With an eye on cutting costs, the city now will mandate that Medicare eligible retirees use a city procured Medicare Advantage plan starting Jan. 1.
In a 13-0 vote, the Racine Common Council approved the resolution at a meeting held Tuesday. Aldermen Terry McCarthy and Jim Morgenroth were excused from attending the meeting.
There is no hard number calculated for overall savings for the City. But the premium cost savings for the retiree group alone would save several thousand dollars. The plan has received some support from the City’s four union groups. But Penny Sharp, whose husband Scott Sharp worked for the city for 35 years before retiring, spoke out against the proposal.
Medicare Insurance A Must For Retirees
The city wants to change the employee handbook so that city retirees receive the same benefit plans as active employees. They want the ability to place them in a Medicare Advantage plan the city chooses, said Racine City Attorney Scott Letteney.
“The plan has changed for active employees along the way and some retirees have been given the option of taking whatever the active employees have or to remain with whatever they had when they retired,” Letteney said. “So there have been changes along the way. All that the employees have been promised is that they will have health insurance after they retire.”
City employees hired after Jan. 1, 2007 have not been promised health insurance after they retire. Current employees are required to sign-up for Medicare once they reach the age of 65, but they can keep the city’s health insurance plan as secondary insurance. Those employees are reimbursed the cost of those premiums, but the level of reimbursement varies.
The proposed change would affect Medicare eligible retirees and the Medicare Advantage plan would replace the city’s existing health care plan.
“I will tell you that part of impetus for this is that the County did this two years ago — put the Medicare Advantage plan in place for their retired employees. The word was they saved lots and lots of money and we heard from many people: Why isn’t the City considering this?” Letteney said. “Look at what the County is saving?
“What we were trying to do is mirror the benefits that the active employees now have,” he said.
Retirees Would See Overall Cost Reduced
There are some differences in the retiree plan, including: a $400 deductible instead of $3,000, a health club membership through Silversneakers, and home doctor visits. But the maximum amount of out of pocket costs for prescriptions for the retirees is $4,900 versus $3,400 for the city employees.
“This is a better plan,” Letteney said. “But for those few employees that have a lot prescription costs they would end up paying more out of pocket, but they would still only pay 20 percent of what the prescription cost.”
Still, the overall deductible difference is $2,400, so the total out of pocket cost is less.
“What this is really going to provide is some consistency and predictability for retirees,” Letteney said.”It is also going to reduce some administrative costs and administrative procedures.”
The 2017 budget called for reducing ½ of a full-time employee, in part, because of the proposal.
“We worked really hard on this… on finding something that was going to be better,” he said. “… Don’t let the perfect be the enemy of good,” Letteney said. “This a good plan.”
Common Council Threatened With Lawsuit
Sharp reminded Common Council members that for 12 years employees didn’t receive a raise.
“They chose to keep their benefits instead of getting an increase in pay,” she said. ”See what I have in my hands here… this is a list of all of the lawsuits the city has lost against the unions.
“You don’t have a chance. Go ahead, I know you are going to vote this in tonight, but you have no chance in court…. And I just want to remind you that this is going to cost the city millions of dollars.”