Insurance Mitigation Funds Revisted

A Sampling of Local Experience

November 2015 Voice: With municipal health insurance reform in 2011, there was a spike in the number of Public Employee Committees (PECs) across the Commonwealth. Currently, some 185 Association members are serving as retiree designees on PECs that negotiate with local officials over health insurance plans.

“We’ve also seen an increase in mitigation funds that help retirees pay for certain out-of-pocket costs (OPC),” reports Association PEC Coordinator Tricia Igo. “That begs the question: Are these funds helping retirees?”

“In our last (September) issue of the Voice, we touched briefly on this question,” according to Voice Publisher Nancy Delaney. “Specifically, we reported on the town of Arlington’s efforts to increase participation in its mitigation fund.

“We also mentioned the City of Newburyport and our PEC designee Joe Donnelly,” continues Delaney. “Just recently Joe, who has served on the PEC since its creation, had to step down.

“We want to take this opportunity to thank him for all his years of service and commitment on behalf of his fellow retirees and survivors. His successor, Gordon Bowman, who comes to us highly recommended, has some big shoes to fill.”

“I’ve enjoyed my time on the PEC since ’07 and know that Gordon (Bowman) will do an outstanding job. He can definitely fill my shoes,” responds Donnelly.

“When the PEC entered into its first agreement back in ’09, the city’s human resources office had no one for health insurance,” recalls Donnelly. “So while things were rocky at the start, they’ve progressed very well. Now there is a full-time human resources person for health insurance.”

“Also when we established the HRA (Health Reimbursement Account) in 2011, we initially experienced some difficulty in getting the word out. But now human resources sends a postcard to retirees, notifying them about the HRA, and a Blue Cross representative comes to city hall every three months and is available to answer any questions.”

Newburyport’s HRA reimburses for prescription drug copayments that exceed $500 for an individual and $1,000 for a family. Medicare and non-Medicare must submit their receipts to human resources for reimbursement. Currently there is approximately $30,000 in the HRA. Ed Note: Medicare and non-Medicare retirees also receive an annual payment from the city toward their healthcare costs – $125 this coming January.

“With our enhanced outreach, Newburyport retirees are taking advantage of the HRA. Our work here, as well as our wellness and heart programs, has been given special recognition by Blue Cross and MIIA (Mass. Interlocal Insurance Association).”

What Others Are Experiencing

Here’s what some other PEC designees had to say about their mitigation fund.

“Currently our mitigation fund has some $140,000,” reports Ron Michaud who is our retiree designee on the Salem PEC. “If it should reach the $50,000 mark, then the PEC and city officials plan to meet to discuss depositing more money into the fund.”

Salem’s mitigation fund reimburses for certain GIC (Group Insurance Commission) co-payments including outpatient surgery, inpatient hospital admissions and high-tech imaging (i.e., MRI, PET & CT scans). Medicare retirees will receive a one-month premium holiday if the city receives a credit from the state under the federal Retiree Drug Subsidy (RDS) program.

“Our mitigation fund is administered by Cafeteria Plan Advisors in Braintree. My sense is that retirees have been applying for reimbursement, and if you haven’t, then just call city hall to learn what you should do.”

“Recently we entered into a new agreement with Mayor Driscoll that extends our participation with the state GIC for another three years. Among the major features in the agreement is one that reduces the retiree share of the Medicare HMO plans from 35% to 30%, which translates into an almost 15% savings in premium dollars for the retiree. That’s great news for these retirees.”

Before it joined the GIC last year, the town of Framingham retained its HRA that it created in 2012. “Since its inception, our HRA has paid out over $480,000 in reimbursements,” according to Sue Wallace, our retiree designee on the town’s PEC.

Framingham non-Medicare retirees and employees can receive reimbursement for the same GIC copayments as their fellow retirees in Salem (see earlier). In addition non-Medicare retirees, can be reimbursed for their out-of-pocket expenses once they exceed the $1,250 for an individual and $2,500 for a family. Medicare retirees receive an annual payment of $105.

“There’s been reasonable usage of the HRA, reports Wallace. “Still we’re always exploring ways to better improve outreach and stimulate more participation.

“Framingham’s Human Resources office is very helpful. They will assist you in getting the proper forms if you qualify for reimbursement.

“So please remember if you want to be reimbursed, just call town hall, they’ll connect you with the office to help you through the process.”
According to Igo, “Our office also heard recently from Ralph McKenna, our retiree designee on the Billerica PEC. And here’s what he told us.”

“I take advantage of the mitigation fund here in Billerica,” reports McKenna. “And the retirees, with whom I’ve talked, are doing the same.
“But I’ve spoken with the town manager who has a different slant and thinks the town’s retirees aren’t taking advantage. We do notify the retirees about the fund, and this article here in the Voice should help to spread the word.

“When we contact our retirees and survivors, we tell them about the benefits from the fund. That includes reimbursing them on their prescription costs in excess of $300 in a fiscal year.”

Under the PEC’s agreement with town officials, the mitigation fund was to lapse about two years ago. But the town has agreed to keep the fund open.

“As we’ve shown, the experience with mitigation fund varies from one community to the next,” observes Igo. “If your city or town has established such a fund, you should see if you’re eligible and apply.”