Medicare Advantage: Attack on Medicare

Because of the City's attempt to cut and run on health insurance benefits for NYC retirees, I've started to do research on Medicare and Medicare Advantage (MA) programs.

By statute New York City is required to pay the entire cost for the health insurance of its workers, retirees and their dependents with an upper limit equal to the cost of HIP-HMO plans. Prior to reaching age 65 the basic cost of that insurance is $775 per month for each worker or retiree. If the worker or retiree has a family, the cost is $2,035 per month. These amounts are current as of FY-2021. Interestingly, city workers and retirees have to pay for their own drug coverage.

When the retiree reaches age 65, the retiree becomes eligible for Medicare and is required to enroll in Medicare. The City then only has to pay the cost of Medicare Supplemental (Medigap) insurance ($194.14 per month). Medigap insurance, GHI Senior Care, covers the 20% of costs that traditional Medicare does not pay. There are some other plans available at 65. You can more info in the Actuary's report

The City is also required by statue to refund to the retiree the Medicare Part B monthly premiums ($146.97 as of 2021) that the retiree must pay for Part B Medicare coverage. If the Medicare retiree still has younger family members that are entitled to paid health insurance, I strongly suspect that the City doesn't need to pay the $194.14 per month because the City is still paying the $2,035 per month family premium to Emblemhealth GHI.

NYC Eligible Retirees - Traditional Medicare With Secondary Medigap insurance

Medicare is a federal benefit that workers and retirees pay taxes for. Retirees have paid into the Medicare system for their entire careers with all employers that they worked for whether or not they it was the City. The City has no right to this benefit.

The current health insurance arrangement for NYC retirees requires the retirees to register with Medicare when they turn 65 and to notify OLR that they are now being covered by Medicare. Then based on the plans offered by OLR, the retiree picks which secondary insurance that they want. The vast majority of retirees pick GHI Senior Care. This is a Medicare Supplement insurance (Medigap) plan.

Medigap plans are run by private insurance companies and are required to conform to structures defined by Medicare. In New York State these plans are subject to oversight by the NYS Department of Financial Services. It appears that GHI Senior Care is a Type A Medigap plan based on its cost. OLR has never been very transparent about this whole process. Needless to stay it is the cheapest plan available. FYI: There are 10 Medigap plans defined by Medicare.

In spite of the limits of GHI Senior Care and the cost of drug coverage, city retirees after age 65 have excellent health covereage at a very reasonable cost.

The Medicare Advantage Invasion - Private Sector Insurance

From my reasech it is clear that for many years the health insurance industry has been attempting to infiltrate the successful government Medicare payment system. Medicare Advantage is the program that allows private insurance to accomplish this infiltration.

CMS is the federal government agency that administers Medicare and pays the bills for Medicare eligible retirees health costs. CMS pays the bills directly for traditional Medicare and funds the insurance companies when the retiree has elected a Medicare Advantage plan. The name Medicare Advantage is a marketing ploy. This is a private insurance plan.

This attack on Medicare is driven by greed and survival. The insurance companies very quickly realized that Medicare, passed in 1965, was going to over take their business model because of it effectiveness and the fact that they were being completely left out of the payment cycle of health costs for retirees.

The insurance companies knew that they had to get into the payment cycle between CMS and retirees so that they can get a cut of the action. We are talking about private companies getting a significant potion of the taxes paid by workers and retirees over their careers and into retirement for their health care.

Even with Medicare Advantage retirees most still pay Medicare Part B premiums out of their Social Security checks. They may also have to pay a premium to the MA insurance company even though some MA plans have no premiums.

In traditional Medicare, CMS pays 80% of a retiree's Medicare approved health costs. It spends only 2% of its expenses on administrative costs.

In a MA plan, the MA insurance company uses money that CMS allocates to the company to pay retireess' health care costs. That amount is based on the number and the health status of retirees enrolled in its plan. In the NY area, that amount is roughly $1,100 per month per eligible retiree. The company is allegedly required to pay out 85% of that amount to cover 100% of retiree's Medicare approved health costs. They can keep the rest to cover costs and profit.

Assuming a 10% profit margin, the new Emblemhealth/Blue Cross Medicare Advantage plan will clear $110 per month per captured retiree. That is $198M per year if the City can deliver 150,000 retirees. Not bad for an inferior product. You start to get very suspicious when there is this much money floating around.

Sounds like a win/win deal? The MA process is supposed to be better than the one run by CMS but you kind of know it isn't.

The MA system doesn't work as straight forwardly as the traditional Medicare plan run by CMS. Insurance companies must make a profit or they go out of business. So how do they make 80% cover 100% of costs. They inflate adjusted payments from CMS for each retiree by claiming that the retiree has significant health problems, they reduce and delay payments to doctors and hospitals, and they charge retirees for unapproved costs and copays. 

The key to this strategy is that the insurance company takes control of the decision process of what medical treatment retirees receive and what actual payments are made to doctors and hospital. This puts the retiree at the mercy of the insurance company. If you are healthy, this generally is not a problem. If, however, you have serious health issues which many retirees do, you will problems. Problems which will very often force you back into traditional Medicare and maybe without the option of an affordable Medigap insurance plan.

The Attack is Getting More Intense

As you can read in the following critique, private interests are increasing their attacks on Medicare. This stuff is frightening and I suspect is a residue of the Trump administration.

Another threat is involuntary auto enrollment into a MA plan. Without the forced enrollment the City's Medicare Advantage plan would get only a trivial number of voluntary enrollees and none if the City had not reneged on its commitment to pay for Medigap insurance.

Conclusion

The City and the leaders of major unions agreed to degrade retirees and workers Medicare benefits to funnel the savings into the unions' welfare funds. I suspect that when workers get a clear understanding of this betrayal, these leaders will be in for a reckoning.

Assuming a 10% profit and 150,000 captured retirees, Emblemhealth stands to increase its annual profit from $34.92M to $198.00M by shifting from Senior Care to the Medicare Advanatage plan.

Who do you think was pushing for this plan? Not the workers and retirees!

NYS Medigap Rate Chart for 2022 and the NYC Medicare Advantage Scam

New York State and Medigap Insurance

If you click on the link below, you will see the all the Medicare Supplememt(Medigap) insurance plans available in New York State for 2022 along with their monthly premiums. These plans are avalilable on the open market to everyone covered by traditional Medicare. I have always found when you get to see everyting laid out in chart, it all comes into focus.

NYS Medigap Rate Chart for 2022

Medigap inurance is what the City currently provides for retired City workers who are eligible for and covered by Medicare. The City pays a $194 premium per month per retiree to EmblemHealt/GHI. If the retiree is married the City also pays another $194 per month for the spouse if he/she is also eligible for Medicare.

This Medigap insurance, GHI Senior Care, appears to be a Plan A type of Medigap insurance based on its cost. This is the lowest cost Medigap insurance that CMS, the federal Medicare administraror, allows to qualify as Medicare Supplemental insurance. Medigap insurance basically covers the 20% of medical costs that Medicare doesn't cover.

As compared to Plan A, Plan F is the best type of Medigap insurance that you can buy as you can see in the chart. You can bet your ass that the City wasn't going to provide a Plan F type Medigap insurance for its retirees. You can see all the premium rates for all the plans in the NYS chart. The NYS Department of Financial Services (DFS) oversees the Medigap insurance plans sold in the state. DFS does not have authority over Medicare Advantage plans.

Critique of Medicare Advantage Problems

This is a clear critique of the Medicare Advantage business model and who gets the short end of the stick. Read this link, Medicare Advantage critique

Attack on the NYC City Council and the Health Benefits of NYC Workers and Retirees

The battle over health insurance for NYC Medicare eligible retirees is being fought over 126.b.(1) of the NYC Admin Code as well as workers’ contractual rights. This fight, however, effects all NYC retirees and workers.

The key part of Section 12-126 that is in dispute is:

Section 12-126. … b. Payment of health insurance costs. Except as otherwise provided in section 12-126.1 and section 12-126.2 of this chapter, for city employees, city retirees and their dependents: * (1) The city will pay the entire cost of health insurance coverage for city employees, city retirees, and their dependents, not to exceed one hundred percent of the full cost of H.I.P.-H.M.O. on a category basis. Where such health insurance coverage is predicated on the insured's enrollment in the hospital and medical program for the aged and disabled under the Social Security Act, the city will pay the amount set forth in such act under 1839 (a) as added by title XVIII of the 1965 amendment to the Social Security Act. …

The City Council’s Legislative Authority

The City Council is the legislative body for the NYC government.

On June 28, 2001, the NYC City Council unanimously overrode the mayor’s veto and passed Local Law 39 of 2001.This law modified Section 12-126.b.(1) of the Admin Code of the city of New York. Specifically, it made permanent the full refund of Part B premiums to eligible NYC retirees who were paying those premiums to the federal government as part of their Medicare benefits. This vote makes it clear that the City Council has authority over this part of Section 12-126 even in the face of mayoral opposition. As an insight to this law, remember who the mayor was in 2001.

