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Commissioners consider insurance brokers

Three insurance brokers made recommendations for Washington County during the Dec. 11 meeting of the Employee Compensation and Benefits Committee.
Following the largest amount of claims in eight years, committee members decided in November they owe it to the taxpayers to consider available options, though Commission Chair Greg Matherly cautioned them to put some thought into the county’s needs before issuing the invitations.
“I think we want to be very specific in what we want to be consulted about,” Matherly said.
“We failed in the past by not making it broad enough when we were self-funded looking to go to fully insured, it cost us $10,000 and we might have missed better options.”
Tim Helton, owner of Sequoyah Group in Knoxville, said he worked with former mayor George Jaynes and is very much aware of the situation in Washington County.
“The county is offering two plans for employees,” he said. “The base plan is $4,000 and the buy-up plan is $6,300, but nobody is in the buy-up plan.”
In addition, Washington County is funding 90 percent of the plans. “It’s a very lucrative plan, as we all know,” he said, adding most of the counties he works with pay 75-80 percent.
“The contribution should not be a flat amount for employees with Washington County absorbing the difference.”
Based on the limited historical information provided, Helton’s recommendations included a fully-insured medical plan that offered dental and vision insurance as stand-alone options. Wellness exams should be conducted with a primary care doctor, which are covered under the Affordable Care Act, rather than biometric screenings that have a charge.
“I think you also should consider a spousal surcharge for those who have access (to insurance) from their own employers,” he said.
Another driver of increased health insurance costs that Helton has observed in the counties he works with is the number of employees over the age of 65 who don’t want to get off the county’s plan because they are used to it.
“Once they sat down with our medicare representative and saw what that program offered, they moved to medicare.”
Bill Thomas, board chairman of TIS Insurance Services Inc. headquartered in Knoxville, said his company is locally owned and has experience with smaller groups, though they do not have another county government client.
According to Ben Kelly, president of the TIS Employee Benefits Division, the biggest low-hanging fruit for Washington County is the Health Reimbursement Account, which was added last year to help pay for the increase in the maximum out-of-pocket, which went from $1,750 to $4,000. The HRA limits an employee’s maximum to $2,500, with the county responsible for the remaining $1,500.
“Expanding the HRA is what I would want to look at, which is the first step in self-funding,” Kelly said.
“Including office visits in the HRA could save 25 percent on the premium, and the savings would allow Washington County to keep the maximum out-of-pocket for employees at $2,500.”
An analysis of the county’s wellness program to consider incentives for participation and potential penalties for employees who don’t is another idea Kelly said TIS would want to pursue if selected.
A third recommendation was requiring spouses to request coverage from their own employers or adding a spousal surcharge of $50 per paycheck.
“Spouses often cost more than the employees,” he said.
Jon Manfull, marketing manager for Mark III Employee Benefits headquartered in Charlotte, N.C., said his company has been operating in the public sector since 1977.
“We don’t go after private firms,” he said, noting the company has represented Johnson City schools for the last decade, and the City of Johnson City for the last six years.
Manfull, who operates from the Johnson City office of Mark III, said the company’s leadership has an understanding of the challenges facing county government, noting it would not be a good idea for Washington County to go to a self-insured plan at this time.
Claims are what drive the cost of health care, according to Manfull, who said the county is basically funding 86 percent across the board, with a small number of individuals accounting for the highest percentage of claims. “You need a healthier workforce,” he said.
Commissioner Rick Storey asked if there is a way to move the larger claims into a separate group where the healthier section is not affected.
“It’s hard because you can’t discriminate, but you could look at incentives for people not using their insurance,” he answered.
Manfull also suggested the county consider the amount of dependent coverage, and the option of adding a spousal surcharge if the spouse has access to coverage.
“This is something that could be implemented incrementally,” he said. “Two out of the top five claims are spouses.”
Following the presentations, committee members agreed a spousal surcharge is something to think about, though Commissioner Steve Light said it needs to be done three to four years down the road rather than all at once because it will make the employees angry.
“Quite frankly, time is short,” Mayor Dan Eldridge said. “We’re not going to solve this tonight, but Washington County will definitely be facing challenges in the next three years.”
In addition, Eldridge said the county is not prepared for the ACA reporting requirements that will begin during 2015.
“We need to consider a company that can work with us to develop a plan to offer competitive benefits to employees without having to go to the taxpayers with a property tax increase,” he said.
“The worst thing we can do is look at this on a year-to-year basis.”
Eldridge asked committee members to study the information provided by the consultants, and offered to work with Benefits Coordinator Michelle Stewart to provide a comparison of the services offered for discussion during the January meeting.