cover
TO: Mayor Richard C. Irvin
FROM: Alisia Lewis, Director of Human Resources
DATE: September 7, 2017
SUBJECT:
A Resolution Establishing Heath and Dental Insurance Monthly Rates of Contributions for Pre-Medicare Retirees Effective January 1, 2018 through December 31, 2018.
PURPOSE:
To establish the 2018 health and dental insurance monthly rates of contributions for pre-Medicare retirees.
BACKGROUND:
Each year the premium rates of health and dental insurance for all retirees (pre-Medicare and Medicare eligible) and their qualified dependents are adjusted accordingly from the prior year’s rates on the basis of past actual claims experience, projected current loss experience and medical and dental costs associated with the OAP health insurance and dental plan currently offered by the city. The city offers three tiers of insurance for retiree, retiree + 1 and retiree + family coverage. Retirees pay based on the applicable level of coverage chosen at time of retirement and pursuant to whichever pay plan or collective bargaining agreement is currently in effect.
DISCUSSION:
Based on analytic data, the city was advised to separate the premium calculations for pre-Medicare retirees from active employees and Medicare eligible retirees. Year to date, the pre-Medicare retiree group is running a deficit of $1.7 M with a projected year end deficit of $2.3 M. As a result, the active employees and Medicare eligible employee's premiums are significantly subsidizing the pre-Medicare retirees share of the cost to the city. Due to legal constraints in not being able to change the contribution percentage of employees once they retire and the current contractual limitations in making plan design changes, the present method of applying the insurance premium to all groups (active, pre-Medicare and post Medicare) is no longer financially sustainable. With the assistance of the city's health insurance consultant, a separate pre-Medicare retiree premium has been calculated based on that group's current claims and projected loss experience. This change is expected to eliminate the deficit in the fund and break even for 2018.
Retiree dental premiums are the same as for active employees and there is no increase in dental premiums for 2018
The attached 2018 retiree insurance premium rate sheets reflect the applicable premiums that have been adjusted with the new calculation and in accordance with each city group of pre-Medicare retirees in their respective collective bargaining agreements or pay plans.
The attached comprehensive 2018 pre-Medicare contribution sheet is attached for your review.
IMPACT STATEMENT:
No Impact
RECOMMENDATIONS:
Place on the Finance Committee calendar for approval to City Council
cc: Alderman O’Connor, Chairman
Alderman Mesiacos
Alderman Bugg
Alderman Mervine, Alternate
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution Establishing Health and Dental Insurance Monthly Rates of Contributions for Pre-Medicare Retirees Effective January 1, 2018 through December 31, 2018.
body
WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, (it has been determined that the pre-Medicare retiree rates set forth herein for health and dental insurance premiums represent equitable and reasonable amounts for eligible retiree and dependent participants in the city health plans:)
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: that the attached 2018 City of Aurora medical and dental rates for eligible pre-Medicare retirees and dependents are hereby adopted as attached hereto and made a part hereof as Exhibit “A”.