| ITEM #: 2. DATE: 12/11/2023 AI #:1775 |
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CITY COUNCIL ACTION REPORT
| SUBJECT: | RETIREE HEALTHCARE |
| STAFF PRESENTER(S): | Lyman Locket, Human Resources Director, Jared Askelson, Deputy Finance Director |
OTHER PRESENTER(S):
N/A
Summary
Provide study results on offering retiree healthcare benefits to attract and retain a talented workforce that continues to deliver exceptional services to Goodyear citizens. (Lyman Locket, Human Resources Director, Jared Askelson, Deputy Finance Director)
STIPULATIONS
The proposed bridge plan will provide retiree medical coverage with 50% of the premium covered by the retiree and 50% covered by the city. Retirees will have the option to remain on the city’s medical healthcare plan upon retirement, until the age of 65 or Medicare eligible. Eligibility requirements will include a minimum of 15 continuous years with the city and commencement of retirement with ASRS or PSPRS. Disability retirement provisions are included to provide coverage for employees who meet the disability criteria established by ASRS or PSPRS. Along with 15 years of continuous employment with Goodyear, eligibility requirements will correspond with those required by ASRS or PSPRS. For Council members, eligibility for retiree healthcare will require serving two full consecutive terms.
FISCAL IMPACT
The proposed bridge plan has a minimum first year ongoing cost of $115,000 however, it is recommended that the amount of benefits earned be set aside annually. This amount is currently calculated at $1.6 million. There is an additional one-time cost of $25.2 million for benefits earned in prior years. It is recommended that this cost be paid in full within a fixed period of 15 years using one-time sources. A full plan to fund the one-time costs will be developed with the FY2025 budget process along with the funding of other strategic plan initiatives.
BACKGROUND AND PREVIOUS ACTIONS
At the February 3, 2023 Council retreat, Council was provided with a preliminary overview of retiree healthcare options and market conditions. Currently, the city provides contributions to a retirement health savings (RHS) for benefit eligible employees, however post-employment healthcare is not provided. Data from Mercer's 2021 Annual Employer Survey shows 62% of government employers offer health plans for pre-Medicare eligible retirees and 33% offer plans for Medicare eligible retirees. Following this preliminary discussion, Council provided direction to conduct a feasibility study. The city contracted with Milliman Consulting, an actuarial firm, and worked through our insurance broker/consultant GBS to complete a feasibility study as requested by Council.
In response to this request, several options for a contribution only plan, bridge plans and a Medicare supplemental plan were presented to Council at the November 13, 2023 work session. Retiree healthcare options for a contribution only plan, bridge plans and a Medicare supplemental plan were presented. Council provided direction to focus on the feasibility of the bridge plan option and to bring the Medicare Supplemental plan back for further discussion.
In response to this request, several options for a contribution only plan, bridge plans and a Medicare supplemental plan were presented to Council at the November 13, 2023 work session. Retiree healthcare options for a contribution only plan, bridge plans and a Medicare supplemental plan were presented. Council provided direction to focus on the feasibility of the bridge plan option and to bring the Medicare Supplemental plan back for further discussion.