The Proposed MAP Contract

As part of the Medical Advantage Plus (MAP) contract that the City wants to sign with Alliance, there is the following clause (Addendum A, Quoted Stipulations, page 4 ):

“Retirees who opt out of the NYC Medicare Advantage Plus Plan must pay the premium difference between the NYC Medicare Advantage Plus Plan and their selected retiree Medicare health plan, if applicable.”

In its raw form, this an agreement between two parties to damage a third party. The City and Alliance drafted this provision to put in place a mandatory penalty for retirees who choose to leave the MAP plan. The driving force behind Alliance’s profit margin is the number of retirees in the MAP plan. The more retirees that opt out, the less money that comes in from CMS ,the federal Medicare administrator, and the higher the risk of claim losses becomes.

Attack on the City Council

In addition to this attack on retirees, the clause is a secretive attempt to subvert the legislative authority of the City Council. It is my opinion that this clause violates the City Charter. The clause clearly attempts to block the City Council’s legislative authority over Section 12-126 and destroy the purpose of this 54-year-old statute.

At the November 10th City Council contract hearing, the OLR Commissioner made no mention of this penalty clause in the contact. She was there to sell the benefits of the MAP plan and not clearly state the problems with the MAP plan. Specifically, there was no mention of the fact that this would be an almost $4B annual contract. That is the amount that CMS will pay Alliance each year to cover the retirees’ health benefits. According to the stipulations in the contract, the City will only pay a trivial $14M in the first year of this five-year contract ($7.50 per month per retiree). This a dump and run scam if I ever saw one.

What would happen if the City Council chose to begin action to modify Section 12-126.b.(1) explicitly requiring the City to pay for the Senior Care premiums for eligible NYC retirees, like the action it took with Local Law 39/2001?

Would the Law Department argue that the mayor’s contract prevents the Council from passing such a law? I am beginning to think that this contract is illegal as it is currently drafted.

Stupidity and the Medicare Advantage Scam

I am assuming that all NYC retirees and workers know that the City is trying to screw with retirees Medicare benefits. Enough with abuse of power and illegal actions, let's look at the City's stupidity.

Cross Over Retirees

Consider a current 66 year old male NYC retiree with traditional Medicare and GHI Senior Care coverage. He has a 62 year old wife. With respect to Part D coverage at age 65, he continued his family drug coverage with GHI which he started when he retired at age 62. He pays the the family GHI-CBCBS drug premium ($149.96), not the Senior Care family drug premium ($300.60).

In FY-2021 the City paid $2,023.61 per month to GHI for CBP/EBCBS family health insurance. This was for workers and retirees with non-Medicare eligible dependents. This means that the City is paying GHI $2,023.61 for this retiree's family health insurance even though he is Medicare eligible. I am almost dead sure that the City is not paying GHI the $194.14 per month individual Senior Care premium for this retiree, since it is already forking over the $2,023 each month.

Now consider that in 2021 this retiree and his wife adopted two newly born children. The retiree now has three dependents on his health insurance coverage and the City now has a 25 year liability for family GHI CBP/EBCBS health insurance costs. As I stated above the monthly cost for the GHI family coverage is $2,023.61. That is $24,283 per year. Even when the retiree's wife turns 65, the City will still have to pay the $2,023 per month

The New MAP Plan for January 1, 2022 - With a Court Stay in Place

On January 1, 2022 the City wants to jam this retiree, along with all other Medicare eligible retirees (not HIP-HMO), into a Medicare Advantage plan with the express purpose of avoiding paying the Senior Care $194.14 per month premium. Of course, the City is not actually paying for this retiree. The City then wants to give the "savings" to the union welfare funds (the MLC).

In fact the City will probably never save any money on this retiree.

Political Blowback

Since the City can not escape paying the $2,023.61 per month for this retiree, would it not be more politically advantageous to leave this retiree in his current "Senior Care". You know this family is going to be radically motivated to rip the heart out of the scum that are screwing up their health insurance. Of course all effected retirees are going to want to get revenge but the City is not even getting any "savings" in this case.

I created this exaggerated case to highlight the complications of the Medicare Advantage scam. There about 158,000 Medicare eligible city retirees covered by Senior Care. I guarantee you that 25% of those retirees fall into this cross over scenario to some extent. Just think of a 66 year old retiree marrying a 55 year old. Happens all the time. All of a sudden the cost goes from zero to $24,283 per year.

Catch-22

The City has created a Catch-22 for the Medicare eligible retirees. The City will not be saving anything on these cross over retirees and yet the City is punishing them by reducing their benefits.

The retirees are either forced into the new inferior "free MAP" plan or pay the Senior Care $191 a month premium each for themselves and everyone of their Medicare eligible dependents plus $125 month each, for Part D coverage, for themselves and everyone of their Medicare eligible dependents.

Of course the new free MAP plan is not totally free since the drug coverage will cost $125 per month each for the retiree and any of his/her Medicare eligible dependents. In addition, the retiree can not choose to buy the Part D drug coverage on the open market since CMS gives Medicare Advantage plans a monopoly on Part D coverage. Interestingly, the retiree in Senior Care plan can shop for a better Part D drug plan.

How About a Little Intelligence

The City has pressure on it health insurance costs. Instead of picking on a party that the City thinks it can walk over, how about bringing all parties together. That means the insurance companies, the workers, and the retirees. Get the insurance companies to offer better coverage at lower cost and require all the workers and the retirees to make a monthly payment. That would also mean that the City would have to be totally transparent. That is a big problem. Don't feel sorry for the City. The federal government gave the City $1.02B in FY-2022 to pay for workers health insurance.

FY-2021 Was a Very Good Year for the City Pension Funds -- $57.5B Increase

Short and sweet, read pages numbered 218 and 219 from the NYC FY-2021 CAFR.

Pages 136 to 144 are interesting reading about the cost of non-pension benefits to retirees.

A Simple Look at the Pro's and Con's of Medigap Insurance and Medicare Advantage Insurance From the Wall Street Journal

I have previously written about the City's Medicare Advantage scam. That is the one where the City saves money by taking away traditional Medicare/Medigap insurance from retirees over age 65 and dumping them into a Medicare Advantage plan. The City then gives the money saved to City unions for their patronage welfare funds.

It is really difficult sorting through the pros and cons of the Medicare/Medigap versus the Medicare Advantage plans. This is especially hard since the insurance companies, who run the Medicare Advantage plans, spend huge amounts of money promoting their extremely profitable businesses.

I recently, however, came across a very simple straight forward explanation in the Wall Street Journal, of all places. Please read the article.

The basic conclusion is that if you can afford it, the Medicare/Medigap program is the better choice, since soon or later we all have signification health issues. For decades the City, by statute, has been paying for the Medigap insurance for its retirees. Now it wants retirees to pay for the insurance and give the savings to the union welfare funds.

Temporary Stay and the Case Against the Medicare Advantage Scam

On October 21, 2021 the retiree group in opposition to the Medicare Advantage scam was granted a temporary stay to the 10/31/21 opt-out deadline.

NYS Courts website – case index # = 158815/2021 Find the decision (login as a guest)

Please contribute

There are over 157,000 Medicare retiree that the City is trying to steal their Medicare rights and dump them into the inferior MAP plan.

Please go on the group's website and contribute just $25. The legal fight will be expensive. Expenses are already over $50,000 and it may take up to $250,000 to beat the City.

I'm afraid that if the City wins, retirees that have the finacial resources will be able to hold onto their Medicare coverage but retirees with limited funds will be pushed into the private plan.

Excerpt from Temporary Stay Decision

The petioners are the retirees and the respondents are the City and others.

FILED: NEW YORK COUNTY CLERK 10/21/2021 04:24 PM INDEX NO. 158815/2021 NYSCEF DOC. NO. 114 RECEIVED NYSCEF: 10/21/2021 158815/2021 Motion No. 001 002 003

Page 2 of 4

Motion Sequences 002

“A movant's burden of proof on a motion for a preliminary injunction is particularly high” Council of the City of NY v Giuliani, 248 AD2d 1, 4 [1st Dept 1998]. A party seeking a preliminary injunction must clearly demonstrate (1) the likelihood of ultimate success on the merits; (2) the prospect of irreparable injury if the injunction is not issued; and (3) a balance of the equities in the movant's favor. (Doe v Axelrod, 73 NY2d 748 [NY 1988]; Housing Works, Inc. v City of New York, 255 AD2d 209 [1st Dept 1998]).

As to likelihood of success on the merits, the Court feels that the method of implementation of this plan at present has been irrational, and thus arbitrary and capricious.

It is not in dispute that currently, in the midst of a pandemic, that has been hardest on the elderly and infirm, retirees have been given a deadline of October 31 to either do nothing in which case their health care plan will change, or to stay in their current plan in which they will likely have to pay what can only be described as a penalty. At the same time, there is little clarity as to which health care providers will be accepting this new Medicare Advantage Plan. It is simply irrational for retirees to have to make this decision as circumstances currently stand.

