HomeMy WebLinkAboutIR 9588 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9588
To the Mayor and Members of the City Council September 10, 2013
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SUBJECT: MEDICARE ADVANTAGE TRANSITION
On August 16, 2013, the City Council received a briefing on the funding strategy for retiree
healthcare for employees hired prior to January 1, 2009. The plan outlined a modified funding
schedule for the Other Post-Employment Benefits (OPEB) Trust. Additionally staff identified
significant cost savings if the City requires Medicare-eligible retirees to enroll in a fully-insured
Medicare Advantage Plan with Aetna. The City Council gave the nod to proceed with this plan
change for open enrollment in October of this year.
As we worked with our Medicare Advantage provider and our healthcare consultant, they
recommended a slightly different alternative. They advised that the most cost-effective strategy
that minimizes impact to Medicare eligible retirees is to move Medicare Parts A (hospitalization)
and B (outpatient) to the fully insured plan while retaining the self-insured Part D (pharmacy) set
up by the City in 2013.
When the Center for Medicare & Medicaid Services (CMS) released the Part D rates in late
August, Aetna was able to set their 2014 rate structure. The self-insured Part D is equally cost-
effective and allows the City to maintain control over the drug formulary. This will minimize the
disruption that retirees may have encountered during the transition. Medicare eligible retirees will
still get the benefit of coordinated care.
As a result of this slight modification, Medicare eligible retirees will be notified they will have a $50
annual deductible, as they currently have with the Traditional Medicare Plan. Initially, the plan
was to not pass along an annual deductible to Medicare eligible retirees on the City's Medicare
Advantage Plan. The premiums continue to represent a substantial savings to Medicare eligible
retirees and the City.
If you have additional questions please contact Susan Alanis, Assistant City Manager at
817.392.8180.
Thomas Higgins
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS