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TO: Mayor Richard C. Irvin
FROM: Alisia Lewis, Chief Human Resources Officer
DATE: August 27, 2024
SUBJECT:
A Resolution Authorizing an Agreement with Humana to administer a Medicare Advantage Plan for Medicare Eligible Retirees for the Period of January 1, 2024, through December 31, 2025.
PURPOSE:
To authorize an agreement with Humana to administer a Medicare Advantage Plan for Medicare eligible retirees.
BACKGROUND:
January 1, 2022, the City of Aurora moved the Post-65 Medicare retirees from the Aetna Medicare Advantage plan over to Humana’s Medicare Advantage Plan. Under the Humana Medicare Advantage Plan the City saved 43.3%, or approximately $835,730. The below is the rate history since 2019:
2020: $343.35 Per Retiree Per Month
2021: $314.84 Per Retiree Per Month
2022: $178.55 Per Retiree Per Month
2023: $199.98 Per Retiree Per Month
2024 $214.86 Per Retiree Per Month
DISCUSSION:
Humana’s renewal for 2025 is a 16.2% increase. The main factors generating the increase are the notable revisions CMS is making to the Medicare Advantage program starting in 2025. The revisions impacting the plan are:
Ratebook resulted in CMS MA payment reductions.
The change in Risk Score Normalization: At a high level, CMS is moving from a single five-year linear regression methodology to a multiple year regression methodology. The result of this regulatory change (linear to multiple year) for risk normalization is a lower paid risk score, i.e., revenue from CMS.
Part D (RX) has been restructured. While the City members pay the cost share as defined by their custom prescription plan design, all Medicare Advantage carriers are required to track where a member is on CMS’ Defined Standard Benefit for Part D plans. The changes to Part D are as follows:
Members will have a $2000 maximum out of pocket. CMS is defining the maximum out of pocket as: member cost share plus any benefit plan enhancement. The actual cost share a member will pay for their Part D medications will vary based on the member’s specific medications/cost of their specific medications, most members will pay significantly less than $2,000 out of pocket.
CMS is eliminating the Coverage Gap. During this phase of the defined standard benefit, manufacturers have been required to provide a 70% discount.
The 70% manufacturer discount in the Coverage Gap is being replaced with a manufacturer discount of 10% in the Initial Coverage Limit phase and 20% in the Catastrophic.
Today CMS’s reinsurance in the CAT phase is 80%, in 2025 it is 20% for brand and 40% for generic; this another shift of costs to the Plan
Humana Plan Highlights:
Silver Sneakers - Fitness Program included (Enhancement over Aetna)
Home Delivery Meal Program - 14 days after in-patient stay
Go 365 Wellness Program included
Post-Discharge Personal Home Care
The City recommends accepting the Humana renewal for the Post-65 retiree health plan on January 1, 2025; the 2025 rate of $249.66 is 20.7% below the 2021 rates for Post-65 retirees.
IMPACT STATEMENT:
No impact.
RECOMMENDATIONS:
Place on the Finance Committee calendar for approval to the City Council.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution authorizing an Agreement with Humana to Administer a Medicare Advantage Plan for Medicare Eligible Retirees for the Period of January 1, 2024, through December 31, 2025.
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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 is in the best interests of the City of Aurora to continue a contractual relationship by and between the City of Aurora and Humana for administration of a Medicare Advantage Plan for Medicare eligible retirees; and
WHEREAS, the 2025 proposed City budget provides funding for this item in employee health account 602-0000-410-.28-02; 602-0000-410.28-04; 602-0000-410.28-21; and retiree health account numbers 704-0000-41.28-52; 704-0000-410.28-54; 704-0000-410.28-62; 704-0000-410.28-64; 704-0000-410.28.72; 704-0000-410.28-74
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: that the Mayor if hereby authorized to enter into an agreement with Humana for the period of January 1, 2024, through December 31, 2025.