Published: August 20, 2008 01:11 am      

TOWN OF LOCKPORT: Retirees shifted to Medicare

TOWN OF LOCKPORT — Municipal retirees age 65 and older are being assigned to Medicare supplemental health insurance plans.

According to Supervisor Marc Smith, the shift away from traditional town-paid plans will save about $50,000 a year while maintaining or improving the health benefits of 18 retirees.

“It’s a great way to continue a benefit for people who’ve worked hard for our community,” Smith said Tuesday. “The last thing we want is to be forced, like GM, to cut off our retirees.”

Medicare-eligible retirees are being enrolled in a Blue Cross Blue Shield health plan whose premiums are paid by the federal government.

Smith said the town will provide secondary coverage to pay the portions of bills not covered by Medicare, up to the coverage levels offered in the town’s plans.

The switch was explained to retirees before it was effected, and retirees consented, Smith said.

“Overall, I think everyone was quite pleased,” he said. “I would enroll my own parents in this, it’s that good.”

By shifting older retirees into Medicare, the town will save anywhere from $4,600 to $10,600 per retiree per year.

Town-paid Blue Cross Blue Shield plans cost, on average, $8,000 for single-person coverage and $14,000 per family plan, while the Medicare supplemental plan will cost the town $3,400 per person, Smith said.

One advantage of the Medicare plan that is retirees and their spouses can each be covered singly, rather than by more costly family health plans. Another is that by removing older retirees from the town’s experience-rated risk pool, the town can better hold down future cost increases for insuring active employees, Smith said.

The Blue Cross Blue Shield Medicare plan offers retirees some benefits not provided in the town plans, such as enhanced vision coverage and reimbursement of health club membership fees.

“It’s comparable or enhanced coverage, depending on what plan (retirees) had before,” Smith said. “It’s what you’d call a win-win situation.”

The town has possessed the legal right to shift retirees to Medicare for at least several years, thanks to language in both its labor union agreements and the town employee handbook. Smith figures past administrations didn’t exercise the option out of concern it would be perceived as abandoning retirees.

“What stopped it until now, I think, is mostly the fear that people would get less (coverage) than they currently have, and that’s really not the case,” he said.

Perhaps surprisingly, while federal law has said all along that Medicare is the primary health insurance for Americans 65 and older, municipalities routinely purchase traditional plans for their retirees, and neither they nor their insurers have sought reimbursement from Medicare. It’s taken federal incentives to insurers to get them out actively promoting Medicare, Smith said.

The City of Lockport spent $1.75 million on health insurance for 152 retirees in 2006. This year, there are about 130 insured retirees, who have the right to lifetime city-paid coverage, and the majority are enrolled in the costliest plan offered. A single premium costs the city $5,100 and a family premium costs $14,500, according to City Clerk Richard Mullaney.

The city also is looking at a Medicare shift, but that remains to be worked out with both retirees and active-employee unions, Mayor Michael Tucker said.

While the unions do not represent retirees, their consent on the city’s single-carrier insurance package is required before expired contracts are negotiated. The savings wrought from insurance adaptations is what will pay for employee raises, he said.

The city has shown a few proposed Medicare-primary plans to select retirees for their feedback, Tucker added.

“We’re trying to find out what’s best for us and best for them,” he said. “We don’t have any intention of leaving them out of the loop.”

In the town, the Medicare transition is nearly complete for 12 of 18 retirees, according to Smith. Another six, who live out of state, will be enrolled in a new, national Blue Cross Blue Shield Medicare plan in about 60 days, he said.

The town’s retiree health benefit varies by the retiree. Depending on their hire date, some have lifetime town-paid coverage and others have it for as many years as they worked for the town.

Contact reporter Joyce Miles at 439-9222, ext. 6245.