At its April meeting the Board of Trustees approved a change to the Library’s Group Health Care Benefits for Qualified Retirees policy. Two policies were approved and have been incorporated into the Employee Handbook to replace the previous policy.
How do these changes affect employees who retire in 2015 and 2016?
- TSCPL will continue to pay 50% of the premium of a qualified retiree (regardless of age) and the retiree’s dependents through December 31, 2015.
- The premium for qualified retirees for 2016 will be established and announced by Library administration before the open enrollment meetings which will be held in November 2015. The library will be reducing retiree health premiums by a flat monthly subsidy amount regardless of family size or age of retiree. Amount of premium reduction:
- Qualified Retirees who at time of retirement worked 30 or more hours per week = $300/month
- Qualified Retiree who at the time of retirement worked at least 20 but less than 30 hours per week = $150/month
- No reduction for dental premiums
Note: Retirees may be disqualified from participating if they fail to make required premium payments or if they become covered or eligible to be covered under a group health care benefit plan of another employer. Retirees over the age of 65 must be enrolled in Medicare parts A&B.
How do these changes affect employees who retire after 1-1-2017?
Policy #2 becomes effective on January 1, 2017. It provides that qualified retirees under the age of 65 and their dependents may continue to participate in the TSCPL group health or dental care benefit plan. Participation in the TSCPL Plan shall cease upon:
- the qualified retiree attaining age 65 or becoming eligible for Medicare,
- the qualified retiree failing to make required premium payments on a timely basis, or
- the qualified retiree becoming covered or eligible to be covered under a group health care benefit plan of another employer.
Premium subsidy: Going forward, retiree premiums will be set by Library Administration during the annual budget and policy renewal process and will be subsidized/reduced for up to 36 months for qualified retirees. Please see the examples below for illustrations of how this may affect you.
TSCPL is committed to providing resources to current and future retirees to help them make informed decisions about retirement, Medicare, and Medicare supplements vs health insurance. Additional training and planning resources will be available including quarterly staff meetings, TSCPL programs such as Medicare Mondays, KDADS Commission on Aging services such as SHICK (Senior Health Insurance Counseling for Kansas), and consultation with the TSCPL health and benefits consultants, The Power Group, or its affiliates.
Save the date: A retiree education and open enrollment meeting is currently scheduled for the morning of Tuesday October 27, 2015. Current employees who are considering retiring during the next few years are also encouraged to attend.
The next Medicare Monday program is scheduled for July 6 at 1pm in the Menninger Room.
Qualified Retiree Group Health policy examples
Example 1: Current Retiree, Age 66 in 2015.
- Pays $255 a month to the library for single-coverage BCBS health & dental insurance for the remainder of 2015.
- During 2016 the monthly premium will be reduced by $300 or $150 depending on full time vs part-time service prior to retirement.
- At the end of 2016 during Medicare open enrollment this retiree will enroll in a Medicare supplemental plan (with or without dental) and in Part D Medicare in order to transition out of the TSCPL insurance group policies.
- Monthly premiums for Plan F Medicare supplemental premiums for 67-year old nonsmoking males range from $130 to $262. The Blue Cross Blue Shield of Kansas monthly Plan F premium is $154. Part D and dental coverage (see notes below) would bring the total to $300 a month.
Example 2: Current Employee, Age 65 in 2015. Retires January 1, 2016.
- Enrolled in the TSCPL health and dental insurance plan as an active employee and has signed up for Medicare Part A (only) at 65th birthday in 2015.
- Enrolls in Part B Medicare beginning January 1, 2016 and decides to remain in the Library plan during 2016, paying the library for his share of premium. He does not need to enroll in Part D prescription coverage while covered by the library policy because the library’s plan exceeds Part D prescription coverage.
- Since he is over 65 he is no longer eligible for coverage after the end of 2016 so he enrolls in a Medicare supplement, Part D prescription coverage, and dental plan effective January 1, 2017.
Example 3: Employee age 61 retires 9-1-16.
- Enrolled in the TSCPL health and dental insurance plan as an active employee.
- Remains in the plan after retirement, pays reduced premium for 36 months and begins paying 100% of premium 9-1-19 at age 64.
- Continues to pay full premium until 65th birthday in 2020, when Medicare eligibility begins and he must leave the TSCPL group.
