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It is the policy of the BOCC to have and maintain financial reserves, including funding for plan run-out, within the County’s Health Care Fund. The amount of the reserve shall be determined annually by the BOCC, based upon funding recommendations prepared by the County Manager. As a part of the annual budget process, the County manager or his designee shall provide to the BOCC a full analysis of the Health Care Fund and its reserves, including the difference between projected and actual collections and expenditures, and the change in fund balance, and funding for the reserves shall be included in the annual budget in an amount calculated to provide a reserve level of “secure funding”. The “secure funding” level shall include an amount reasonably calculated to cover expenses “incurred but not reported” for the Fund, an amount reasonably calculated to cover unanticipated administrative expenses related to the run-out claims and “IBNR” expenses, an amount reasonably calculated as a contingency for dental claims, and an amount determined through actuarial methods as a contingency for the medical plan claims. In no event, however, shall the amount be less than that amount determined as reasonably necessary to provide a high minimal level of reserve funding. The County Manager and/or his designee shall develop and adopt criteria and procedures, recognized in the health care insurance industry, for determining the high minimal funding level and the secure funding level and those criteria shall consider the following:

  1. The County’s average monthly claims.
  2. Trending factors for claims and costs.
  3. Trending factors for utilization of the fund.
  4. Exposure to catastrophic or other cost factors.
  5. The ability of the fund to be and remain viable through various experiences.

All funds, including reserve amounts, contained in the Health Care Fund shall be used exclusively for the purpose of that fund, and excess funds, whether considered reserved or otherwise, shall not be transferred to any other fund nor used for any other purpose but may be spent down within the fund to reduce future contributions either by the County or the employees benefiting from the fund.

In the event that the amount of the reserve falls below the determined “high minimum” level for a given year, then the County Manager shall prepare and submit recommendations to the BOCC, as soon as practical but not to exceed 90 days following receipt of notice from the Director of Budget and the Director of Financial Management, to reestablish the reserve at acceptable levels.

In the event that the fund balance for the Health Care Fund at the close of any fiscal year provides reserve funding in an amount that exceeds that past year’s “secure funding” level by 35% or more, then the County Manager shall, as a part of the next year’s budget process, notify the BOCC of the status of the reserves and present options for the BOCC to consider for funding the reserves in the ensuing budget. The BOCC shall adjust the reserve funding as it deems advisable so that the amount of the reserves is reasonably limited to the calculated “secure funding” level.

Resolution No. 122-02
Revision Number: Original
Date of Last Review: Adopted 12-19-02 Revised 02-28-13

Policy Number: