Non-Medicare Subsidy Increase
Update as of July 11, 2017: On July 6, 2017, the Board of Fire and Police Pension Commissioners considered the recommendation to approve a five percent non-Medicare health subsidy increase for the 2017-2018 fiscal year. This report had previously been considered on May 11, 2017, June 1 and June 15, 2017, but was continued due to the Board’s request for more information and a lack of sufficient votes to either pass or reject staff’s recommendation. After consideration and deliberation of the information, the Board approved a six percent increase to the non-Medicare health subsidy instead of five percent as recommended by staff.
Members who either (1) entered DROP or retired prior to July 15, 2011, or (2) chose to opt-in to pay an additional 2% contribution are eligible to receive a maximum non-Medicare health subsidy of $1,627.73, effective July 1, 2017.
For many pensioners, the approved increase will result in a retroactive subsidy credit back to the June 30, 2017 pension check. As new health insurance rates have already taken effect on the June 30, 2017 pension check, if your health plan premium exceeds the previous maximum non-Medicare health subsidy of $1,535.59, you will receive a retroactive subsidy adjustment. Additionally, some members enrolled in Medicare multi-party plans will receive a retroactive subsidy adjustment. Retroactive subsidy adjustment amounts for pensioners enrolled in LAPRA, LAFRA or UFLAC sponsored plans may vary. Members will receive the retroactive subsidy adjustment with their July 31, 2017 pension check or as a separate retroactive payment.
The staff recommendation was based on the average historical and future health plan premium increases as reported by Segal and the relief associations’ medical plan consultant. Contrary to published reports, the staff recommendation was not a repeat of 2013 to “satisfy” the CAO, Mayor or any other particular party to lower the maximum cap on annual increases in the non-Medicare health subsidy from 7% to 5%.
The City of Los Angeles Administrative Code, which governs retiree health benefits, stipulates that the Board has the authority to increase the non-Medicare subsidy up to the lesser of 7% or the actuarially assumed medical trend rate. This was also reaffirmed by the Second District Court in the Fry case. The Board’s duty is to review the information and make a rational decision based on factual information. Suggestions that the Board has now rendered moot the language contained in the Administrative Code that spells out how increases in the retiree subsidy are to be determined is unfounded.
For information regarding the non-Medicare Health Subsidy increase or if you have specific questions regarding a pending subsidy credit, please contact Medical & Dental Benefits at (213) 279-3115.
Previously posted on June 29, 2017:
On July 6, 2017, the Board of Fire and Police Pension Commissioners will again consider a recommendation to increase the maximum non-Medicare health subsidy by 5% for the 2017-2018 fiscal year. This item was originally presented to the Board on May 11, 2017, and again on June 1 and June 15, 2017. Copies of these Board reports are available on our website here:
As new health insurance premiums for LAPRA and LAFRA take effect on July 1, 2017, the pending Board action will affect some of our members. If you are enrolled in a multi-party plan, or are in a non-Medicare single-party plan and have less than 16 years of service, there may be a decrease in your net pension payment on June 30 due to a larger health plan premium deduction. Additionally, members who are enrolled in a non-Medicare single-party plan through UFLAC may also be affected. However, once the Board approves an increase to the non-Medicare health subsidy, those members who are owed a subsidy credit will receive a separate retroactive payment.
We will update our website with more information as soon as the subsidy increase is approved by the Board.
For information regarding the Board calendar, agendas, and meeting location, please click here. If you have any additional questions, please contact Medical & Dental Benefits at (213) 279-3115.