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Thursday, May 23, 2013

Placer County Health Insurance Costs

September 02, 2010

PLACER COUNTY – HEALTH INSURANCE COSTS

KEY POINTS

  • Placer County provides generous health insurance benefits for employees, their families and retirees despite budget challenges caused by the economic downturn and state budget crisis.
  • The county is seeking limited increases in the share paid by employees to help balance the 2010-11 budget and ensure costs are sustainable in the future. The county still will pick up 80 % of the costs for most employees and retirees during 2010-11.
  • Health insurance costs continue to rise significantly. CalPERS rates are scheduled to increase by 4.37 to 17.24 % for Placer County in January 2011.
  • CalPERS law requires employers to make health insurance contributions for retirees equivalent to the contributions for active employees hired before Jan. 1, 2005. Therefore, by law, increases or decreases in cost-sharing formulas for active employees trigger corresponding changes for retirees.

HISTORY

Before 1987, the county did not provide health insurance coverage for retirees.

  • Public agency retirees had difficulty acquiring insurance at reasonable costs.
  • New CalPERS legislation allowed retirees to get coverage through their former employers.

In 1987, the county discontinued a self-funded health insurance program for active employees and joined CalPERS Health.

  • The new program had buy-in provisions for retiree coverage.
  • County contributions for retirees were to rise slowly until they were equivalent to payments for active employees.

In the 2000-01 fiscal year, retirees reached parity with active employees in three groups: management, confidential and the Deputy Sheriff’s Association.

  • Before then, the county contributed 30 to 67 %, or from $52 to $233 per month, toward health insurance for retirees in the three groups, depending on health plans and coverage levels.
  • Beginning in 2000-01, the county made equivalent contributions for retirees and active employees. The change benefitted at least 144 retirees.

In 2002, retirees reached parity with active employees represented by the Placer Public Employees Organization.

  • Before Jan. 1, 2002, the county contributed from 24 to 67 %, or from $99 to $287 per month, for health insurance for PPEO retirees, depending on plans and coverage levels.
  • Beginning in 2002, the county made equivalent contributions for PPEO retirees and active employees. The change resulted in increased benefits for at least 360 retirees.

OTHER IMPORTANT DETAILS

Since 1987, county cost-sharing formulas for employees have changed about five times.

In 2005, the county established a vesting requirement for new employees. They are eligible for retiree health benefits after 10 years of PERS service, Five years must be with the county.

  • If they retire with 10 years of service, they receive 50 % of an active employee’s benefits.
  • The county share rises 5 % for each added year of service and reaches 100 % after 20 years.

Costs for health, dental and vision insurance continue to increase significantly each year.

  • For active employees, county costs for health, dental and vision insurance were $17.9 million in 2003-04 and $26.3 million in 2008-09. For 2010-11, they are projected at $27.3 million.
  • Placer County’s health insurance costs for retirees rose from $310,041 in 1995-96 to almost $6 million in 2005-06. They are projected at $11.9 million in 2010-11.