Page 3 of 4

Petitioners argue are that they will be irreparably harmed if forced to make a health care coverage decision by the October 31, 2021 deadline for the new Medicare Advantage Program which is due to begin January 1, 2022. As noted, it is undisputed that much of the program terms are still unsettled and unclear. At the oral argument held on October 20, 2021, the attorneys representing the respondents made clear that medical providers were still being contacted to see if they will agree to this plan. Moreover, it appears that a public hearing that was scheduled for October 28 has been cancelled. The respondents contend that fluidity of participation in the plan of healthcare providers is always subject to change but concedes that many other factors of the plan have not yet been determined. As noted above, once October 31 comes and goes, according to the way this plan is currently being implemented, there will be no turning back and the retirees will be bound by their decision. Any harm that they have suffered to have to decide without adequate information will be irreparable.

Petitioners argue, and the Court agrees that the balance of equities are in their favor. “The balancing of the equities requires the court to determine the relative prejudice to each party accruing from a grant or denial of the requested relief” (Barbes Rest. Inc. v ASRR Suzer 218, LLC, 140 AD3d 430, 432 [1st Dept 2016] internal citations omitted). Here it is clear that the potential for prejudice to the petitioners outweighs any prejudice to the respondents. No contract has been signed apparently between OLR and the respondents. This Court has upheld the process used to pick the Alliance, so the entire process will not need to begin anew.

In sum, while the Court has already determined that respondents’ ultimate determination of choosing a Medicare Advantage Plan provider was rational (Footnote 1) and does not intend to disturb that determination, the Court finds that the implementation of its program is irrational and if the

Footnote 1: See the Decision and Order of the related action, AETNA 158216/2021.

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petitioners and similarly situated individuals are required to opt-in or out of a medical program by the October 31, 2021 deadline there would certainly be irreparable harm.

Accordingly, it is hereby

ORDERED that the respondents are enjoined from enforcing the October 31, 2021 Opt-Out/ Opt-In date; and it is further

ORDERED that petitioners maintain the status-quo enrollment in until the respondents cure deficiencies with the implementation of the proposed new Medicare Advantage Plan, and it is further

ORDERED that such new plan be sent to this Court for this Court to review and determine whether such plan cures the defects as indicated above, and it if further

ORDERED that such plan be sent to the petitioner’s counsel seven days prior to such submission to the Court and petitioner may then provide any input regarding the proposed new plan to the Court.

The NYCERS Actuary and the Medicare Advantage Scam

Each year the NYCERS Actuary publishes a finacial report (2021) that anaylzes the City's future liabilities for other than pension benefits for city retirees. It's a pretty dry report but it is actually the most detailed description of retiree non-pension benefits, mostly health benefits and welfare fund payments. I have referred to this report in past Medicare Advantage scam postings but now I want to go into some of the details from the actuary's report. There is something about numbers that give you a different sense of the scam.

Now for the numbers for FY-2021:

• the number of city retirees = 243,978
• the amount the City put into the NYC Retiree Health Benefit Trust Fund = $3.200B
• the amount the City paid out for retiree health benefits = $2.784B
• the amount the City paid into the retirees welfare funds = $399.5M

The Monthly Health Insurance Costs

The Actuary states the following as the momthly imsurance premiums per retiree that the City pays to the insurance companies:

• HIP HMO
  • Non-Medicare Single - $776.01
  • Non-Medicar Family - $1,901.23
  • Medicare - $181.58
• GHI/EBCBS
  • Non-Medicare Single - $775.66
  • Non-Medicar Family - $2,035.61
  • Medicare - $194.14
• Other HMOs (without drug coverage)
  • Non-Medicare Single - $1,160.34
  • Non-Medicar Family - $2,701.42
  • Medicare Single - $291.83
  • Medicare Family - $576.92

Doing the arithmatic,
the annual cost for a GHI covered employee or pre-Medicare retirees's family health insurance is $24,427.32.
The annual cost of a GHI covered Medicare retiree is $2,329.68 plus $1,763.64 for the annual Medicare Part B premium refund.

Of cousre, the City is also targeting the Part B refund for elimination.

Distribution of Medicare retitrees over the city retirement systems.

This breakdown can be found on page 140 of the report. For some reason the Actuary uses a total population of 275,519 retirees when stating this breakdown. The key numbers are who's eleigible for Medicare with GHI and who is not. There are 157,381 Medicare eligible retirees with GHI coverage and 62,779 pre-Medicare retirees with GHI coverage.

The GHI pension fund breakown of the 157,381 is as follows

• NYCERS = 59,670
• TRS = 61,775
• BERS = 11,665
• Police = 15,507
• Fire = 7,339
• TIAA = 816
• LODW = 609

The HIP covered retirees breakdown is 22,404 for Medicare eligible and 9,169 for pre-Medicare. For some reason this group is not part of the Medicare Advantage scam. HIP is part of EmblemHealth as is GHI. I suspect there is undisclosed agreement covering HIP which the City/MLC does not want the public to know about. In fact, the retirees and also the workers have not seen a written and signed agreement between the City and the MLC. There is no list of which Locals have signed on to the Medicare Advantage scam. You can imagine a worker in his/her early 60's and looking at retirement and Medicare at age 65 becoming aware that his/her Local has just sold them out.

Pre-Medicare Retirees

None of the pre-Medicare retirees, which total 78,252, are being hit with Medicare Advantage scam as of now. They probably haven't even gotten notice of the scam yet. They won't get hit until they turn 65. Interesting figure: there are 31,527 police retirees in the pre-Medicare group.

The remaing 7,857 medicare eligible retirees, not in GHI or HIP, are in other health insurance plans. These retirees are being hammered the same way GHI covered retirees are.

There are also 12,155 retirees who have waived health insurance coverage.

Aetna and the City's Procurment Guidelines

One of the other plans is from Aetna and is a voluntary Medicare Advantage plan. Aetna has sued the City over improper procurment actions with respect to the award of the contract to EmblemHealth. The contract has yet to be registered with the Comptroller. In fact, it quite possible that the contract has not yet been signed or approved by Corp Counsel.

CMS Approval

It is safe to say that the new MAP plan has not yet gotten approval from CMS, the federal Medicare administrator. CMS will be the entitiy that will give money to EmblemHealth to run the MAP plan. I would love to see the application that EmblemHealth submits to CMS.

The Big Welfare Funds for Retirees

On pages 141 to 149 you can view a detailed list of all the RETIREE welfare funds, the number of retirees covered by the fund and the annual contribution to the fund by the City for each retiree. These figures do not reflect the contributions for current employees.

While these amounts add up to over $490M in FY-2022, the real money is paid for active employees at a total of almost $1.2B for FY-2022.

I'm only listing the larger funds here. The report has all the details.

• NYCERS
  • Managerial Employees - 8,451 - $1,940
  • Correction Captains ---1,901 - $1,590
  • Correction Officers -- 9,585 - $1,740
  • DC-37 ----------------- 37,391 - $1,940
  • Staff Analysts --------- 2,560 - $1,740
  • CWA -L#1180 ---------- 6,074 - $1,775
  • TRansit - PBA --------- 1,271 - $1,853
  • NYS Nurses Assoc. --- 4,294 - $1,740
  • Sanitation Officers -- 2,366 - $1,290
  • Teamsters L#237 ----- 7,276 - $1,085
  • Sanitation Workers -- 6,936 - $2,009
• TRS
  • UFT --------------------------------- 70,445 - $1,820
  • Supervisors and Administrators - 7,536 - $1,820
  • Professional Staff Congress ------ 2,081 - $1,965
• BERS
  • DC-37 - 12,991 - $1,940
• Police
  • DEA -------- 12,824 - $1,573
  • PBA -------- 23,329 - $1,853
  • LTBA -------- 4,014 - $1,665
  • Capt. End. - 1,436 - $1,665
  • SBS ---------- 7,949 - $1.740
• Fire
  • Firefighters - 10,488 - $1,820
  • Fire Officers - 4,819 - $1,695

Medicare.gov: Compare Original Medicare vs Medicare Advantage Scam

If you have been wondering if OLR has been correct in describing the new Medicare Advantage plan that they are forcing all retirees into, just check out the offical Medicare website with its helpful compare page.

On the this page you get to pick Original Medicare with or without Medigap insurance and/or Part D drug coverage versus Medicare Advantage. You then get a list of the main features of the two different plans.

When you pick Medicare Advantage chart you get all the same features as Original Medicare with Medigap insurance and Part D drug coverage except for one one big item. You will notice an interesting red X next to "Use of any doctor or hospital that takes Medicare, across the U.S.". This is the key problem problem for retirees especially those dispersed all over the country.

At the bottom of the page listing the features of either choices, you can click on a list of all the associated plans in your geographical area. The City MAP plan is not listed in Suffolk County, where I live.

