Retiree Health Plans
Update:¬†On October 23, 2010 a notice was sent to all involved parties about the Retiree Healthcare Settlement.¬† Click the link below to access a copy of the settlement
Update: On¬†Thursday June 10, 2010¬†U.S. District Judge Joseph Bataillon issued¬†a temporary¬†injunction at the request¬†of the¬†three City Workers' Unions and sent the case to trial. A July 26 date was set.¬† A letter was sent to all effected retiress around Friday June 18, 2010.
The City of Omaha like¬†most cities¬†is experiencing a budget shortfall.¬† This deficit is expected to grow to over $20 million next year.¬† As a result of¬† the City¬†being self-insured, the rise in healthcare costs is a contributing factor to this shortfall.¬†
As of today the City currently administers 34 different retiree health plans.¬† On Tuesday April 20, 2010 Mayor Jim Suttle announced that the City plans to reduce the number of retiree health plans to three.¬† This reduction in the number of health plans could save the city up to $4,000,000 dollars per year.
The following updated information is being provided to help you make your decision about your health insurance
Questions & Answers
Q1. ¬†Why is there a problem with the City?s group health plan?
Answer: Multiple issues are involved.¬† The primary issue is the increase in paid claims.¬† The City of Omaha is self-insured which means claims are paid by the City?s general fund. The¬† increase in paid claims has been especially significant within the retirees group: There has been a 303% increase from 2000 through 2009.¬† Secondly, it has become cumbersome to administer all the various health plans that have existed over the years: Currently there are 34 retiree health care plans.¬† Lastly,¬† the City of Omaha is looking at budget shortfalls of approximately $9.8 million in 2010 and $21 million in 2011.
Q2. ¬†Why target the retirees?
Answer: Active employees are paying a premium whereas the vast majority of retirees are not.¬† Additionally, health care usage by retirees has grown dramatically during this decade which has created an unprecedented strain upon the City?s budget.¬† Per capita cost for an active employee has grown from $5,875 in 2000 to $11,055 in 2009; per capita cost for a retiree has grown from $7,869 in 2000 to $17,111 in 2009.¬†
Q3. ¬†How were the premiums established?
Answer: The premium rates were determined by the City?s third party administrator (Blue Cross Blue Shield) by looking at the claims experience for each group (Civilian, Police, and Fire retirees).¬† Once the premiums were determined, the proposed percentages (25/30/35%) were applied to the single, single + one, and family levels of coverage.
Q4. ¬†Are the proposed changes by the City considered a qualifying event so that I could get on my spouses coverage?
Answer: No.¬† Under federal provisions (HIPAA), the termination of an employer contributing toward the coverage triggers a Special Enrollment even though the coverage is still offered.¬† A reduction of the employer?s contributions or the levels of benefits will not trigger a Special Enrollment.¬† Since the City is still paying a significant amount of the cost, this change in premium and coverage level is not a qualifying event.
Q5. ¬†Can a retiree drop the City coverage, acquire alternative coverage, and later come back under the City?s coverage?
Answer: Retirees are allowed to re-enroll only if they have a qualifying event under HIPAA.¬† Qualifying events include:¬†
* Divorce or legal separation from the spouse who had the alternative coverage
* Death of a spouse who had the health coverage
* Termination of current employment which provides coverage
* Reduction in hours worked that causes loss of health coverage
* Termination of benefits to a class of individuals that includes the retiree or dependent
* Acquisition of a new dependent by marriage, placement of adoption, or birth.
Q6. ¬†Why isn?t there one plan for all retired people?
Answer: At one time, all City employees and retirees shared the same health plan.¬† Over the years, benefits were modified by bargaining group and these differences were carried over to retirees.¬† The goal is to return to one plan for all active and retired employees.¬†
Q7.¬† ¬†Why are civilians paying the most for all the levels of coverage?
Answer: The civilian retiree utilization is higher than the other groups.¬† Since the utilization is higher, the cost is higher so the premiums are higher.¬† This is partly driven by the fact that there are more civilian retirees than Police or Fire.¬† It is anticipated that as of July 1, 2010, there will be 400 civilian retirees, 353 police retirees, and 287 fire retirees.
Q8. ¬†If my health plan changes on July 1, 2010, will I get any credit for the medical and prescription deductible/stop loss that I?ve already satisfied for 2010?
Answer: Yes.¬† If you will have a higher deductible and/or stop loss under the new plan, new claims will be added to what you have already paid until the new deductible and/or stop loss have been met.¬†
Example: If your old plan had deductibles of $150 single/$300 family and the new plan has deductibles of $400 single/$800 family, you will need to incur additional claims of $250 single/$500 family to meet the new deductibles before the City starts to pay its share of claims incurred on or after July 1, 2010.¬† The same procedure would apply for meeting the annual stop loss.¬† Out-of-pocket payments prior to July 1st will not count towards the new deductible and stop loss.¬†
Q9. ¬†Under the three-tier prescription plan for civilian retirees, how do I find out which of the tiers my current medications are in?
Answer: Call the Blue Cross Blue Shield Customer Service office at 402-392-4190 or toll free at 800-424-7146.¬† You may also obtain general information about medications online at www.bcbsne.com.
Q10. ¬†When I retired there were only two levels of coverage: single and family. Will I be offered the opportunity to choose single + 1 if it?s only myself and spouse or myself and a child?
Answer: Yes.¬† After approval by the City Council, the City will send a third letter identifying a period of time when retirees may enroll in single, single + 1, or family coverage.
Q11. ¬†Can the premiums I?m paying in 2010 be increased in 2011 or subsequent years?
Answer:¬† Yes.¬† Premiums are based on each group?s (Civilian, Police or Fire) specific experience/utilization over the previous year, so those premiums could go up, down, or stay the same.
Q12. ¬†If I?m currently covered under my spouse?s health coverage, can I drop my coverage through the City of Omaha?
Answer: Yes.¬† Remember that in a situation like this, you could re-enroll in the City?s group health plan only if you have a qualifying event under HIPAA (see Q5, above).¬† You would need to contact the Human Resources Department within 30 days of the qualifying event.
Q13. ¬†Since I am going to have the same health coverage as an active employee, will my benefits change if the active employees plan changes?
Q14.¬†My husband is a retired police officer.¬† Can he remove himself from coverage and I remain on the policy?