2012 Medicare Health Subsidy Decrease for Age 65 and Over With Medicare Parts A and B

Effective January 1, 2012, the maximum Medicare Health Subsidy decreased 11.86%, from $480.41 to $423.45. Historically a reduction in the subsidy has occurred only once in the last 10 years – a decrease of 10.34% on January 1, 2006. This subsidy applies to Members and Qualified Survivors enrolled in both Medicare Parts A and B. Depending on their health care plan and years of service, Retired Members enrolled in both Medicare Parts A and B may receive an additional subsidy amount for covered dependents.  The health insurance subsidy for Qualified Survivors is limited to the single-party cost of their health plan, and no subsidy for dependent coverage is provided. However, they may cover dependents but are responsible for the additional cost above the single-party premium.

The changes to your subsidy are in accordance with Section 4.1154(c) of the City of Los Angeles Administrative Code.  This language ties the maximum monthly subsidy amount for our members enrolled in Medicare Parts A and B to an approved Medicare Part A plan available to retired members of the Los Angeles City Employees' Retirement System (LACERS).

QUESTIONS AND ANSWERS

• Why the link to civilian premiums?

Back in the 1970's when the retiree health subsidy program was put in place, the City Administrative Office and the Personnel Department developed language in the City Administrative Code to establish the sworn retiree health subsidy and provide for ways to control the subsidies.  A method of controlling sworn retiree health subsidies was to tie them, in certain areas, to the maximum subsidies that civilian retirees receive.   This Administrative Code language is still in place.

 

• Can the ties to civilian health premiums be changed?

They can be, but that would require a change to the City Administrative Code.  The City Council and Mayor have oversight over this language.  There have been changes to this language over the years, but the City may be reluctant to change this particular language because it does not provide control over rising health care costs. Also, anytime a change is made in an area this complicated, there may be unintended consequences.

 

• Why did my subsidy go down?

Members enrolled in a single-party plan had their maximum subsidy reduced from $480.41 to $423.45. This is the amount negotiated by LACERS with Anthem Blue Cross which LAFPPs subsidies are tied to.  Fewer claims in 2011 and a switch to a Medicare plan with lower premiums, contributed to a decrease in the LACERS premium and subsequently the LAFPP subsidy.

 

• What if I am covering dependents on my health plan?

Members enrolled in both Medicare Parts A and B may receive an additional subsidy amount for covered dependents.  The additional subsidy amount is a composite of two separate calculations based on varying factors, such as years of service and plan rates.

For members enrolled in a two-party or more plan, the subsidy is equal to:

(the member subsidy for individual coverage) + (additional subsidy for covered dependents)

Example:  A member retired with over 20 years of service.  The member and spouse both qualify for Medicare Parts A and B and are enrolled in a two-party plan under the Los Angeles Police Relief Association.  The single-party monthly premium for this plan is $524.80.  The total maximum subsidy available is calculated as follows:

The maximum subsidy the member can receive for individual coverage is the lesser of:  $423.45 or 100% of the plan's single-party premium, $524.80.  Therefore, $423.45 is the maximum subsidy for individual coverage.  Under this plan, the additional subsidy allowed for a dependent is $392.61.  The member receives a total maximum subsidy of $816.06 per month. ($423.45 + 392.61 = $816.06)