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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 ...
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