The Budget and the Medicare Advantage Scam

The following are the amounts budgeted by the city for health insursance and welfare benefits in FY-2021 and FY-2022:

NYC Health Insurance and Welfare Fund Budget 2021-2022

Description	FY-2021	FY-2022	Inr/Dcr
Employee Health Insurance	$4.822B	$5.188B	$366.8M
Retiree Health Insuranve	$2.773B	$2.142B	($630.9M)
Employee Welfare Funds	$899.8M	$1,161.5M	$261.8M
Retiree Welfare Funds	$351.6M	$491.9M	$140.3M

It is clear from the chart above that via the Medicare Advantage scam the City was able to take $630M from the retirees health insurance benefits and increase payment to workers health insurance payments ($366M), and most importantly to funnel more into the union welfare funds, ($391M). The actual annual savings, however, is only $367M based of the fact that only 157,500 retirees are covered by GHI Senior Care, the target of the forced transfer.

UFT and DC-37 and the Welfare funds

As stated in the latest audit (October, 2020) from the Comptroller, the City gave over $368.0M to the UFT welfare fund and $288.1M to the DC-37 welfare fund in 2018. Click on the Comptroller's audit from the Comptroller. The total amount paid to all welfare funds for 2018 was $1.37B to 107 city unions of which over $113.5M was spent on administration.

The NYCERS Actuary's FY-2021 OPEB Report provides extensive information on non-pension benefits paid to retirees. In particular, see page 140.

Federal Subsidy for 2022

Note: As part of the ARP Act of 2021, the federal government gave the city $1.024B towards employees health insurance costs (ARP Act - 2021)

Retirees from the NYC Dept. of Ed and the Medicare Advantage Scam

All retirees from the NYC Department of Education or the old Board of Ed should be aware that there is a state law protecting their health insurance benefits. You can read a relevant court decision at Bryant.

With respect to Board of Ed retirees, the City's attempt to force all medicare eligible retirees into a Medicare Advantage (MAP) plan violates this law. Unfortunately, without court action the City will get away with it. There are current court actions against this conversion but I'm not sure that they address this state law.

The suing retirees are now aware of this restriction as is the City.

The law states without reservation that the City can't reduce your

1. health insurance benefits or
2. its associated contributions

unless it does the same to all active workers at the Department of Education. See Chapter 504 below.

This permanent requirement was enacted as part of the Tier 5 law passed in 2009. It was sponsored by the NYSUT association for the purpose of protecting their retirees from unilateral actions by school districts to cut their health benefits since the retirees did not have union representation. It was carefully constructed to include reductions both in benefits and the districts' contributions paying for the benefits.

This requirement clearly blocks the new MAP plan on both counts.

First, this is a reduction in benefits. The idea that the MAP plan is equal to or better than the current plan is disproved by the fact that retirees are not being given a free choice. In fact, reirees have had the option to enroll in Medicare Advantage (PPO) plan for many years and the numbers speak for themselves. TRS retirees eligible for Medicare have overwhelmingly chosen traditional Medicare with supplemental insureance:

• 61,775 retirees are covered by Medicare and GHI Senior Care
• 4,088 retirees are covered by Medicare Advantage - HIP HMO
• 1,488 retirees are covered by Medicare Advantage - Aetna PPO

I can not understand how UFT union leaders thought they could let the City cut the throats of their former members and eventually their current members.

In addition, most retirees who wind up in the MAP plan will have to buy their Part D drug coverage from the MAP vendor, Alliance/Emblemhealth.

Second, the City is clearly reducing its contributions to the retirees health insurance benefits. Except for a trivial first year monthly charge, the City is paying nothing for the MAP plan and it may actually be getting a kick back from Alliance/Emblemhealth. It is not even clear that the City has any standing in this contract because of possible lack of consideration from the City.

JUSTIFICATION

The following is the justification for the one year extension (Chapter 30) of this law in 2009. Chapter 504 made the protection permanent.

JUSTIFICATION: Health insurance coverage for school district retirees has been protected from unilateral reduction since 1994 under provisions of a law which is subject to annual renewal.

The law provides that school districts may reduce neither the level of health insurance coverage nor their contribution toward its cost for retirees, unless the reduction applies equally to active employees. This protects retirees by in effect making them part of the collective bargaining process.

The law does not, however, prevent school districts from taking cost-cutting measures, so long as these apply equally to active employees and retirees. There has been no evidence of harm befalling school districts over the past decade as the result of this requirement for fair treatment of their retirees.

It is clear what the policy is in New york State about treating retirees equally with active workers when it comes to health insurance coverage.

Chapter 504 of the Laws of 2009

Chapter 504 of the Laws of 2009 - Part B - Section 14

§ 14. Section 1 of chapter 729 of the laws of 1994 relating to affecting the health insurance benefits and contributions of retired employees of school districts and certain boards, as amended by chapter 30 of the laws of 2009, is amended to read as follows:

Section 1.

From on and after June 30, 1994 [until May 15, 2010,]
a school district, board of cooperative educational services, vocational education and extension board or
a school district as enumerated in section 1 of chapter 566 of the laws of 1967, as amended,

shall be prohibited from diminishing the health insurance benefits provided to retirees and their dependents or
the contributions such board or district makes for such health insurance coverage
below the level of such benefits or
contributions made on behalf of such retirees and their dependents
by such district or board

unless a corresponding diminution of benefits or contributions is effected from the present level during this period by such district or board from the corresponding group of active employees for such retirees.

NYCERS Mistake: Wages, Overtime Ceiling, and the MTA

NYCERS appears to be under the impression that its Tier 6 members are subject to an overtime ceiling with respect to both payroll pension contributions and to calculating the member’s final average salary when the member retires.

NYCERS has notified its membership that it is in the process of refunding pension contributions made by members who work for the MTA.

NYCERS does not have a legal opinion on this issue from the Law Department. There are two other city pension funds (TRS and BERS) covered by the Tier 4/6 term "wages". In addition, I guarantee you that the Tier 3/6 NYPD and FDNY pension members are not subject to the overtime ceiling that applies to Tier 5/6 state police and fire pension members.

NYCERS has been notified twice that they are in error and NYCERS appears to be intent on pursuing this incorrect interpretation.

Statutory Background

In 2009 NYS passed a pension modification law (Chapter 504 of the Laws of 2009) for state police and firefighters. This was a response to the fact that in July of 2009 new city and state police and firefighters lost their Tier 2 coverage and were dumped into Tier 3.

The state unions negotiated a compromise law (Tier 5 for state police and fire) which allowed the new state police and firefighters to return to Tier 2 with some benefit reductions. As of today, however, new city police and firefighters are still trapped in Tier 3.

In addition to the Tier 5 component, there were some secondary pension reductions in Chapter 504 which applied to regular state workers and members of the city’s UFT union.

One of those limitations was a modification of the Tier 4 definition of "wages".

Wages impact member contributions (Section 613/ NY RSSL) and a member's final average salary (Section 608/ NYS RSSL) at retirement Members’ pension contributions are a percentage of member’s wages including overtime pay (OT). Member’s final average salary is also based on member’s wages including overtime. The final average salary is the compensation base for calculating a member’s annual pension benefit when he/she retires.

This 2009 modification created two new definitions, "overtime compensation" and "overtime ceiling" which applied to all Artile 15 (Tier 4) members. These terms were used to modify the term "wages" by imposing the "overtime ceiling" on wages for only new members of the NYSLERS and the NYSTRS who join after 1/1/2010. There is also a NYS Constitutional benefit protection for Tier 4 members who have membership dates prior to the effective date of Chapter 504.

The terms "overtime compensation" and "overtime ceiling", however, legally applies to all city and state Tier 4 members as of the effective date of Chapter 504. These terms by themselves have no direct impact on Tier members' benefits. It is only through the the term "wages" that Tier 4 members' benefits are impacted. Therefore only NYSLERS and NYSTRS members are effected. Correctly, there was no attempt in 2009 by NYCERS to impose an overtime ceiling on wages for of new post 1/1/2010 Tier 4 members because the limitation was only authorized for the two state pension systems.

As of today, despite two subsequent laws in 2012 and 2017, the definition of wages with the overtime ceiling limitation still only applies to post January 1, 2010 members of NYSLERS and NYSTRS.

The only place that the term “overtime ceiling” appears in Article 15 is in the definition of wages. This is how it has an impact on a member’s contributions and final average salary.

In 2012, with the passage of the Tier 6 (Chapter 18) law, the definition of "overtime ceiling" was changed. That change entailed adding a second overtime ceiling but restricted to new Article 15 (Tier 4/6) members who join after 4/1/2012. The law, however, did not alter the definition of wages with respect to the overtime ceiling limitation. It still only covered the two state pension syetems and did not add any of the city pension systems.

The legislature did, however, specifically add new limits to the term "wages" for new Article 15 members as of 4/1/2012:

For members who first join a public retirement system of the state on or after April first, two thousand twelve, the following items shall not be included in the definition of wages: 1. wages in excess of the annual salary paid to the governor pursuant to section three of article four of the state constitution, 2. lump sum payments for deferred compensation, sick leave, accumulated vacation or other credits for time not worked, 3. any form of termi- nation pay, 4. any additional compensation paid in anticipation of retirement, and 5. in the case of employees who receive wages from three or more employers in a twelve month period, the wages paid by the third and each successive employer.

