Claims above $50,000 totaled 97 in the past fiscal year; they numbered 46 at this fiscal year’s mid-point
Amid all the positive trends of Sarasota County’s finances for the middle of the 2016 fiscal year, one concern has arisen: the rise in medical benefits expenses.
As Kim Radtke, director of the county’s Office of Financial Management, ran through department budgets on April 27, showing the County Commission how much certain ones have spent since the fiscal year began on Oct. 1, she noted that Human Resources was at the 47-percent mark.
“We are keeping an eye on … the medical benefits fund,” Radtke said, reserving to a county reserve account. Staff members of both the Office of Financial Management and Human Resources (HR) “are monitoring and analyzing this trend monthly,” she added.
The main reason for the concern to-date, she pointed out, is the number of medical claims exceeding $50,000.
In response to a Sarasota News Leader request for information, HR staff complied statistics showing that the department processed a total of 97 claims above $50,000 in the 2015 fiscal year, for a total of $11,291,028, or an average of $116,402.35 per claim. As of the mid-point of this fiscal year, HR has handled 46 claims higher than $50,000, totaling $4,633,524; the average expense for those is $100,728.78 per claim.
In a review of data for fiscal years 2013 through 2015, HR reports a steady climb in the number of employees filing claims — from 6,169 in the 2013 fiscal year to 7,163 in the 2015 fiscal year. Through the mid-point of this fiscal year, 5,974 people have filed claims, records show.
The county paid a total of $19,648,753 in claims in the 2013 fiscal year and $31,240,547 in the 2015 fiscal year, according to the data.
Thus far in the current fiscal year, claims have totaled $15,188,454, the HR records indicate.
The average age of county employees is 48, HR reported.
Radtke explained on April 27 that, if necessary, staff might need to bring a budget amendment to the board later this year, because county policy requires a certain level of reserve in the fund set aside to cover medical benefits. (A News Leader search of county documents found that the Medical Benefits Reserve must maintain a reserve of 60 days of projected claims.)
“This one was the subject of some controversy under the previous administrator’s tenure,” Commissioner Christine Robinson noted, referring to concerns about the Medical Benefit Reserve when Randall Reid was still county administrator in 2013.
During a Sept. 25, 2013 County Commission discussion, Robinson voiced alarm when county staff talked of the potential for a 15-percent increase in county employees’ medical insurance premiums. At that time, Steve Botelho, the county’s chief financial planning officer — and now an assistant county administrator — explained that because the county is self-insured, as claims expenses rise, it is necessary for the costs to be addressed.
Robinson asked on April 27 how county staff felt the situation would play out for the 2017 fiscal year. If rate increases will be needed, she said, “We need to provide adequate notice to our employees.”
A chart HR provided to the News Leader on May 2 showed that while premiums went down 3.1 percent in 2011, they have been rising ever since. In the 2013 fiscal year, they were up 9 percent; in FY 2015, 3.6 percent; and in FY 2016, 8.9 percent. The average increase over the past six years is 4.9 percent, the HR data show.
“We can’t control the claims,” County Administrator Tom Harmer told Robinson and the other commissioners on April 27. No information is available yet, he added, about the rise in premiums employees might be facing for the 2017 fiscal year. In June, he continued, staff should have more details.
“Quite honestly,” Robinson said, “[this] was glossed over for a number of years before we had that issue [of maintaining a sufficient Medical Benefit Reserve] pop up. … But I would like to understand if there are any options for us.”
The discussion needs to be held in the context of employee pay raises for the next fiscal year, she added.
Because of the board concerns that arose about three years ago, Harmer pointed out, county administrators and the Office of Financial Management get regular updates from HR about medical claims. “It’s really the highest [increase] as you look at these major funds,” he added of the expenses thus far in the fiscal year.
Robinson told Harmer she did not have the level of concern she held three years ago, when Reid “was working us into a deficit in [the Medical Benefit Reserve], but I do want to understand this” in regard to its impact on employee premiums and pay.