COLUMBUS CONSOLIDATED GOVERNMENT
COUNCIL MEMORANDUM
TO: Mayor and Councilors DATE: January 8, 2008
FROM: Liz Turner, Asst. to CM SUBJECT: Retiree Health Plan
___________________________________________________________________________
Please see memo from Tom Barron below that was included with the Council Agenda
on December 4, 2007. Also, attached at the bottom of the memo is a PowerPoint
presentation that was presented to over 100 retirees Thursday, December 27,
2007.
Attachments:
1. Memo - Tom Barron dated November 27, 2007
2. PowerPoint Presentation ? New Retiree Health Plan
Human Resources Department
Memorandum
To: Isaiah Hugley, City Manager
From: Tom Barron, Director
Date: November 27, 2007
Subject: Retiree Health Insurance Update
______________________________________________________________________________
The new retiree insurance plan includes a number of positive changes as
reported to us by the Blue Cross representatives. However, in meeting with the
retirees it has come to our attention that the Blue Cross statement that there
are no changes to the plan is not entirely correct. Key plan change details
follow.
The new plan is potentially saving each participant $544 per year in
deductibles and premiums. ($124 Medicare deductible, $300 CCG plan deductible
and $120 in premium because of canceling the planned $10 monthly increase).
The old (current) Medicare plan pays 80% of professional service charges
(mostly doctor visits) and the CCG plan also provides for an 80% payment.
Although this gives the appearance that the retiree is responsible for the
remaining 20%, the actual outcome is full payment of the charges, with the
retiree paying nothing (However, until Medicare and CCG plan deductibles are
paid the retiree pays 100% of charges).
The new Medicare Advantage plan continues to pay 80% of professional service
charges, but because there is no longer a second plan this results in the
retiree being responsible for the 20% copayment up to the plans $2000 out of
pocket maximum annual payment. However, a retiree would have to go to the
doctor quite often before the 20% copayment will exceed the new plan deductible
and premium savings but it can and will happen.
Example: Under the old plan the retiree paid the entire cost of a doctor visit
until paying the Medicare and CCG plan deductible, thereafter there was no cost
for doctor visits. Under the new plan there is no deductible, meaning that the
first visit of the year is covered but a $50 doctor office visit (average
charge per BCBS) would require a $10 copayment.
Of the approximately 40 attendees at the retiree meetings, only 4 expressed
concern about the copayment change. However, many retirees will not be able to
form a true opinion until they have a chance to experience the new plan.
Understanding this, Blue Cross has developed a contingency plan if the
professional service charges do become an issue. This plan would work as
follows:
In place of the 20% copayment we can change to a flat $20 copayment for
professional services. This arrangement would be similar to the active
employee and pre-65 retiree plans that have a $15 copay for primary care and
$25 for specialists. The cost for this change is only $2 per month per retiree
or about $22,000 per year for the entire group.
Example: Again using the BCBS reported average charge for a typical doctor
visit the retiree is better off paying the 80% copayment of $10 rather than a
fixed $20 copayment. On the other hand an extended or specialist visit could
have a copayment of $40 or $50 or more. Accordingly, with a $20 flat copayment
some visits will cost more and others less...some retirees will be better off
and others not.
Recommendation: Because there is insufficient time to make any changes now
without causing a disruption in service then we must stay the course at this
time. However, we will monitor the retiree feedback after the January 1, 2008
implementation date and maintain contact with retiree association
representatives regarding retiree satisfaction with the changes. If the new
copayment appears to be an issue then we can poll the retirees through either
their association or the focus group and ask them to decide which way they
prefer. Because the cost differential is minor, either option works as well as
the other for the CCG.
Attachments