NYCERS incorrectly thinks that since the law restricted the definition of "overtime ceiling" to only new Tier 4/6 members that it then allowed NYCERS to modify the definition of wages to impose an overtime ceiling on Tier 4/6 NYCERS members' wages. Legally all NYCERS Tier 4 members subject to the term "overtime ceiling" since 2009. Making some new part of overtime ceiling applicable to new NYCERS members does not change its impact on wages.

If the legislature wanted to modify the definition of wages it could have easily added NYCERS to the restrictive list in the term "wages" along with NYSLERS and NYSTRS. It did not. Whether or not you think that the legislature meant to do that, administrators have to assume the legislature intentionally did not change the definition of wages and wanted to keep the overtime ceiling limit applicable to only NYSLERS and NYSTRS.

Legislative Track

Pre-2009

Prior to 2009, Article 15 wages were defined as follows:

"Wages" shall mean regular compensation earned by and paid to a member by a public employer.

2009

Chapter 504 (2009) changed the definition to:

"Wages" shall mean regular compensation earned by and paid to a member by a public employer

, except that for members who first join
the New York state and local employees' retirement system or
the New York state teachers' retirement system
on or after January first, two thousand ten,
overtime compensation paid in any year in excess of the overtime ceiling,
as defined by this subdivision,
shall not be included in the definition of wages.

"Overtime compensation" shall mean, for purposes of this section,
compensation paid under any law or policy under which employees are paid at a rate greater
than their standard rate for additional hours worked
beyond those required, including compensation paid under
section one hundred thirty-four of the civil service law and
section ninety of the general municipal law.

The "overtime ceiling" shall mean fifteen thousand dollars
per annum on January first, two thousand ten, and
shall be increased by three per cent each year thereafter

.

2012

In 2012, NYS passed a general modification of Article 15, Chapter 18 of the Laws of 2012, for all city and state workers. Chapter 18 modified the definition of “overtime ceiling” as follows but left the definition of wages was left intact.

There was a modification applying to wages but it was independent of the OT ceiling. Its main feature was capping wages at the governor's paid salary, a truly fascinating idea.

The change is listed below:

"Wages" shall mean regular compensation earned by and paid to a member by a public employer

, except that for members who first join
the New York state and local employees' retirement system or
the New York state teachers' retirement system
on or after January first, two thousand ten,
overtime compensation paid in any year in excess of the overtime ceiling,
as defined by this subdivision,
shall not be included in the definition of wages.

"Overtime compensation" shall mean, for purposes of this section,
compensation paid under any law or policy under which employees are paid at a rate greater
than their standard rate for additional hours worked
beyond those required, including compensation paid under
section one hundred thirty-four of the civil service law and
section ninety of the general municipal law.

The "overtime ceiling" shall mean fifteen thousand dollars per annum on January first, two thousand ten, and shall be increased by three per cent each year thereafter,

provided, however, that for members who first become members
of a public retirement system of the state
on or after April first, two thousand twelve,
"overtime ceiling"
shall mean fifteen thousand dollars per annum on April first, two thousand twelve, and
shall be increased each year thereafter by a percentage to be determined annually
by reference to the consumer price index
(all urban consumers, CPI-U, U.S. city average, all items, 1982-84=100),
published by the United States bureau of labor statistics, for each applicable calendar year.

Said percentage shall equal the annual inflation as determined from the increase in the consumer price index in the one year period ending on the December thirty-first prior to the cost-of-living adjustment effective on the ensuing April first.

For members who first join a public retirement system of the state on or after April first, two thousand twelve, the following items shall not be included in the definition of wages:

• 1. wages in excess of the annual salary paid to the governor pursuant to section three of article four of the state constitution,
• 2. lump sum payments for deferred compensation, sick leave, accumulated vacation or other credits for time not worked,
• 3. any form of termi- nation pay,
• 4. any additional compensation paid in anticipation of retirement, and
• 5. in the case of employees who receive wages from three or more employers in a twelve month period, the wages paid by the third and each successive employer.

2017

In 2017, NYS again modified (Chapter368) the definition of “overtime ceiling” but left the definition of wages intact.

(c) The "overtime ceiling" shall mean fifteen thousand dollars per three per cent each year thereafter, provided, however, that:

(i) for members who first become members of a public retirement system of the state on or after April first, two thousand twelve, "overtime ceiling" shall mean fifteen thousand dollars per annum on April first, two thousand twelve, and shall be increased each year thereafter by a percentage to be determined annually by reference to the consumer price index (all urban consumers, CPI-U, U.S. city average, all items, 1982-84=100), published by the United States bureau of labor statistics, for each applicable calendar year. Said percentage shall equal the annual inflation as determined from the increase in the consumer price index in the one year period ending on the December thirty-first [prior to] preceding the [cost-of-living] overtime ceiling adjustment effective on the ensuing April first.

(ii) Commencing January first, two thousand eighteen, and each year thereafter, the overtime ceiling percentage shall be increased by an amount equal to the annual inflation as determined from the increase in the consumer price index in the one year period ending on the September thirtieth prior to the overtime ceiling adjustment effective on the ensuing January first.

Specifically, Chapter 368 of the Laws of 2017 modifying the definition of “overtime ceiling” had only two fiscal notes, one from the NYSLERS actuary and one from the NYSTRS actuary. New York State pension legislation requires fiscal notes from all pension systems effected by the legislation.

City Incompetence and the Medicare Advantage Scam

I have previously written about the Medicare Advantage takeover. OLR is calling it the MAP plan.

By law the City is required to pay for health insurance for its employees and retirees as per Section 12-126.b of the Administrative Code of New York City

(1) The city will pay the entire cost of health insurance coverage for city employees, city retirees, and their dependents, not to exceed one hundred percent of the full cost of H.I.P.-H.M.O. on a category basis.

For more updated info on the MAP plan check this Facebook page. It also appears that the PBA union is not on board with the MAP plan.

OLR sent out an undated letter around August 15, 2021, stating as part of the MAP implementation that retirees would receive an enrollment guide, an FAQ sheet, and a plan comparison chart. It also promised to include in the package an opt-out form for retirees who do not wish to be enrolled in the Medicare Advantage plan. The letter did not say when the package would be sent. OLR’s website, as of August 18, 2021, stated that the enrollment package would be sent in late August.

It is now September 16, 2021 and I have yet to receive the package. Update - on 9/17/2021 I received a package from Blue Cross/Blue Shield.

The most current opt-out period is 9/15/2021 to 10/31/2021. It originally was 9/1/2021 to 10/15/2021 as per the August 18, 2021 website FAQ sheet.

OLR also gave a call center number in the August letter. The call number is answered by employees of Blue Cross who are unable to answer issues involving OLR’s control of the process. OLR is legally required to administer the health insurance program for city retirees (S.126.d of the NYC Admin Code), not Blue Cross.

OLR is hiding behind its website and has given no OLR phone number where retirees can call.

The website is constantly changing so it is not an adequate legal notice of the specifics of the MAP plan. As of today, there is still no summary plan description of the MAP plan even on the website. I suspect OLR is having serious trouble drafting a document that will pass legal muster.

CSM, the federal Medicare administrator, states that Medicare Advantage plans are voluntary. It is not clear how OLR is unilaterally placing all Medicare eligible city retiree in the MAP plan.

I suspect there will be litigation on the MAP conversion and aside from legal issues, OLR will probably have to deal with gross incompetence issues. I know the new mayor is going to love this headache.

OPEB issues in the NYC 2020 CAFR

The Comptroller issues the city’s annual financial report every October 31. The following comments are based on data from the FY-2020 report. The NYCERS Actuary also published OPEB Report on 9/10/2021.

As of June 30, 2020, there were 243,978 city retirees and beneficiaries. My estimate based on CAFRs from the five city pension funds is that 75% of city retirees are enrolled in Medicare.

The two main health insurance plans covering the Medicare portion of this group are GHI and HIP. GHI, a supplemental plan, covers about 80% of the group and HIP, an HMO plan, covers about 15%. The are 12 other plans, some of which are Medicare Advantage plans, but together they only cover about 5% of the total Medicare group.

For FY-2021 (new info from NYCERS Actuary) the city was paying the follow monthly premium for each member of the group:

GHI-EBCBS

• Non-Medicare Single : $775.66
• Non-Medicare Family : $2,035.61
• Medicare : $194.14

HIP-HMO

• Non-Medicare Single : $776.66
• Non-Medicare Family : $1,901.23
• Medicare : $181.58

Other

• Non-Medicare Single : $1,160.34
• Non-Medicare Family : $2,701.42
• Medicare Single : $291.83
• Medicare Family : $576.92

It is clear that the premiums for Medicare covered retirees are the least expensive premiums and represent the lowest cost to the City. As of 1/1/2022 GHI Medicare retirees will be forced into the MAP plan unless they choose to opt out and stay in the GHI plan which will now cost $191 a month.

