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Beaufort County staff urge phased move toward higher employee premium shares to shore up self‑funded plan
Summary
Benefits staff recommended a phased change in employer/employee premium splits to reduce the county's self‑insured plan deficit, proposing an 85/15 shift over two years (or 80/20 over five) and outlining year‑by‑year premium and surcharge changes and projected FY27 plan costs of $19.2 million.
Beaufort County benefits staff told council on March 10 that staying self‑funded remains the preferable option for the county but urged a phased increase in employee premium contributions to address a multi‑year deficit and long‑term sustainability.
Staff said the county transitioned to a self‑funded health plan in July 2016 and has saved money relative to early fully insured quotes; however, recent high claim years left the self‑insured fund with a deficit (staff reported a fiscal‑year‑end FY25 audited deficit of a little over $5 million). Benefits staff and consultants recommended a phased contribution change to shift more costs toward employees; staff presented two approaches: a five‑year plan to reach an 80/20 employer/employee split or an accelerated two‑year move to an 85/15 split.
"Our projected health plan cost for FY27 is $19.2 million," staff said, outlining a scenario in which initial employee contribution increases would move the county to an 87.2/12.8 split in year one under a proposed phase. Staff said the most practicable approach would be a phased transition (year‑by‑year increases) to avoid abrupt shocks to the workforce and urged tying larger policy elements (such as cost‑of‑living adjustments) to considerations of equity and recruitment.
Key elements presented: staff described a five‑year illustrative phase to reach 80/20, with initial year one increases affecting employee and dependent tiers; an alternate two‑year 85/15 trajectory would spread less of the impact into later years but requires higher initial adjustments. Staff also described targeted surcharges (spousal coverage and tobacco use) to reduce plan exposure and described pharmacy and dependent‑verification programs already implemented to reduce costs.
Council concerns: members asked about the plan’s $5 million deficit and how the county would balance employee recruitment and retention with contribution increases. Several council members favored a shorter, two‑year move to 85/15 for budget‑planning clarity; others urged measured phasing to avoid eroding lower‑paid employees' compensation and suggested pairing contribution changes with flat COLA or merit strategies to protect low‑paid workers.
Next steps and budgeting: staff said they will present detailed backup materials and the phase schedule in budget documents and implement recommended communication plans to employees. Any final change would be adopted through annual budget and plan amendments.
Ending: council directed staff to prepare FY27 budget numbers reflecting a move toward an 85/15 split in two years (staff to refine year‑one phasing) and to return with more detailed per‑employee impact analyses.
