Town Council Regular Session


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  Item # D.       
Meeting Date: 10/03/2018  
Requested by: Stacey Lemos Submitted By: Stacey Lemos, Finance
Department: Finance  

Information
SUBJECT:
Resolution No. (R)18-37, approval to discontinue offering Town-provided medical insurance to retirees and their dependents beyond December 31, 2024
RECOMMENDATION:
Staff recommends approval.
EXECUTIVE SUMMARY:
This agenda item serves to formalize and make applicable to all retirement-eligible Town employees the discontinuation of offering medical coverage to Town retirees and their dependents after December 31, 2024. This change has already been incorporated and memorialized in the current Public Safety Memorandum of Understanding (MOU) through negotiations this past year (see Exhibit A, Attachment B, Item 9). Since this MOU is specific to only certain members of the retirement-eligible Town employee population, Council action is necessary to adopt this resolution making this change applicable to all retirement-eligible employees town-wide. Subsequent to December 31, 2024, Town retirees will be able to enroll in medical coverage provided through the Arizona State Retirement System (ASRS) or the Public Safety Personnel Retirement System (PSPRS) based on which retirement system they are enrolled.
BACKGROUND OR DETAILED INFORMATION:
Currently, all retirement-eligible Town employees and their dependents have the option of enrolling either in Town-provided medical coverage until they are Medicare-eligible at age 65 or medical coverage provided by the two State retirement systems mentioned above. In an effort to reduce the Town's future medical claims liability and preserve the fiscal health of the Town's self-funded medical program, Town management and the public safety negotiation committee mutually agreed during this year's public safety MOU negotiations to discontinue providing medical coverage to public safety retirees covered by the MOU after December 31, 2024. This date was agreed upon in order to give sufficient notice to all members already on the Town's retiree medical plan and others approaching retirement time to plan accordingly to transition to one of the other medical plans offered by the State retirement system. Since this provision in the public safety MOU is only applicable to certain public safety employees, it is necessary for Council to adopt a resolution extending this policy decision to all retirement-eligible employees town-wide, including the public safety employees covered by the MOU.

Currently, three (3) Town retirees are covered by the Town-provided retiree medical plan; however, this number is projected to increase over the next several years, thereby increasing the potential future claims liability in the Town's self-funded medical program.

After December 31, 2024, retirees and their eligible dependents will be able to enroll in medical coverage provided either through ASRS or PSPRS, depending on which retirement plan they are enrolled. There are a variety of plans and levels of coverage offered by the State retirement plans, and retirees are eligible to receive a monthly subsidy from each plan toward payment of the premiums.
FISCAL IMPACT:
Currently, the Town already pays into both the ASRS and PSPRS systems for retiree medical benefits through our annual contribution rates, in addition to offering Town-provided medical benefits to retirees through our self-funded program. As a result, the Town is paying twice for retiree medical benefits, thereby placing increased pressure on the future fiscal health of the Town's self-funded medical program.

With the number of future retirees projected to increase over the next several years, discontinuation of Town-provided medical coverage to retirees will significantly reduce the Town's future medical claims costs, thereby preserving and protecting the fiscal health of the Town's self-funded program. Retirees, in turn, will have a greater variety of medical coverage options available to them through the State plans, of which a portion of the cost is covered by the retirement plan medical subsidy.
SUGGESTED MOTION:
I MOVE to (approve or deny) Resolution No. (R)18-37, discontinuing the offering of Town-provided medical insurance to retirees and their dependents beyond December 31, 2024.
 
Attachments
(R)18-37 Retiree Medical
Exhibit A MOU 2018-2020


    

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