(new info) Current HIP medicare retirees who are enrolled before 12/31/2021 can stay in the HIP plan but that plan will close to new enrollees after 12/31/2021. It is not clear why there is a different approach for the HIP retirees.

Without access to the new MAP contract with Emblemhealth/Blue Cross, I have to assume that the City will no longer be paying the Medicare premiums for GHI retirees and beneficiaries covered by Medicare. As of 1/1/2022, CSM will pay Emblemhealth/Blue Cross directly to cover 100% of authorized Medicare charges. Previously CSM paid the doctors 80% of the charges and GHI or HIP paid the remaining 20% using the premiums paid by the City.

It is not clear what the city will be paying for retirees covered by Medicare but who have spouses and children not eligible for Medicare.

Where is the saved money going? Into the union welfare funds and increased insurance costs for active employees. Just check the fringe benefit numbers in the City's FY-2022 Adopted Budget on page 1406 (page 1412 of PDF document). Actually the city scatters a lot of these costs throughout the budget, especially for DOE and CUNY.

Bottom line, the City is walking away from its statutory obligation to pay the entire cost for city employees, city retirees, and their dependents health insurance limited only by the cost of the HIP-HMO coverage. This is not a collectively bargained obligation. It is a law.

The new MAP plan is not equal to the previous supplemental insurance plans. The City has previously offered Medicare Advantage plans to retirees and the retirees have chosen the supplemental plans overwhelmingly. (new info, 9/20/2021) The City has just been sued by Aetna over claims of violations of standard City procurement rules.

If the retiree wishes to keep his/her previous free GHI coverage as of 1/1/2022, he/she will now have to pay $191.57 per month and if there is coverage for a Medicare spouse the premium doubles to $383.14. In addition, the GHI benefit is less generous than it currently is. Existing retirees covered by HIP can stay in the HIP plan premium free. Medicare Retirees covered by the others plan can choose to stay in them but will now also have to pay the City's premium as well as their own.

NYSUT and School Districts in New York State

With the passage of Chapter 504 of the laws of 2009, the NYSUT, which includes the city UFT Local, negotiated a permanent protection (Chapter 729 of the Laws of 1994) for their retirees from NYS school districts from unequal treatment with respect to health insurance benefits versus active workers. Any reduction to retiree health insurance benefits must be equal to reductions to active worker health insurance benefits. See Section 14 from Part B of Chapter 504 below.

This statute is something called a chapter law. It is not part of the consolidated laws of NYS which are published separately like the RSSL or the Education Law. You are not going to be able to easily find it unless you know about it ahead of time. Actually Chapter 729 was renewed for one year earlier in the 2009 legislative session. You can check Chapter 30 of 2009 to see the annual renewal along with a very clear justification of the law. Later in the session, Chapter 504 made it permanent. This means that BERS and TRS retirees can not be sucked up into the MAP plan. They can not have their benefits diminished nor can the city reduce its contributions to health insurance benefits below active workers.

So why did the UFT abandon their city retirees?

I think the UFT was just incompetent with respect to the legal rights to retirees of school districts. Of course, I may be wrong. The UFT may just be dishonest and wanted to get the increased money for their welfare fund and screw the retirees.

Chapter 504 of the Laws of 2009 - Part B - Section 14

§ 14. Section 1 of chapter 729 of the laws of 1994 relating to affecting the health insurance benefits and contributions of retired employees of school districts and certain boards, as amended by chapter 30 of the laws of 2009, is amended to read as follows:

Section 1. From on and after June 30, 1994 [until May 15, 2010,] a school district, board of cooperative educational services, vocational education and extension board or a school district as enumerated in section 1 of chapter 566 of the laws of 1967, as amended, shall be prohibited from diminishing the health insurance benefits provided to retirees and their dependents or the contributions such board or district makes for such health insurance coverage below the level of such benefits or contributions made on behalf of such retirees and their dependents by such district or board unless a corresponding diminution of benefits or contributions is effected from the present level during this period by such district or board from the corresponding group of active employees for such retirees.

JUSTIFICATION: (Chapter 30 of the Laws of 2009 - a one year extension - C.504/L.2009 made it permanent)

Health insurance coverage for school district retirees has been protected from unilateral reduction since 1994 under provisions of a law which is subject to annual renewal. The law provides that school districts may reduce neither the level of health insurance coverage nor their contribution toward its cost for retirees, unless the reduction applies equally to active employees. This protects retirees by in effect making them part of the collective bargaining process. The law does not, however, prevent school districts from taking cost-cutting measures, so long as these apply equally to active employees and retirees. There has been no evidence of harm befalling school districts over the past decade as the result of this requirement for fair treatment of their retirees.

Tier 4/6 Definition of Wages - Effect on Your Pension Benefit

There is a sharp distinction in the definition of wages between state pension members and city pension members.

See the statute, Section. 601., below.

It appears that the wages for city pension members are not subject to the overtime ceiling. Wages come into play in determining a member's required contributions, final average salary, and in turn your pension benefit.

Of course, the wages for all Tier 6 members, city and state, are limited by the governor's official salary:

• 2012-2018 - $179,000
• 2019 - $200,000
• 2020 - $225,000
• 2021 - $250,000 (maybe $225,000 since Cuomo turned down the increase).

I'll bet Albany didn't focus on the pension cost implications when they passed the pay increases in 2019.

New York State Tier 4/6 pension law

RSSL.601. Definitions a. . . .

l.

(a) "Wages" shall mean regular compensation earned by and paid to a member by a public employer,

except that for members who first join
the New York state and local employees' retirement system or
the New York state teachers' retirement system
on or after January first, two thousand ten,
overtime compensation paid in any year
in excess of the overtime ceiling, as defined by this subdivision,
shall not be included in the definition of wages.

(b) "Overtime compensation" shall mean, for purposes of this section,
compensation paid under any law or policy
under which employees are paid at a rate greater
than their standard rate for additional hours worked beyond those required,
including compensation paid under section one hundred thirty-four
of the civil service law and section ninety of the general municipal law.

(c) The "overtime ceiling" shall mean fifteen thousand dollars per annum
on January first, two thousand ten, and
shall be increased by three per cent each year thereafter,
provided, however, that:

(i) for members who first become members of a public retirement system of the state
on or after April first, two thousand twelve,
"overtime ceiling"
shall mean fifteen thousand dollars per annum
on April first, two thousand twelve,
and shall be increased each year thereafter by a percentage
to be determined annually by reference
to the consumer price index (all urban consumers, CPI-U,
U.S. city average, all items, 1982-84=100),
published by the United States bureau of labor statistics,
for each applicable calendar year.
Said percentage shall equal the annual inflation
as determined from the increase in the consumer price index
in the one year period
ending on the December thirty-first
preceding the overtime ceiling adjustment
effective on the ensuing April first.

(ii) Commencing January first, two thousand eighteen, and each year thereafter,
the overtime ceiling percentage
shall be increased by an amount equal to the annual inflation
as determined from the increase in the consumer price index
in the one year period ending on the September thirtieth
prior to the overtime ceiling adjustment
effective on the ensuing January first.

(d) For members who first join a public retirement system of the state on or after April first, two thousand twelve,
the following items shall not be included in the definition of wages:

• 1. wages in excess of the annual salary paid to the governor pursuant to section three of article four of the state constitution,
• 2. lump sum payments for deferred compensation, sick leave, accumulated vacation or other credits for time not worked,
• 3. any form of termination pay,
• 4. any additional compensation paid in anticipation of retirement, and
• 5. in the case of employees who receive wages from three or more employers in a twelve month period, the wages paid by the third and each additional employer.

NY Daily News Article on the City's Attack on Retirees' Medicare Benefits

Medicare Bait-and-Switch

Yesterday, August 13, 2021, the New York Daily News printed an opinion piece about the City’s plan to push Medicare eligible retirees out of traditional Medicare into a Medicare Advantage plan that will allow the City to dodge its statutory obligation to pay the cost of health insurance coverage for city retirees covered by Medicare.

The key component of the article is quoted below. It recently dawned on me what the really vicious impact of the MA plan conversion is, but the following quote from the article hits the nail on the head.

Worst of all, the city’s move will harm those least able to protect themselves. City employment data show that white workers are twice as likely as Black workers, and 1.6 times as likely as Hispanic workers, to have the higher incomes that will allow them to pay the extra $2,000 to $5,000 to buy their own Medigap plan and remain in public Medicare. Male workers are 60% more likely than female workers to afford that extra cost.

This will increase the inequities in our health care system already displayed in the past year’s pandemic crisis. Who will suffer? The people who usually suffer: Blacks, Hispanics, women.

How did the City unions agree to hammer the retirees, their former members?

Note: City’s obligation to pay

NYC Admin. Code S.12-126.b

(1) The city will pay the entire cost of health insurance coverage for city employees, city retirees, and their dependents, not to exceed one hundred percent of the full cost of H.I.P.-H.M.O. on a category basis.

