| ITEM #: 11. DATE: 12/18/2023 AI #:1853 |
 |
CITY COUNCIL ACTION REPORT
| SUBJECT: | RETIREE HEALTHCARE |
| STAFF PRESENTER(S): | Lyman Locket, Human Resources Director, Jared Askelson, Deputy Finance Director |
SUMMARY
A request to approve the plan design framework and transition plan for the implementation of a retiree healthcare plan.
STRATEGIC PLAN ALIGNMENT
.png) |
RECOMMENDATION
ADOPT RESOLUTION NO. 2023-2377, ACCEPTING THE FRAMEWORK AND TRANSITION PLAN FOR THE IMPLEMENTATION OF A RETIREE HEALTHCARE PLAN WITH THE TRANSITION COMMENCING ON DECEMBER 19, 2023 WITH A PLAN EFFECTIVE DATE OF JULY 1, 2024. (Lyman Locket, Human Resources Director, Jared Askelson, Deputy Finance Director)
FISCAL IMPACT
The proposed bridge plan has a minimum first year ongoing cost of $120,000 with the amount of benefits earned estimated at $1.7 million. There is an additional one-time cost of $25.8 million for benefits earned in prior years. As a part of the fiscal year 2025 budget process, a full plan to fund the ongoing and one-time costs will be developed along with the funding of other strategic plan initiatives.
BACKGROUND AND PREVIOUS ACTIONS
At the December 11, 2023 Council work session, Council reached consensus on the creation of a retiree healthcare plan for eligible retirees. The plan design framework will be a bridge plan that covers retirees from the point of retirement to age 65 or Medicare eligibility. The premium equivalency rate will be 50% retiree, and 50% city. Rates are based on the full premium rate that is established on an annual basis for active employees. Eligibility rules will include commencement of retirement and actively drawing retirement benefit from PSPRS or ASRS for members of each plan. Retirees must also complete ten consecutive years of service with the city and elect the retiree healthcare plan at the time of retirement.
For Council members eligibility will include serving two full consecutive terms. At the end of the final term, Council members must elect the retiree healthcare plan to be eligible.
Effective December 19, 2023, we will begin the transition and implementation period concluding with the commencement of the new retiree healthcare plan effective July 1, 2024. During the transition period, employees retiring between January 1, 2024 and June 30, 2024, who wish to elect retiree healthcare coverage must enroll in COBRA immediately upon retirement. Retirees enrolling in COBRA during this period will receive COBRA rates equal to the retiree premium equivalency rate. In order to remain eligible for retiree healthcare, employees wishing to enroll in the retiree healthcare plan must maintain COBRA coverage until June 30, 2024.
The transition and implementation period will include establishing contracts with plan administration and billing services, finalizing the contract renewal for medical and stop-loss coverage, developing plan documents, finalizing policy and guidelines and developing open enrollment materials. Final plan policies related to retiree healthcare will come to Council for approval in April, 2024 before implementation.
For Council members eligibility will include serving two full consecutive terms. At the end of the final term, Council members must elect the retiree healthcare plan to be eligible.
Effective December 19, 2023, we will begin the transition and implementation period concluding with the commencement of the new retiree healthcare plan effective July 1, 2024. During the transition period, employees retiring between January 1, 2024 and June 30, 2024, who wish to elect retiree healthcare coverage must enroll in COBRA immediately upon retirement. Retirees enrolling in COBRA during this period will receive COBRA rates equal to the retiree premium equivalency rate. In order to remain eligible for retiree healthcare, employees wishing to enroll in the retiree healthcare plan must maintain COBRA coverage until June 30, 2024.
The transition and implementation period will include establishing contracts with plan administration and billing services, finalizing the contract renewal for medical and stop-loss coverage, developing plan documents, finalizing policy and guidelines and developing open enrollment materials. Final plan policies related to retiree healthcare will come to Council for approval in April, 2024 before implementation.