HomeMy WebLinkAbout(0006) IR 20-10412 - Retiree Health Plan Premiums for 2021INFORMAL REPORT TO CITY COUNCIL MEMBERS
No. 20-10412
To the Mayor and Members of the City Council May 19, 2020
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SUBJECT: RETIREE HEALTH PLAN PREMIUMS
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As of FY2017 active and retiree health costs were separated into two different funds operating independent
of each other. The purpose of this was two -fold: Employees would no longer share their City contributions
and employee premiums to help subsidize retiree healthcare costs, thus making employee premiums more
competitive with the market, and, subsequently, retirees would be more responsible for their costs of
healthcare. It is relevant to note that state law requires plan designs for both active employees and retirees
to be actuarially equivalent, but does allow for retirees to go on a Medicare supplement type plan upon
obtaining age 65.
Additionally, as a result of the above it was determined in 2017 that the City would start to require retirees
to contribute to the City's Preferred Provider Organization (PPO) plan that is now referred to as the Health
Center Plan. The plan, at that time, was to have retirees pay $50/month and increase by $50/month for the
next two years to a total of $150/month, which is reflective of what retirees over the age of 65 pay to
Medicare for their Part B coverage. However, the performance of the retiree health plan in 2018 and 2019
showed improvement and the additional $50 increases were unnecessary.
Unfortunately, FY 2020 is not shaping up as a good year for retirees. As mentioned, above, while the
retiree costs for health care had been running well and they entered the current fiscal year with a $2.5
million fund balance, it is projected that retirees will be over budget by $1.7 million this year. Claims
during the first six months of the fiscal year have trended twenty-eight percent over the same period last
year. As a result, it is expected that contribution increases from both the retirees and the City will be
needed for 2021. Any increases in retiree premium on the PPO plan will be limited to an additional
$50/month for a total of $100/month, as previously planned, and dependent coverage (spouse, children and
family) is planned to increase by three percent. At this time, it is expected that the City will need to
increase its contribution by a little over six percent. Retiree only coverage for the City's high deductible
health plan (Consumer Choice) will remain at zero premium cost to retirees, but dependent coverage
(spouse, children and family) is also expected to increase by three percent with the City contribution
increasing by six percent as well.
Active employee premiums are not expected to increase for 2021 and, probably, for 2022 because their
performance has continued to be strong.
If you have any additional questions, please contact Brian Dickerson, Human Resources Director at 817-
392-7783.
David Cooke
City Manager
ISSUED BY THE CITY MANAGER
FORT WORTH, TEXAS