To:	OCAA Board of Directors / General OCAA Membership
From:	The Medical Benefits Advisory Committee
Subject:	Medical Benefits Recommendation
Date:	May 3, 2001

Action Taken

          Upon the Board’s directive, the Medical Benefits Committee reviewed the County of Orange’s proposed medical benefits changes, seeking clarification from the Board and the County regarding the specific terms and conditions of the proposed changes. The Committee then obtained a copy of the original Plan documents from the County, and compared the proposed changes against the Plan documents to ensure that our association would not lose any benefits.

          The Committee then contacted OCEA, spoke with their negotiating representatives for these proposed changes, and asked to speak with their independent health insurance expert contracted to assist them in their negotiations with the County. The Committee spoke with OCEA’s expert – Russ Baum of DeMartino Associates, Inc., from Seattle, and discussed with him the pros and cons of the proposed changes in relation to comparable health care coverage and costs around the nation. Baum informed the committee that the proposed changes were beneficial additions to our current health care plans, and the increase in costs were comparable and competitive with those throughout the nation.

          The Committee then held a face to face meeting with representatives from the County of Orange – Susan Carlucci, Patty Gilbert, and their Mercer representative. At the meeting, the committee asked probing questions seeking clarifications of the proposed changes, and justifications for the cost increases. The County of Orange subsequently provided Mercer’s spread sheet analysis of an overview of expected cost increases from each plan, a copy of which has been provided with this recommendation. Finally, the committee met to provide the following recommendation.

The Proposed Medical Benefits Changes

          As clarified by the County of Orange at our face to face the meeting, the following changes are the sum total of all changes currently proposed to our medical benefits plans which will take effect on January 1, 2002:

• To the PPO’s, the changes will add a routine physical, preventive care, and Baby Wellcare. The routine physical will have a yearly limit to those covered – including dependents – of $250. The examination would include blood test, height, weight, clinical breast examination, EKG, chest x-rays and routine laboratory test. The preventive care will include immunization for children, a well baby care series of visits, examinations for children through age 18, mammograms, colonoscopy, prostrate screening, vision and hearing screening, blood pressure and pap smears. The only limitation is that the physician must be in the PPO network.

 

• For the HMO plans (Kaiser and Cigna Private Plan), chiropractic care will be added. The plan will be a carve out plan. The HMO will contract with a network of chiropractors. The patient will pay a $5 co-pay per visit. There will be a maximum of 30 visits per years per person covered by the plan including dependents.

 

• The County will implement a nonmandatory flexible spending plan within the rules of IRS Rev. Ruling 125. The maximum allowable set aside is $5,000 pre tax.. The county, however, is considering capping the set aside sum to only $ 2,000, due to its paternalistic concerns that our membership will not fully understand how to use the program. The amount set aside will be divided by 24 pay periods – except in the month of December, and will be automatically deducted from our paychecks. We will submit receipts to the county like the current Attorney Optional Benefits Program, and the County will reimburse those amounts from the fund. A list of covered health care costs is delineated in the attached Department of Treasury, Internal Revenue Service, Publication 502. There is no cost or administration fees to the employee. The danger is that whatever set aside money not used in a calendar year will be lost. The money will escheat to the County. To prevent the escheatment from happening, the County anticipates distribution of educational materials to the employees prior to the required sign on date. The Committee requests that the Board press the County to provide a full $5,000 plan, so that our membership may take better advantage of this beneficial program.

 

• Because the County is self-insured, it does not have to comply with the Mental Health Parity Act under the PPO plan, as compared to HMO where compliance exists. The County agrees to now comply under the PPO plans as well. The County will subsume the costs. There will be a lifetime maximum of $ 2,000,000.00, covering eight disorders: schizophrenia, bipolar disorder, panic disorder, autism, bulimia nervosa, schizoaffective disorder, major depressive disorders, obsessive-complusive disorder and anorexia nervosa.

 

• The County proposes to raise Kaiser’s co-payment from $2.00 to $5.00 and the prescription cost from $1.00 to $5.00. Cigna Private Practice will have no change in the co-payment, but the prescription fees will be raised from $2.00 to $5.00. Finally, there will be a 7% to 17% increase in the premium costs for dependent care for all programs, as a result of the cost inflation of medical insurance nationwide and the additional proposed benefits.

The Recommendation

          The Committee recommends that the Board endorse the proposed medical benefits changes to the OCAA membership, conditioned upon the County’s agreement that there be no changes in the plan documents other than are necessary to implement the above changes.