Contractor is adding 2-3 inches layer of concrete and he says the 2-3 inches bottom part of this wood column will be covered in concrete. Won’t this cause water to get trapped and cause the wood to mold and rot inside the concrete?

In my experience concrete should not be touching the wood. Moisture build up, rot-like you said-and termite damage are likely results. Is this a licensed contractor and are permits pulled?

Originally posted by @Bjorn Ahlblad :

In my experience concrete should not be touching the wood. Moisture build up, rot-like you said-and termite damage are likely results. Is this a licensed contractor and are permits pulled?

A wood column needs to sit on top of the concrete. 

Short term solution but will create a longer term problem.  As Bjorn said the wood will soak up the water from the concrete and will rot.  Pressure treated would will rot slower but will still rot.  I would raise the post above the new cement and even then avoid having wood touch the cement as the bottom will simply rot over time quicker if they are in direct contact. 

Yes to what all have said. You need to isolate the wood from the concrete. There are materials that will do this, remove the trim and seal the wood on bottom and sides, then re-apply the trim....

Agreed with all that the wood post should be bearing on top of the concrete. If, for some reason, this can't be done, you could use a fiber or rubber expansion board to create a bond-break between the wood and concrete.