Where such health insurance coverage is predicated on the insured's enrollment in the hospital and medical program for the aged and disabled under the Social Security Act, the city will pay the amount set forth in such act under 1839 (a) as added by title XVIII of the 1965 amendment to the Social Security Act;

July 14, 2021 - Medicare Advantage Plan for Some NYC retirees

On July 14, 2021 the Municipal Labor Council agreed with the City to replace the Emblem Health Senior Care plan with a Medicare Advantage (MA) plan run by Emblem Health/Blue Cross for targeted city retirees eligible for Medicare effective January 1, 2022. The cost of the MA plan will be paid by CSM, the government agency that manages Medicare. The current basic Emblem Health/GHI Senior Care plan will no longer be free.

The retirees had no say in the decision, and it was all done in secret.

The targeted retirees are not being given a choice. Targeted retirees who have signed up for GHI-Senior Care supp plan will be allegedly forced into the new MA plan. The City states that targeted retirees can opt out of the MA plan and stay in your current add on plan but the City will no longer pay the Senior Care basic coverage subsidy.

I find this strange since MA plans are voluntary. I don't see how the City can interfer with a retiree's (and/or his/her spouse's) Part B coverage without the retiree's and/or the spouse's consent. I'm sure The City can offer the MA plan to the targeted retirees but I don't think they can force anyone into it.

As a complication, there are currently 14 City medicare add-on plans, including Senior Care, offered by the City to these targeted retirees, each with the Senior Care subsidy. The City claims it will continue to offer these plans. But effective as of 1/1/2022, I am assuming, the City will no longer be paying the Senior Care subsidy to those plans. The City will have to lay out clearly all the new premiums and any changes in benefits for these plans so that retirees can make an informed decision. The City has alteady cut the benefits for Senior Care as of January 1, 2022.

Wouldn't it be interesting if the City already offered MA plans on voluntary basis? Actually, they do but retirees have not keen on the option.

Targeted City Retirees

Targeted city retirees are Medicare eligible retirees (age 65 or older or receiving SSA disability) who do not have spouses under age 65 or children under age 26. I suspect that this group will total about 55-60% of all city retirees, teachers at higher percent and police/fire at a lower percent.

For example, I estimate that each year 18% of new NYCERS retirees are targeted retirees. Eventually all these retirees will fall under the MA umbrella unless they continue to have beneficiaries outside the scope of Medicare. Slowly over time the percent increases but deaths are always cutting into the total retiree population.

The City will still have to provide regular GHI(CBP) health insurance for non-targeted retirees.

The City's Obligation to Pay for Health Insurance - NYC Admin Code Section 12.126

The mandating statute for health insurance is listed below. It sure appears to me that the City is no longer paying for the health insurance for targeted retirees. I am actually beginning to think that there may be some serious legal issues based on the City's obligation to pay for city retiree's health insurance. Retirees rights are not based on a collective bargainning agreement but a NYC Admin Code section of law.

And it is only older retirees that are being targeted.

Section 12-126.b. Payment of health insurance costs. Except as otherwise provided in section 12-126.1 and section 12-126.2 of this chapter, for city employees, city retirees and their dependents:

* (1) The city will pay the entire cost of health insurance coverage for city employees, city retirees, and their dependents, not to exceed one hundred percent of the full cost of H.I.P.-H.M.O. on a category basis.

Where such health insurance coverage is predicated on the insured's enrollment in the hospital and medical program for the aged and disabled under the Social Security Act, the city will pay the amount set forth in such act under 1839 (a) as added by title XVIII of the 1965 amendment to the Social Security Act;

Quotes from the City's press release

This is a quote from the July 14, 2021 City press release

The NYC Medicare Advantage Plus Program replaces the current Senior Care program, which is a supplement to traditional Medicare, as the program that is free to all retirees. Other buy up options, including the Senior Care plan and the HIP VIP program will remain available to retirees.

It does appear from the press release that Senior Care will still be available but the retiree will have to pay the basic coverage premium which the City has been paying for up till now. That should be an interesting amount. Will it be what the City has been paying or will be jacked up for increased risk that Emblem health will claim?

It appears that the City will also continue to offer the other 13 supplemental plans but without the current subsidy.

Medicare retirees will still be paying for their Part D drug coverage which is most often handled by GHI(CBP) or Senior Care for most Medicare eligible retirees. The new MA plan will offer option of paying for Part D drug coverage.

From the City’s press release:

Retirees will still be eligible for the reimbursement of the Medicare Part B benefit that they receive today.

This means that the City will still be refunding $1,800/yr. to every Medicare retiree and every Medicare covered spouse. I’m assuming the IRMAA premiums will also still be refunded. These can run up to $2,500/yr.

Cost Savings

From the City’s press release:

Implementing the NYC Medicare Advantage Plus Program will produce approximately $600 million annually in health care cost savings for the system. … The City spends over $1 billion a year on retiree benefits, including the Part B Medicare reimbursement, and this will help the City control those costs while improving the quality of care for retirees.

This may be the most critical part of the new plan. This decision is supposed to save the City money while keeping the same level of benefits for the targeted retirees. Retirees, however, will now have $15 copays for all doctor visits.

The savings are created by the City offloading its supplemental health insurance costs to Medicare via the Medicare Advantage program. With the MA plan, the City will not pay for the second level of insurance coverage that it currently provides to targeted city retirees. Medicare will now be paying for that coverage via the MA plan.

Do you get the feeling that Medicare is getting the short end of the stick along with the retirees? What happens if CSM wakes up one morning and sees that every employer is dumping their retiree health care costs on Medicare?

The City does not report what it currently pays for the individual Senior Care premium for basic coverage to Emblem Health for each targeted city retiree. It also doesn’t report the current premium for regular employees and non-targeted city retirees.

I suspect that the City will not report out the details of the new agreement with Emblem Health, the flow of funds from Medicare (CSM) to Emblem Health for this new MA plan, nor Emblem Health’s projected profit from the deal.

On a very basic level a MA plan privatizes Medicare. As such the retiree is dealing with a profit-making insurance company as opposed to CSM, the government entity which runs the Medicare program. Retirees will also be paying $15 copays starting 1/1/2022 both in the MA plan and in Senior care. This is a new cost for retirees for every doctor’s visit. Designed to cut down on visits to the doctor and increase profits. If a retiree chooses to stay with Senior Care, not only will he/she have to pay the basic premium but also the new copays. This is what happens when you are not part of the decision.

Access to Doctors

From the City press release:

A major concern for retirees is whether they can keep their current doctors and hospitals in a NYC Medicare Advantage Plus Program. In the City’s Medicare Advantage Plus Program, a retiree can go to any doctor or hospital that accepts Medicare. It doesn't make a difference if that provider is in the insurer's network or not. As long as the provider takes payment from Medicare, they are obligated to accept the NYC Medicare Advantage Plus Program payment. That includes all the hospitals in the NYC area, including those at Memorial Sloan-Kettering and The Hospital for Special Surgery (HSS), and almost all hospitals nationally and 99.5% of all doctors. The program is a national program so it covers retirees in any State in which they work or reside and when they travel.

This is a very misleading statement. Doctors who accept Medicare will provide service, but you may have to pay for the full cost of the service and then submit a claim to Emblem Health for reimbursement. I suspect that this will happen a lot. This is the big problem with MA plans along with the referral issue. This is why many reirees stay away from MA plans.

Currently most doctors do accept Medicare. They submit their charge to CSM for the 80% payment for the covered service and usually attempt to collect the finally 20% from Senior Care. Only then do they send a bill to the retiree for the remainder of the charge. Doctors are comfortable with reimbursements from CSM. They tend to be wary of payment from MA plans.

City Budget - Retiree Health Insurance

Over the last five years the City has budgeted the following amounts for retiree health benefits:

• 2022 = $1.693B
• 2021 = $0.268B (orig. $2.293B)
• 2020 = $0.779B (orig. $2.500B)
• 2019 = $2.230B
• 2018 = $2.170B

It would be very informative to get the itemized details and supporting data for these numbers. That is real transparency.

The City OLR site has new FAQ sheet on its website.

This is another info link from a AFSCME local for a MA plan implemented in Illinois Illinois.

Threat to Health Insurance for NYC Retirees.

The following is an opening to a recent news article:

Nearly 250,000 retired New York City employees and their spouses could have their health insurance changed to “Medicare Advantage” plans managed by private insurers as soon as July 1, New York Focus has learned.

Retirees, who are pushing to delay the switch, say they are worried that a switch away from their current Medicare plan could lead to dramatically higher out-of-pocket costs and a smaller network of providers.

“It’s a little frightening,” said Jane Roeder, a retired city administrator. “The word on the street is that these Advantage plans are fine as long as you don’t get sick, as long as you don’t need the chemotherapy that my friend is having right now, or radiation treatment, or infusion treatment, or skilled nursing.”

