Large claims drive insurance costs higher for Lee County employees

LEESBURG — A larger-than-normal number of extremely high insurance claims by Lee County employees has presented a dilemma for the Lee County Commission.

It’s a dilemma that can only be solved with money, and that burden is going to be shared by Lee County commissioners and employees.

The employees will pay more for their county insurance coverage beginning Feb. 1, 2015. The rate increase will be 5 percent for those employees with employee-only coverage. Rates for those who coverage themselves and a child will rise 6 percent. A 7 percent increase has been approved for workers who cover themselves and a spouse. Rates for those with complete family coverage will rise 8 percent.

The problem facing the commission is coming up with about $650,000 to put into a reinsurance pool with other employers designed to soften the blow of huge year-to-year swings in insurance costs.

“Typically we have eight to 10 claims in excess of 25,000,” said Lee Commission Chairman Rick Muggridge. “This year, there are already 19 claims above that total.”

Lee County has a self-insurance plan through Blue Cross Blue Shield. It also purchases reinsurance to cover claims that top $80,000.

Chad Slaughter, an insurance executive with J. Smith Lanier & Co., said Lee County is running at 88 percent of maximum claim liability, or 110 percent of expected claims. Lee County historically has run at 80 percent of max or lower.

Commissioners approved a plan recommended by Slaughter Thursday that continues using Blue Cross Blue Shield to administer the plan and provide employees access to BCBS preferred providers.

The big change is a decision to participate in the Apollo Captive, a self-insurance captive that Slaughter says should lessen the claim volatility for Lee’s self-funded plan by participating in a risk pool with like-minded companies. The agreement must be reviewed by Lee County Attorney Jimmy Skipper.

Slaughter said companies in the Apollo Captive must commit to an aggressive wellness program with at least 75 percent of its employees participating.

“This will be a more strategic approach rather than the year-to-year changes,” County Manager Ron Rabun said. “We got nailed this year and I don’t want to get nailed again. We can’t stand it.”

Finding the funds will be painful, Rabun said.

To make those payments, Rabun said the county may have to consider a hiring freeze, a freeze on capital expenditures, delays on financing building maintenance and other cost-cutting policies.

Most of the county’s road resurfacing plans for the year likely will continue because the majority of those funds were committed in bids and accepted at the commission’s regular December meeting a couple of weeks ago.

In addition to the higher insurance rates for county workers, the commission implemented a spouse surcharge of $125 a month for spouses who have access to coverage through their own employer.

To fund Lee’s participation in the captive, Lee county must provide about $650,000, or about $3,000 per employee, out of its general fund to finance its share of the captive pool of funds.

That presents a cash flow problem for the County Commission, which does not have the $650,000 budgeted.

Commissioner Luke Singletary asked Slaughter to see if Apollo would consider spreading the initial $650,000 expense over 18 months, instead of 12. Slaughter is to report back to the commission on that request.