HomeMy WebLinkAbout1995 RETIREE MEDICAL INSURANCE BACKGROUND
Retirees initially paid all premiums. Fixed dollar subsidies were granted
incrementally by City Council in response to large premium increases.
· Formula subsidy developed based on 3% per year of service (30 years
maximum) up to 90% of lowest single person rate (currently HMO).
· In 1988 the Council provided 42% subsidy to o~et cost of unblending Fee
For Service Retiree rates from active employee rates.
· Retiree Fee for Service rates were blended with active employee rates
(reason unknown ?).
· Net Result - Three Subsidies:
1. Years service subsidy.
2. 42% for Fee For Service retirees subsidy.
3. Subsidy due to cost shift from retirees to active employees
through Fee For Service blended rate.
· Concerns:
1. Major uncontrollable increases in cost of Retiree Medical to
City and growing future liability for Retiree Medical Insurance
funding.
2. Inequity between Fee for Service and HMO (HMO costs more?)
3. No rationale for 42% subsidy. (not reasonable plan design)
4. Shift of Retirees from HMO to Fee For Service not cost
effective. (moves retirees away from more cost effective
managed care)
RETIREE MEDICAL PLAN DESIGN
· Should encourage managed care options.
· Should encourage use of Medicare-when eligible (Employees hired after
1985 are all eligible).
· Rates should recognize participation in Medicare and Medicare Risk
optional coverages
· Promote equity of benefit for those now in plan.
· Identify subsidies and their rationale.
· Limit future liability for growing uncontrollable costs.
· Identify benefrts for disability retirees.
· Pursue options for retirees outside the HMO coverage area.
· Be flexible to be able to respond to a changing health care environment.
· Legal constraints (collective bargaining and statutory).
RETIREE MEDICAL PLAN OPTIONS
General Recommendations:
· Implement Medicare Risk option for retirees with the City contributing the
fiat dollar amount of the Medicare Premium ($46.10). The City would
reserve the right to modify or delete this practice in the future in response
to significant changes in medical plans by providers, economic or legal
conditions.
· Require that employees not yet hired will participate in the retiree medical
plan only as follows:
1. Employees must retire from service with the City of Bakersfield and
have a minimum twenty (20) years service with the City of.
Bakersfield.
2. Eligible retirees will receive a rate contribution from the City based on
3% of the lowest (HMO or Fee For Service) single coverage rate
(either under 65 or over 65 depending on the retirees age) per full
year of service up to a maximum of thirty years service or 90% of the
applicable, rate.
3. All retirees eligible for Medicare Part B are required to enroll as a
condition of participation in the City's retiree medical plans.
4. Disability retirees are eligible to participate and receive credit for their
actual years of service only.