DATE: May 15, 2019
TO: Board of Mayor and Aldermen
FROM: Eric Stuckey, City Administrator
Kristine Brock, Assistant City Administrator/CFO
Kevin Townsel, Human Resources Director
SUBJECT:
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Consideration of Resolution 2019-54 Establishing the City's Contribution to Health Care Coverage for Retirees Electing Option II Coverage. (05/28/19 WS)
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Purpose
The purpose of this memorandum is to provide the Board of Mayor and Aldermen (BOMA) with information to consider Resolution 2019-54, which will establish a new policy related to the City of Franklin's contribution to the retiree health insurance coverage.
Background
The City currently contributes $200 toward the monthly premium for eligible retirees with single coverage and $500 to the monthly premium for all other plan tiers in Option II. Option II health insurance coverage ends when the retiree reaches age 65 and transitions to Medicare. The City contribution rate has remained unchanged since 2012 while total premiums for retiree health care have increased. Staff is proposing a change in calculating the City's contribution to retiree health care by which the City would contribute 40% of the premium for both single and other plan tiers that include dependent coverage. This change would become effective July 2019.
Currently, there are 30 retirees participating in the Option II Retiree Health Plan, of which 91% select either Single (11 retirees) or Retiree + Spouse (16 retirees) plan. One retiree has a plan including children and two retirees have family plans.
Financial Impact
Assuming current enrollment, the estimated financial impact for FY 2020 is additional city expense of $19,459 above the current contribution. The actual expense will be dependent upon the actual number of enrollees during the year and the plans they select. For the two most popular plans, single retirees will benefit from an additional monthly city contribution of $51.32 and retiree + spouse plans will ...
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