- Example 3A: same as above, but retiree begins working in July 2017 for an employer which offers health insurance to its employees. He may not remain in the TSCPL plan if eligible to enroll in other employer group health insurance.
Example 4: Active employee retires 4-1-16 at age 63.
- Enrolled in the TSCPL health and dental insurance plan as an active employee.
- Remains in the plan after retirement, pays reduced premium for 15 months until 65th birthday in 2017 when Medicare eligibility begins and he must leave the TSCPL plan.
Example 5: Active employee retires 1-1-17 or after at age 66.
Not eligible to remain in the TSCPL health or dental insurance plans, enrolls in Medicare Parts B & D, and purchases a Medicare supplement and dental insurance.
Assumptions/notes regarding these examples:
- All retiring employees have worked 10 years at TSCPL and are currently enrolled in the Library’s health insurance plan.
- During 2015 and 2016 Medicare-eligible retirees are enrolled in Medicare Parts A&B, which is primary for retirees (i.e. Medicare pays first for retirees). For active employees, the library insurance policy pays first.
- All premiums are rounded to even dollar amounts.
- Medicare supplemental premium estimates are for a nonsmoking male living in zip code 66604.
- Note: Approximately 50 insurance companies offer Medicare supplement insurance in Kansas. We have used Blue Cross Blue Shield of Kansas Supplemental Plan F premiums in the illustration above. Other insurance carriers’ policy premiums can be higher or lower than the examples used. Premiums for women are lower than premiums for men. Premiums increase with age.
- Plan F coverage is more expensive than other supplements because it pays Medicare co-pays, deductibles, and Part B excess charges, resulting in lower out-of-pocket healthcare costs. Other supplemental plans with lower premiums and higher out-of-pocket expenses may be a better fit for some retirees. For an idea of the range of premiums visit the Kansas Insurance Department website “Kansas Medicare Supplemental Insurance Shopper’s Guide.”
- In addition to Medicare supplemental health premiums, dental and prescription coverage is estimated to add $146 a month:
- Blue Cross Blue Shield Part D prescription coverage premiums range from $33 to $106 a month depending on level of coverage and co-pay amounts.
- A Blue Cross Blue Shield Plan 65 dental rider monthly premium is $40. This coverage is similar to the library plan in terms of coverage and reimbursement except that there is a $50 annual deductible (library dental plan has no deductible), preventive appointments are limited to two per year (library plan does not limit necessary preventive appointments), and the annual benefit maximum is $1500 (library plan has no annual maximum).
Why were these changes made?
Some of the factors discussed by the board in reaching their decision included the following, excerpted from the CEO report for the April 2015 trustee meeting:
Reasons for making this change:
- Increasing costs for health insurance over at least the past 4 years, with some years in the double-digit percentage rate. New health plans were offered to active employees for the 2015 plan year to help contain costs. As a result, active employees either had to pay a higher premium or accept a greater risk in much higher deductibles.
- Increasing number of retirees over the next 11 years. It could grow from 36 retirees to 109.
- Changes in Medicare coverage over the past 20 years, including the ready availability of supplemental plans.
Criteria for making this recommendation:
- Cost containment: the ability of the Library to control costs over time
- Financial Planning: the ability to project costs over time
- Sustainability: ensuring that the Library is able to sustain health care coverage that meets the needs of employees
- Recruitment and Retention: that health insurance continues to be a tool for recruitment and retention of excellent employees
- Retirees: providing an alternative to the current policy that acknowledges service and is also a cost effective solution for retirees and the Library
- The total cost of a premium per month for medical and prescription coverage (excluding dental) for a retiree is $469.16. The retiree and the Library each pay $234.58. For a retiree 65 and older, Medicare is primary payer. The Library’s plan covers the remaining deductible and 20% co-insurance and prescriptions.
- In essence, the retiree and the Library are over-insuring and overpaying for a retiree’s health insurance for medical coverage.
- Staff is suggesting that the payment retirees currently make for participation in the library’s plan would be better applied to a Medicare supplement plan or plans.
Handbook revision: go here to see the policies and procedures in the Employee Handbook (revised material begins on page 43). Handbook material is a combination of board-approved policies (Bold Print) and administrative procedures or guidelines.