City switching to CalPERS medical plan

DOWNEY - From Downey firefighters and police officers to city executives and mid-level managers, all Downey employees will soon see profound changes to their medical benefits as the city prepares to dissolve its costly, self-funded medical plan in favor of a healthcare program sponsored by CalPERS.Approved by the City Council during a special council meeting last Thursday, the latest agreement includes renegotiated medical contracts between the city and the associations representing the city's current employees. In an effort to reduce city spending and balance the 2012-13 fiscal year budget, employees conceded several medical benefits and agreed to contribute more to their healthcare coverage over the next couple of months under the city's self-funded medical plan. Effective Oct. 1, the city will contract with CalPERS and offer all personnel their medical plan, saving the city more than $1.5 million this fiscal year. For the last 15 years, the city has provided its own medical benefit program consisting of a self-funded preferred provider option (PPO) medical plan and a fully insured health maintenance organization (HMO) plan through Kaiser Permanente. With coverage available under both plans to current payroll employees and retirees with 10 or more years of continuous service, the city currently pays 100 percent of the cost for employees and their qualified dependents and provides a contribution towards retiree medical premiums. By the end of the 2011-12 fiscal year, citywide costs for medical insurance benefits was approximately $7.8 million with 67 percent of the costs attributed to the city's self-funded medical plan. As a cost-saving measure, the council and city staff proposed terminating the self-funded plan in favor of CalPERS medical insurance program governed under the Public Employees' Medical and Hospital Care Act (PEMHCA). Under its contract with CalPERS, the largest health purchaser in the state, the city will continue to provide medical benefits for active employees and retirees, but according to the agreement, the city will pay the lowest premium contribution possible to retirees - one dollar a month. "The retiree will remain responsible for payment of the balance of the monthly premium under a CalPERS plan including any additional cost for dependent coverage," said Irma Youssefieh, the city's human resources director. According to a cost analysis ordered by the city, the switch from a self-funded medical plan to the CalPERS program will decrease the city's liabilities associated with other post employment benefits from $22.4 million to $9.2 million. Last week, the council also approved a two-year memorandum of understanding with the Downey Fire Management Association, which represents the city's four battalion chiefs. In addition to accepting the changes to the medical benefits, the battalion chiefs also agreed to pay more towards their retirement costs. Starting next year, the fire administration will be responsible for contributing 4 percent compensation towards their pension costs. In July 2014, they will be required to pay an additional 1.5 percent for a total of 5.5 percent. The savings in personnel costs are expected to exceed $35,000 over the next two years.

********** Published: August 02, 2012 - Volume 11 - Issue 16