Title
Human Resources Department recommending the Board take the following actions regarding Health Plan Programs and Ancillary Employee Benefit Programs for the 2025 Plan Year:
1) Approve the revised 2025 Affordable Care Act compliant health plan rate card (Attachment A) in accordance with the Patient Protection and Affordable Care Act; and
2) Grant Human Resources the authority to correct any minor clerical errors or adjustments, if necessary, to the approved health plan rate cards for the 2025 health benefits plan year, as needed.
FUNDING: Countywide cost, shared between the County Departments (General Fund and Non-General Fund) and employees.
Body
DISCUSSION / BACKGROUND
Health Plans
On September 24, 2024, with Legistar file 24-1611, the Board of Supervisors adopted the 2025 health plan rate card for the County’s Affordable Care Act (ACA) compliant health plan.
To be considered affordable under the ACA, an employee’s contribution for self-only coverage under the lowest plan cost option available cannot exceed 9.02% of the employee’s household income for the 2025 tax year. The IRS acknowledges that the employer is typically not aware of an employee’s household income, thus permits the employer to measure the affordability of their coverage using an ACA affordability safe harbor. Under the Rate of Pay Safe Harbor, the maximum amount an employer can charge for self-only coverage is the percentage of affordability factor (affordability limit) times the employees’ lowest hourly rate of pay times 130 hours. To comply with the Rate of Pay Safe Harbor, the County calculates the employee share of premium based on California’s lowest minimum wage, which currently (and as used for the 2025 ACA compliant health plan rate card) is $16.00 per hour. As long as an offer of coverage satisfies an ACA safe harbor, the ACA employer shared responsibility will be met, avoiding penalties.
The “Blue Shield PPO 2000 ABHP High” (high deductible) plan is the County’s ACA compliant plan. Due to a clerical error, the employee share of premium for this plan was incorrectly calculated with an affordability factor of 9.20% instead of the 9.02% required. As the revision results in the County assuming a slightly higher contribution towards the total cost of coverage than originally presented, the revised rate card is presented to the Board for approval.
ALTERNATIVES
There are three “Safe Harbor” methods available to satisfy “affordability” under the ACA: Rate of Pay, Federal Poverty Level, and Form W-2.
To use the Form W-2 Safe Harbor, the employee’s required contribution must remain a consistent amount or percentage of all Form W-2 wages during the plan year. The Form W-2 Safe Harbor retroactively determines the affordability of its health coverage by looking at each employee’s wages reported in Box 1 of Form W-2. This option requires a structured and ongoing per-person analysis as W-2 wages fluctuate, potentially affecting affordability calculations and must be monitored throughout the year. Because for the majority of benefit-eligible employees their wages would result in employee cost of premiums exceeding those offered under the cost sharing prescribed for other medical plans offered pursuant to their negotiated labor agreement (MOU), this method would not satisfy requirements that the plan be the lowest cost plan offered. For these reasons, the Form W-2 Safe Harbor method is not a recommended alternative.
Like the Rate of Pay Safe Harbor, the Federal Poverty Level (FPL) Safe Harbor allows the employer to prospectively satisfy the ACA’s affordability requirement without analyzing every employee’s hours. Unlike the Rate of Pay Safe Harbor, the FPL Safe Harbor also removes consideration of employee wages, as it is instead based on the federal poverty level for a single individual for the applicable year. The Federal Poverty Guidelines are generally expected to be published around the third week of January; as this is after our plan year begins January 1, should the County use the FPL Safe Harbor, rates can be adopted using the FPL in effect up to six months prior to the plan year (per ACA guidelines) but may need to be adjusted should the FPL decrease. This means the FPL Safe Harbor requires more monitoring than the Rate of Pay Safe Harbor (which requires none) to ensure ongoing compliance. The disadvantage of FPL over Rate of Pay Safe Harbor method is the difference in Federal minimum wage compared to the higher California minimum wage; the federal poverty level is substantially below the actual compensation levels of County employees. Should the Board adopt the FPL Safe Harbor method, the County would incur a greater share of cost than is otherwise necessary to be deemed “affordable." Should the Board adopt the FPL Safe Harbor method, the employer would contribute approximately 8.2% more towards the 2025 cost of employee-only coverage than under the existing Rate of Pay Safe Harbor method. Therefore, the FPL Safe Harbor method is not a recommended alternative. However, should the Board choose to adopt this alternative, the associated FPL Safe Harbor “alternative” ACA rate card is included as Attachment B.
PRIOR BOARD ACTION
02/15/2011 Legistar file 11-0121: County joined CSAC-EIA Health program (now PRISM Health)
07/21/2020 Legistar file 20-0949: BCC approved as County’s third party benefits administrator under PRISM Health
08/27/2024 Legistar file 24-1397: Board adopted 2025 health plan rate cards for active employees and outside agencies, and authorized Human Resources to execute administrative health and benefit program plan renewals for the 2025 health benefits plan year.
09/24/2024 Legistar file 24-1611: Board adopted the 2025 ACA compliant plan rate card.
OTHER DEPARTMENT / AGENCY INVOLVEMENT
N/A
CAO RECOMMENDATION / COMMENTS
Approve as recommended.
FINANCIAL IMPACT
There is no new or additional financial impact of adopting the recommended ACA compliant rate card.
CLERK OF THE BOARD FOLLOW UP ACTIONS
N/A
STRATEGIC PLAN COMPONENT
Workforce Excellence
Priority: Focus on Employee Development & Well- Being
Action Item: Continue to implement wellness initiatives and activities for El Dorado County employees
CONTACT
Joseph Carruesco, Director of Human Resources