Retired Teachers Health Benefit Program Order 2007-12: Ordered that, in accordance with the procedures set forth in MGL Ch. 32b s. 11e , The City of Gloucester shall terminate participation in the State Contributory Group Insurance plan for retirees currently covered under this program and incorporate said retirees and future retirees into the City of Gloucester health insurance program under the provisions governing municipal retiree and surviving spouse benefits.
MGL 32b sec. 11e PART I. ADMINISTRATION OF THE GOVERNMENT TITLE IV. CIVIL SERVICE, RETIREMENTS AND PENSIONS CHAPTER 32B. CONTRIBUTORY GROUP GENERAL OR BLANKET INSURANCE FOR PERSONS IN THE SERVICE OF COUNTIES, CITIES, TOWNS AND DISTRICTS, AND THEIR DEPENDENTS Chapter 32B: Section 11E. Life and health insurance for retired teachers; appropriation of funds authorized; acceptance of section by political subdivisions Section 11E. Upon acceptance of this section as hereinafter provided, any political subdivision, subject to the provisions of section twelve of chapter thirty-two A, shall appropriate funds or apply therefor for the payment of certain costs for group life and health insurance coverages for teachers retired from the service of the political subdivision, and for health insurance coverages for their surviving spouses and dependents provided such teachers receive a pension or annuity allowance from the teachers’ retirement system, and for the payment of premiums, subsidiary or additional rates and administrative expenses required to be paid by paragraph (d) of section twelve of chapter thirty-two A. This section shall take effect in a county, except Worcester county, city, town or district upon its acceptance in the following manner: —in a county, except Worcester county, by vote of the county commissioners; in a city having a Plan D or Plan E charter by majority vote of its city council, in any other city by vote of its city council, approved by the mayor ; in a district, except as hereinafter provided, by vote of the registered voters of the district at a district meeting; in a regional school district by vote of the regional district school committee; and in a town either by vote of the board of selectmen or by a majority of affirmative votes cast in answer to the following question which shall be printed upon the official ballot to be used at an election in said town:—“Shall the town authorize all teachers insured for group life and health insurance, and their dependents, upon receiving a pension or annuity allowance from the teachers’ retirement system, to have such insurance transferred to the state for convenience of premium withholdings, with the town making payment of fifty per cent of the premium, a portion of the administrative expense and the payment of a subsidiary or additional rate to be paid by the town?” A political subdivision that has accepted this section and whose application has been approved by the commission as provided in section thirteen of chapter thirty-two A may thereafter terminate its acceptance of this section. Any political subdivision, before voting to terminate its acceptance of this section, shall notify the commission of its intent to submit such termination to a vote, and shall provide for a public hearing for the purpose of informing affected retired teachers and the public. All such affected retired teachers shall be notified at least thirty days prior to such public hearing. After such public hearing, a vote shall be taken of affected retired teachers in attendance. A simple majority shall determine the will of such majority. Such termination shall take effect by a vote obtained in the same manner as that required for an acceptance of this section except as heretofore mentioned. Such political subdivision shall thereafter furnish notice of termination to the commission.
Background • The Gloucester City Council voted on June 10 th 1971 to adopt Chapter 626 of the Acts of 1970 relative to teacher’s retirement and health insurance participation in GIC (Group Insurance Commission). Initially retirees paid 50% of the premium costs with the balance paid by the City via Cherry Sheet assessments. Since then, the premium split for participating municipalities and districts has increased to 90% with the retiree/surviving spouse paying 10%. There is no municipal input on the increases of premiums, or the plan benefits offered by the GIC. • All other Gloucester municipal retirees currently pay 25% of their health benefits with a 75% contribution from the City. Surviving spouses share the cost 50/50. • Current Census: 270 participants including 18 surviving spouses and 31 family plan subscribers - see attached chart for full breakdown of plan enrollment. • Gloucester is one of approximately 70 districts participating in the GIC program through the Retired Municipal Teachers’ Program (RMT). In recent years Lynnfield, Franklin, Berlin- Boylston and Berkshire Regional School District have all elected to terminate participation in the program. • Elderly Governmental Retirees/Surviving Spouses (EGR/EGS) would not be affected by this change. Currently there are 6 beneficiaries in the GIC who entered the system in 1965.
Process • City Council votes to hold public hearing to debate withdrawal from the GIC according to procedures in MGL 32b sec. 11e. • All retirees/surviving spouses notified by mail of public hearing. • At least 30 days following notification a public hearing is held on the issue of termination. • At public hearing a straw-vote of attending retirees/surviving spouses is held - for information only. • City Council votes - if withdrawal/termination is approved, State commission is notified of decision. • Retirees/surviving spouses begin transition into the City of Gloucester health insurance program.
Cost to City - 2007 • FY07 Cherry Sheet assessment: $1,756,538 • FY07 Plan comparative costs to the City (based on current census) • GIC plans: $1,764,237 • COG plans: $1,152,818 • Difference: $611,419 • Compared to City of Gloucester plans and premium ratio, the comparative savings for FY07 would have been more than $600,000
Cost to City - 2008 • FY08 Cherry Sheet assessment: $1,757,127 (House Ways/Means) • FY08 Plan comparative costs to the City (based on current census) • GIC plans: $1,758,454 • COG plans: $1,302,670 • Difference: $455,784 • Compared to City of Gloucester plans and premium ratio, the comparative savings for FY08 will be approximately $455,784 • It is important to remember that these numbers are dynamic depending on the actual number of beneficiaries participating in the plan. The numbers rise and fall as participation changes.
FY07 Comparison City of Gloucester Group Insurance Payments Comm Indemnity OME Health = Medex Potential Cost to retirees Plan Family/ GIC Cost GIC Annual COG COG Annual Annual GIC COG Desig. Individual Enrollees to City Cost CostTo City Plan Cost tot. Savings Payment Payment Difference RMS Individual 15 $339.28 $61,070.40 $179.20 $32,256.00 $28,814.40 $52.76 $179.20 $126.44 RMT Individual 149 $339.28 $606,632.64 $268.80 $480,614.40 $126,018.24 $52.76 $89.60 $36.84 Comm Indemnity Health = Blue Choice Potential Plan Family/ GIC Cost GIC Annual COG COG Annual Annual GIC COG Desig. Individual Enrollees to City Cost Plan Cost Plan Cost Savings Payment Payment Difference RMS Individual 3 $634.63 $22,846.68 $227.32 $8,183.52 $14,663.16 $111.20 $227.32 $116.12 RMT Individual 58 $634.63 $441,702.48 $340.97 $237,315.12 $204,387.36 $111.20 $113.66 $2.46 Family 29 $1,525.33 $530,814.84 $905.42 $315,086.16 $215,728.68 $269.38 $301.81 $32.43 Comm Indemnity Health = Blue Care Elect RMT Individual 7 $634.63 $53,308.92 $393.89 $33,086.76 $20,222.16 $111.20 $131.30 $20.10 Family 2 $1,525.33 $36,607.92 $987.39 $23,697.36 $12,910.56 $269.38 $329.13 $59.75 Tufts Secure Medicare Preferred = Medex Potential Plan Family/ GIC Cost GIC Annual COG COG Annual Annual GIC COG Desig. Individual Enrollees to City Cost Plan Cost Plan Cost Savings Payment Payment Difference RMT Individual T 7 $133.97 $11,253.48 $268.80 $22,579.20 -$11,325.72 $14.89 $89.60 $74.71 Totals 270 $1,764,237.36 $1,152,818.52 $611,418.84
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