Benefits & Compensation
Retiree Health Plans
Update: On October 23, 2010 a notice was sent to all involved parties about the Retiree Healthcare Settlement. Click the link below to access a copy of the settlement
Update: On Thursday June 10, 2010 U.S. District Judge Joseph Bataillon issued a temporary injunction at the request of the three City Workers' Unions and sent the case to trial. A July 26 date was set. A letter was sent to all effected retiress around Friday June 18, 2010.
The City of Omaha like most cities is experiencing a budget shortfall. This deficit is expected to grow to over $20 million next year. As a result of the City being self-insured, the rise in healthcare costs is a contributing factor to this shortfall.Â
As of today the City currently administers 34 different retiree health plans. On Tuesday April 20, 2010 Mayor Jim Suttle announced that the City plans to reduce the number of retiree health plans to three. This reduction in the number of health plans could save the city up to $4,000,000 dollars per year.
The following updated information is being provided to help you make your decision about your health insurance
Questions & Answers
Q1.  Why is there a problem with the City’s group health plan?
Answer: Multiple issues are involved. The primary issue is the increase in paid claims. The City of Omaha is self-insured which means claims are paid by the City’s general fund. The increase in paid claims has been especially significant within the retirees group: There has been a 303% increase from 2000 through 2009. Secondly, it has become cumbersome to administer all the various health plans that have existed over the years: Currently there are 34 retiree health care plans. Lastly, the City of Omaha is looking at budget shortfalls of approximately $9.8 million in 2010 and $21 million in 2011.
Q2. Â Why target the retirees?
Answer: Active employees are paying a premium whereas the vast majority of retirees are not. Additionally, health care usage by retirees has grown dramatically during this decade which has created an unprecedented strain upon the City’s budget. Per capita cost for an active employee has grown from $5,875 in 2000 to $11,055 in 2009; per capita cost for a retiree has grown from $7,869 in 2000 to $17,111 in 2009.Â
Q3. Â How were the premiums established?
Answer: The premium rates were determined by the City’s third party administrator (Blue Cross Blue Shield) by looking at the claims experience for each group (Civilian, Police, and Fire retirees). Once the premiums were determined, the proposed percentages (25/30/35%) were applied to the single, single + one, and family levels of coverage.
Q4. Â Are the proposed changes by the City considered a qualifying event so that I could get on my spouses coverage?
Answer: No. Under federal provisions (HIPAA), the termination of an employer contributing toward the coverage triggers a Special Enrollment even though the coverage is still offered. A reduction of the employer’s contributions or the levels of benefits will not trigger a Special Enrollment. Since the City is still paying a significant amount of the cost, this change in premium and coverage level is not a qualifying event.
Q5.  Can a retiree drop the City coverage, acquire alternative coverage, and later come back under the City’s coverage?
Answer: Retirees are allowed to re-enroll only if they have a qualifying event under HIPAA. Qualifying events include:Â
* Divorce or legal separation from the spouse who had the alternative coverage
* Death of a spouse who had the health coverage
* Termination of current employment which provides coverage
* Reduction in hours worked that causes loss of health coverage
* Termination of benefits to a class of individuals that includes the retiree or dependent
* Acquisition of a new dependent by marriage, placement of adoption, or birth.
Q6.  Why isn’t there one plan for all retired people?
Answer: At one time, all City employees and retirees shared the same health plan. Over the years, benefits were modified by bargaining group and these differences were carried over to retirees. The goal is to return to one plan for all active and retired employees.Â
Q7.  Why are civilians paying the most for all the levels of coverage?
Answer: The civilian retiree utilization is higher than the other groups. Since the utilization is higher, the cost is higher so the premiums are higher. This is partly driven by the fact that there are more civilian retirees than Police or Fire. It is anticipated that as of July 1, 2010, there will be 400 civilian retirees, 353 police retirees, and 287 fire retirees.
Q8.  If my health plan changes on July 1, 2010, will I get any credit for the medical and prescription deductible/stop loss that I’ve already satisfied for 2010?
Answer: Yes. If you will have a higher deductible and/or stop loss under the new plan, new claims will be added to what you have already paid until the new deductible and/or stop loss have been met.Â
Example: If your old plan had deductibles of $150 single/$300 family and the new plan has deductibles of $400 single/$800 family, you will need to incur additional claims of $250 single/$500 family to meet the new deductibles before the City starts to pay its share of claims incurred on or after July 1, 2010. The same procedure would apply for meeting the annual stop loss. Out-of-pocket payments prior to July 1st will not count towards the new deductible and stop loss.Â
Q9. Â Under the three-tier prescription plan for civilian retirees, how do I find out which of the tiers my current medications are in?
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Answer: Call the Blue Cross Blue Shield Customer Service office at 402-392-4190 or toll free at 800-424-7146. You may also obtain general information about medications online at www.bcbsne.com.
Q10.  When I retired there were only two levels of coverage: single and family. Will I be offered the opportunity to choose single + 1 if it’s only myself and spouse or myself and a child?
Answer: Yes. After approval by the City Council, the City will send a third letter identifying a period of time when retirees may enroll in single, single + 1, or family coverage.
Q11.  Can the premiums I’m paying in 2010 be increased in 2011 or subsequent years?
Answer: Yes. Premiums are based on each group’s (Civilian, Police or Fire) specific experience/utilization over the previous year, so those premiums could go up, down, or stay the same.
Q12.  If I’m currently covered under my spouse’s health coverage, can I drop my coverage through the City of Omaha?
Answer: Yes. Remember that in a situation like this, you could re-enroll in the City’s group health plan only if you have a qualifying event under HIPAA (see Q5, above). You would need to contact the Human Resources Department within 30 days of the qualifying event.
Q13. Â Since I am going to have the same health coverage as an active employee, will my benefits change if the active employees plan changes?
Answer: Yes.
Q14. My husband is a retired police officer. Can he remove himself from coverage and I remain on the policy?
Answer: No.
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