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Information for Medicare Advantage Retirees

Information for Non-Medicare Retirees

A letter was sent to all non-Medicare retirees in August to alert them to the following information. If you didn’t receive it, the letter is available for download.

As retirees may be aware, the City of Fort Worth has been grappling with the high cost of health care over the course of many years. During that time, several difficult decisions have been made with the goal of maintaining the availability of high quality health care while controlling costs.

A few of these examples include:

  • Employees hired after Jan. 1, 2009, do not receive any subdsidy for their health care upon retirement.
  • All retirees who are 65 or older have been transitioned to a fully-insured Medicare Advantage plan with a current annual cost of $4.25 million, saving the plan about $3 million in FY2018.
  • The Pharmacy Benefit Manager has been changed to OptumRx, effective Oct. 1, 2017, which is expected to save the plan $3.8 million in FY2018.
  • Co-pays on emergency room visits have increased.
  • The Healthy Challenge wellness payout was eliminated for retirees only for 2018.

Rates for 2018

Pre-65 Non-Medicare Retirees (Per Month)

Retiree only Retiree + spouse Retiree + child(ren) Retiree + family
Health Center Plan $50 $668.13 $382.92 $977.20
Consumer Choice Plan $0 $525.41 $280.22 $788.12

More information

Challenges with the city’s health care plan

Medical costs of city employees, retirees and dependents exceeded budget by $16 million in FY2016 and are projected to do so by $10 million in the current fiscal year.

The city’s health care plan is a shared expense by the city and the plan members, so it is important for all of us to keep it affordable. Putting more money into the plan will not have any effect on the long-term trend, so city management is looking at other alternatives.

What is driving the cost increase?

DFW is an expensive health care market, with some providers charging substantially more than other parts of the country. We also continue to see excessive use of emergency rooms.

Additionally, the City of Fort Worth has a growing population of pre-65 retirees who are not paying into the fund, but who are supported by premiums from the city that has grown from an annual cost of $3.8 million in 1990 to $32.5 million in 2017. If the trend continues, that cost will be $64 million in 2021, as people are living longer and health care technology is providing advanced options for care.

What commitments have been made to retirees?

Pre-65 retirees will be offered two plans: the Health Center Plan and the Consumer Choice Plan.

The City of Fort Worth currently subsidizes 100% of the premium for retirees hired before Oct. 5, 1988. Retirees hired between Oct. 5, 1988, and Dec. 31, 2008 are subsidized 33% for five to 15 years of service, 67% for 15-25 years of service, and 100% for 25 years of service.

Staff will be recommending that the Consumer Choice Plan continue to be offered to eligible employees at no premium cost. However, the Health Center Plan will have a $50 premium for retirees currently receiving a 100% subsidy from the city. In addition, retirees can expect to pay for more spouse and dependent coverage as the city more accurately prices those benefits.

Based on feedback already received from City Council, employees, and retirees, several adjustments have already been incorporated into the plan and will be outlined further to the City Council in August:

  • Allow access to all United Healthcare specialists for Health Center Plan. The original recommendation to narrow the network of specialists was one of the key strategies of the Health Center Plan. To minimize immediate impact to employees and their families, the plan will now utilize a tiered network with co-pays to steer members to high-quality, cost-effective care. This means plan members can choose to continue their existing relationships with specialists until at least 2019, although it will cost more depending on the specialist and their level of quality.
  • Specialist referrals will not be required for the Health Center Plan. One of the big complaints under the previously proposed model was the requirement to get a referral from the health center primary physician in order to see a specialist, like a dermatologist. To avoid that delay in care, referrals will not be required now.
  • Rates for the Consumer Choice Plan. Premiums for this plan will continue to be lower than the Health Center Plan to accommodate members who need choice of providers, are comfortable with higher deductibles, and who prefer to have a Health Savings Account to accumulate pre-tax dollars for future health needs.

What is proposed for working retirees?

Because eligible retirees pay little or nothing for their health care, if working retirees are eligible for benefits with their current employer, they must leave the city’s plan and elect for coverage for themselves and their spouse with their current employer.

However, should the retiree lose coverage or leave that job, they can return to the city’s plan within a 30 day time period. Note that the city has delayed the elimination of coverage for spouses of active employees for further study this year, to evaluate the potential loss of premium level compared to claims costs.

When will decisions be made that affect the choices of employees/retirees?

The City Council has already received options from staff to create a plan with two options: the Health Center Plan and the Consumer Choice Plan. They will have more discussions in August, with planned discussion at the City Council budget workshop scheduled for Aug. 17.

There will be premium increases to balance the impact among plan members, tax payers and plan design changes. These changes will be finalized and shared with employees in the coming weeks. Most if not all of the details should be available by September, including general locations of the health centers, to aid in the decision-making.