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TO: Mayor Richard C. Irvin
FROM: Alisia Lewis, Director of Human Resources Director
DATE: August 23, 2018
SUBJECT:
A Resolution Authorizing an Agreement with Aetna to Administer a Medicare Advantage Plan for Medicare Eligible Retirees for the Period of January 1, 2019 through December 31, 2019.
PURPOSE:
To authorize an agreement with Aetna to administer a Medicare Advantage Plan for Medicare eligible retirees.
BACKGROUND:
On January 1, 2018, the City of Aurora converted the Post-65 Medicare retirees from the city’s CIGNA OAP health plan to Aetna’s Medicare Advantage Plan. Aetna’s plan is a fully insured product which shifts the risk of claims from the city’s self-insured plan to Aetna. The 2017 funding of the Post-65 Medicare retirees was approximately $5,700,000 and under the Aetna Medicare Advantage Product the 2018 funding was reduced to approximately $2,000,000. Additionally, the city’s long-term health insurance pension liability was reduced by
$25,000,000.
DISCUSSION:
Aetna’s renewal for the Post-65 Medicare retirees is a 9.2% reduction which assumes the same benefits as the 2018 plan. This results in a cost reduction of $166,533 for 2019. In addition, the city paid approximately $204,000 in run-out claims from the CIGNA OAP plan that covered the Post-65 retirees in 2018. Thus, the city’s estimated cost reduction total for this population is $371,000 in 2019.
The recommendation is to renew with Aetna’s Medicare Advantage plan.
IMPACT STATEMENT:
No impact
RECOMMENDATIONS:
Place on the Finance Committee calendar for approval to the City Council.
cc: Alderman O’Connor, Chairman
Alderman Mesiacos
Alderman Bugg
Alderman Mervine, Alternate
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution Authorizing an Agreement with Aetna to Administer a Medicare Advantage Plan for Medicare Eligible Retirees for the Period of January 1, 2019 through December 31, 2019.
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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 enter into a contractual relationship by and between the City of Aurora and Aetna for administration of a Medicare Advantage Plan for Medicare eligible retirees; and
WHEREAS, the 2019 proposed City budget provides for this item in employee health account 602-0000-410.28-02; 602-000-410.28-04; 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 is hereby authorized to enter into an agreement with Aetna for the period of January 1, 2019 through December 31, 2019.