FY2021 Budget

stabilizes health care costs over time. The pool now has 11 members and is considering others. The growth in the pool will continue to allow for more spread of both administrative costs and large claims across a greater number of covered lives. The Town has also achieved more flexibility in plan design and opportunities to utilize pharmacy and wellness tools not readily available to small employers. The Town of Morrisville has continued to reap the benefits by having a number of large cost medical claims experienced both last year and this year be shared with others in the pool rather than bear the brunt of those claims being incorporated into significant renewal premiums that subsequently increase both employer and employee costs. The town also continues to “cost compare” the pooled model with what an annual small employer renewal would be to validate our overall savings, even as health care costs continue to escalate. Because the level of claims has outpaced our current premium structure, the Town has not been able to satisfactorily establish an internal pool reserve, which is a requirement of the plan. The pool has a policy that a reserve for a minimum of 1.5 to maximum 6 times the cost of estimated Incurred But Not Reported (IBNR) is needed to protect the pool. Members have five years to achieve this level of reserve. To allow for progress in achieving this goal and cover our existing non-shared medical costs (those under $40,000 for each covered member), our overall costs have increased approximately 6% for FY 2021. Finance and Budget staff also plan to establish a budget mechanism that clearly tracks and monitors health care costs budgeted versus actual expense to mitigate future budget impacts that will be implemented in FY 2021 that will also help offset future health care cost increases should the Town experience significant claim costs. The Town has retained the two tiers of coverage and made modest plan design changes to reflect reasonable and peer/industry comparisons and matched appropriate levels of shared employee/employer cost to those programs that provide choice and responsibility for employees. Vision benefits have been added back for the buy-up plan and minor pharmacy tier changes and wellness program content will be incorporated into both plans. Council member and employee premiums remain the same. Town staff continue to monitor premium cost, in particular for dependent coverage.

The Town’s basic dental care plan, offered through the North Carolina League of Municipalities, reflects a 2.5% increase ($1 increase in Employee Only coverage).

Employee Compensation/Merit Pay

Past and current merit structures have limited merit-based performance awards and the ability for employees to advance through their pay range. Employee salaries continued to fall behind both in routine market pay adjustments as compared to peer communities and in the industry. These factors have contributed to recruitment and retention challenges for staff. A comprehensive job classification review for all positions and employees was conducted earlier this year and presented to Town Council in February. Recommendations from that study, including adjustments to actual pay for job classification changes, was implemented at that time.

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