees who have two o r more depends could have affor dable healthcare. Thu s the Board adopted a “Cafeteria Bucket” of $1,199 per month for those employees who had more than two (2) dependents. And in 2012, the Board recognized the need to continue to support the ability to retain and attract talent to CMSD by paying the full premiums for long term disability insurance and life insurance. The “Cafeteria Bucket” for a single employee and an emp loyee who has one dependent are the same, $799 per month. While this bucket allowance is adequate to pay for health plans for employees who are on individual plans; employees who are covering one other dependent (Employee plus One Dependent) have much hig her premium costs and experience a large out of pocket expense. Below is an example of the expenses that would occur for an employee on a family plan. District Contribution (Cafeteria Bucket) $799.00 Medical (UnitedHealthcare ) Employee + 1 $898.20 Dental $77.21 Vision $14.69 Employee Out of Pocket Expense ($191.10 ) In the example above, UnitedHealthcare has the lowest monthly rate out of the 13 healthplans offered by CalPERS. The average monthly healthplan rate, excluding UnitedHealthcare, is $1,214.16. T he employee will be contributing $191.10 a month for the identified benefits , which is nearly $2,300 per year . The annual contribution is much more if an employee chooses another plan. It would be fair to all members of the organization to provide three (3) levels of benefit buckets, in alig n ment with the three (3) levels of premiums paid for insurance coverage. Monthly cafeteria allowances vary from agency to agency, but a recent survey conducted via the CSDA list s erve found 48% of 33 responding special districts contribute 90% or more of the employee premium for medical coverage. T he average allowance for an individual plan is $737.25 and for the family plan it’s $1,364.05. Staff has contacted healthcare provider s in an attempt to lower healthplan costs . None of the healthcare providers ret urned staff inquiries as a result of the size of our agency . SDRMA offers a medical insurance program; however, the options are limited. The proposed cafeteria bucket of $9 99 a month for Employee plus One Dependent plans represents a $200 difference between the single employee bucket and family bucket offered by the District. If the Board adopted the new tier, the District’s cafeteria buckets would align with current medical premium tiers, which are; Employee Only, Employee Plus One, and Employee Plus Two or More.
Board of Directors September 25 , 2014 Page 3 of 4 Strategic Element & Goal Complies with Strategic Element 6.0, Personnel/Organizational Management of the Strategic Plan. The objective to this element is to employ and retain a high quality, motivated workforce . Below is the strategy to achieving this objective. “We will do this by utilizing sound policies and personnel practices, offering competitive compensation and benefits , providing opportunities for training , development and professional growth, while ensuring a safe and secure workforce.” Legal Review Not applicable Environmental Review The consideration of health benefits for employees, including considering additional categories and funding levels, is an administrative matter and is not a disturbance of the environment similar to grading or construction and is not a project under CEQA or the District’s CEQA Guidelines. Financial Review If the Board approves the $9 99 a month allowance for Employee Plus One healthcare plans, three employees will be eligible to use the new allowance. The increased cost for the Distr ict for the remainder of FY 2014 -1 5 will be $3,600 . There is adequate funding in the budget for this additional expense due to cost savings from vacate positions. Public Notice Process Copies of this report are on file and will be included with the entire agenda packet for the September 25 , 2014 Board of Directors regular meeting at District Headquarters and on the District ’s website. Alternative Actions 1. Approve a cafeteria bucket for Employee Plus One Dependent healthplans, but reduce the monthly allowance from the recommended amount to an amount that is agreed upon by the Board of Directors. 2. Do not approve a cafeteria bucket for Employee Plus One Dependent healthplans. Leave the current monthly b ucket amount of $799 for Employee Plus One Dependent healthplans. 3. Refer the matter back to staff for additional information. Reviewed by: Wendy Davis Finance Manager
Board of Directors September 25 , 2014 Page 4 of 4 Attachment A: Monthly Healthcare Premimums