The city of Independence and its 65-and-older retirees have reached an agreement on health-care insurance that preserves similar coverage and saves the city about $3.5 million a year.
City Manager Zach Walker's initial 2019-20 budget presented in May had called for converting those retirees' coverage to Blue KC for supplemental group Medicare coverage, which many retirees and citizens saw it as inferior to what had been previously promised.
Walker made that proposal, as well as changes to pre-65 retirees and current employees' coverage, to try to save the city an estimated $7 million annually and address a $3.6 million general fund budget shortfall this year. He waived the pre-65 and current employee changes in June and asked the City Council to approve a health-insurance review committee that would find a solution by October, before open enrollment starts.
Tuesday, the council unanimously approved that recommended solution, which keeps Cigna as the insurance carrier and allows retirees to access one of three customized Medicare surround plans.
The city's cost for post-65 retiree coverage had been projected to be about $5.8 million, and now it's $2.3 million, alleviating some of the budget pain.
Walker called it a “sound agreement” and in a message last week to council members said it prevented what would have been “Draconian” cuts in the general fund. He said he plans to meet with department heads in the coming weeks and come back in October with the necessary budget amendments for about $700,000 in cuts for the 2019-20 fiscal year.
Tuesday's agreed-upon recommendation maintains an 80/20 cost share between the city and employees for premium costs for the custom plan. The other plans offered have 64/36 and 67/33 premium splits, but with $0 and $185 deductible costs, respectively. The custom plan has an $800 deductible.
In all cases, the city pays a premium share of $217.78 (adjustable depending on overall cost).
While the pre-2009 don't have their 83/17 premium split – which became a point of contention in last year's budget process – in nearly all scenarios the retirees' premium cost will be lower than before.
“It was part of our proposals going back and forth,” Assistant City Manager Adam Norris said. “Everybody's premium goes down. Basically, this matches what our employees have, and it locks in our cost.”
Retired police officer Bob Sorensen, part of the special committee, said he'd been skeptical when the meetings started and joked that the city should send him and Norris to Washington, D.C., to show Congress how to work across the aisle.
“There was some hard discussion; I raised my voice a couple times and I learned more about health insurance the last four months than I ever learned before and hope to ever learn again,” Sorensen said. “I never thought we could get to that (solution), but we did get to that. He kept his temper a lot better than me.”
Sorensen last week's retirees meeting at the local Fraternal Order of Police lodge to vote on the recommendation – attendees gave unanimous approval – filled every available parking spot and included a retiree from Florida.
“That's how important this was,” he said.