Currently the City provides health insurance to city employees (and their dependents) and continues to provide it to them when the employees retire. This statement is generally correct with some exceptions.

As reference, this is the current statute from the NYC Admin Code Section. 12-126.b:

b. Payment of health insurance costs. Except as otherwise provided in section 12-126.1 and section 12-126.2 of this chapter, for city employees, city retirees and their dependents:

* (1) The city will pay the entire cost of health insurance coverage for city employees, city retirees, and their dependents, not to exceed one hundred percent of the full cost of H.I.P.-H.M.O. on a category basis.

Where such health insurance coverage is predicated on the insured's enrollment in the hospital and medical program for the aged and disabled under the Social Security Act, the city will pay the amount set forth in such act under 1839 (a) as added by title XVIII of the 1965 amendment to the Social Security Act;

provided that such amount shall not exceed the sum of nineteen dollars and fifty-three cents per month per individual for the period beginning January first, nineteen hundred eighty-eight and ending December thirty-first, nineteen hundred eighty-eight, and

provided further however that such amount shall not exceed the sum of twenty-seven dollars and ninety cents per month per individual for the period beginning January first, nineteen hundred eighty-nine and ending December thirty-first, nineteen hundred ninety-one, and

provided further that such amount shall not exceed the sum of twenty-nine dollars per month per individual for the period beginning January first, nineteen hundred ninety-two and ending December thirty-first, nineteen hundred ninety-five.

Provided further, that such amount shall not exceed the sum of thirty-two dollars per month per individual effective January first, nineteen hundred ninety-six.

Provided further, that such amount shall not exceed the sum of thirty-eight dollars and seventy cents per month effective January first, two thousand and

provided further that each year thereafter, the City shall reimburse covered employees in an amount equal to one hundred percent of the Medicare Part-B premium rate applicable to that year.

At retirement, the retiree can generally pick any one of the insurance plans that are available to active workers. The retiree can also stay with the plan he/she was enrolled in while a worker.

There is no charge for the two standard insurance plans(GHI and HIP) , both for workers or retirees. Other plans may require payments from the workers or retirees.

When the retiree turns 65 and is not working for another employer, he/she is required to enroll in Medicare. At that point Medicare becomes his/her primary insurance plan and the City plan becomes secondary. At this point the cost to the City for the retiree's health insurance drops significantly. The retiree can pick original Part B Medicare coverage or a Medicare Advantage plan. If the retiree chooses original Part B Medicare, the City's health insurance acts as a medigap insurance plan for the retire. The retiree is, however, responsible for his/her own drug coverage.

Note: To be eligible for health insurance the retiree needs to be receiving a pension from one of the five city pension funds and have more than ten years of credited service in the pension fund (five years for old timers).

There are, however, many variations in the above description. In particular, when the retiree has a younger spouse and/or dependent children under age 26. The City insurance continues to fully cover the spouse and/or children even after the retiree moves over to Medicare coverage.

There are also wrinkles when the retiree is an employee of another organization and has health insurance from their employment. The retiree is not required to enroll in Medicare as long as the retiree continues to work with health insurance coverage.

City employees and retirees usually have to purchase drug coverage from the health insurance plan they elected to be covered by. Sometimes drug coverage is provided by a union welfare fund. At the start of Medicare coverage retirees have to pick and pay for a drug plan that meets Medicare Part D requirements. Again this component gets complicated by non-Medicare dependents.

Currently Medicare Advantage Plans are available to city retirees as alternatives to the Standard Part B Medicare coverage. I suspect that the participation rate is low of these plans but not trivial.

The main problem with Medicare Advantage plans is the fact that retirees are restricted in picking their doctors and costs fluctuate with usage. The NYC area creates particular problems with this issue. My own expirence using doctors associated with the hospital at New York State University at Stony Brook is that they do not accept Medicare Advantage plans. There are also significant variations in cost for MA plans based on geographical areas covered.

To say the least medical insurance is a twisted system that has evolved over the years.

In order to cut costs

In secret, the City and a group of unions, including DC-37 and the UFT, are trying to put together a plan to cut health insurance costs (benefits) for all city retirees. So far the specific details are not public. Allegedly the parties are negotiating with two insurance companies to provide a mandatory Medicare Advantage plan for all Medicare eligible NYC retirees. I'm not sure whether the police and fire unions are in on this deal. Aetna and Emblem Health are the two potential firms.

There is, however, no accounting model outlining the targeted cost savings for retirees, how the savings would be achieved or a breakdown of the profits that the Medicare Advantage carrier will make with the conversion. The City's health insurance costs have always been a murky area.

The union welfare funds make the picture even darker. These funds are audited by the City Comptroller. In October 2020, the Comptroller released a 2018 audit. Many of the welfare funds are in dire straights and need help.

Most of the health insurance money for both workers and retirees is being paid to Emblem Health/Blue Cross, one of the two insurance firms haggling over the new Medicare Advantage plan for the City. It would be very helpful to see a full health insurance cost breakdown.

The current Emblem Health Contract needs a hard analysis of what it is providing and what it is charging. This is the battleline for the City and health insurance costs, applied across the board for all workers and retirees, and not at the point where the cost for retirees drops because of the start of Medicare coverage.

This insurance program started back in the 1950's. It was a revolutionary idea back them but it has been allowed to deteriorate.

Below are the cost items that I was able to pull from the FY-2022 NYC Executive Budget:

• FY-2021
  • Employee Fringe Costs
    • Health Insurance = $2.2B
    • Welfare Funds = $355.1M
  • RNBT Costs
    • Health Insurance = $268.5M
    • Welfare Funds = $201.5M
• FY-2022
  • Employee Fringe Costs
    • Health Insurance = $1.7B
    • Welfare Funds = $538.9M
  • RNBT Costs
    • Health Insurance = $2.1B
    • Welfare Funds = $320.0M

The Retiree Health Benefit Trust, RFBT, was created in 2006 to pay retirees' current health benefits and build up a reserve fund to cover future costs.

In FY-2020, the City used $1.0B from the RNBT to cover budget short falls and in FY-2021, the City used $1.6B from the RNBT to cover budget shortages.

It looks like the FY-2021 RHBT amount, $268.5M + $1.6B reflect the annual costs for retirees health insurance benefits. It would be very informative to see the distribution of these costs are for 1) retirees not eligible for Medicare, 2) Medicare eligible retirees with spouse under age 65, or children under age 26, and 3) the remaining Medicare eligible retiree.

Possible Cost Scenario

For argument sake I am going to make some assumptions and sketch out a very simplistic cost scenario. I would love to see the actual spreadsheets outlining the costs, also the profit projections for the insurance firm.

Assume the City

• is paying $15,000/yr. for health insurance for each retiree under age 65 and each Medicare eligible retiree with a spouse under 65 or child under 27.
• is paying $5,000/yr. for the other Medicare eligible retiree over age 65 .
• is paying $3,000/yr. for welfare fund benefits for all retirees.
• is paying on average $2,000/yr. for Part B premium refunds for each Medicare eligible retiree and spouse.

With the Medicare Advantage plan the City will still pay $15,000/yr and $3,000 for all retirees under age 65 and retirees with spouse ubder 65 and children under 27. But for the targeted Medicare eligible retires, I strongly suspect that the City will no longer have to pay the $5,000/yr for the second level health insurance or pay a greatly reduced amount.

It is my understanding that Medicare will pay the Medicare Advantage firm the full cost of the Part A and B insurance coverage being provided by the firm. They actually get a bonus from Medicare for every retiree they cover. I'm not sure about the welfare funds. There is huge incentive for the unions to hold onto them. Let me restate i am doing a certain amount of guessing since the City and the MLC have not been out front.

From my quick review of some of the CAFR's for the city pension funds, I estimate that 90% of the TRS retiree, 50% of the NYCERS and BERs retirees and 30% of the police and fire funds will get whacked by this new MA plan. This limits the savings. But will the City tell the retirees what the savings are? I don't think so.

Mandatory Concept

Medicare Advantage is available to medicare eligible persons on a voluntary enrollment basis. It is not availiable to their spouses or dependents unless they are personally Medicare eligible.

This concept of forcing retirees from Part B Medicare to a Medicare Advantage plan is massively complicated. I suspect that the City can not force retirees to enroll in the MA plan but the City can stop insurance coverage if the retiree chooses to stay with his/her original Medicare Part B. In addition, for current retirees who are covered by Medicare and who choose not to join the MA plan, they may have problems signing up for medi-gap insurance because they missed the one time unrestricted enrollment period. For retirees who do not live in the NY metro area this new plan will cause extra problems. It will caues complications for current employees who are close to retirement and are close to or over 65. Current retirees will want to sue over loss of contracted benefits but I expect that will not be successful.

If you pick Medicare Part B at age 65 instead of the City MA plan, it appears that you will get no health coverage from the city. You will probably have to pay for a medi-gap insurance to cover what is currently paid by the city plans. That is if you can afford to.

It is not clear how current Medicare retirees will handle their Part D drug coverage plan. Most retirees are paying a premium for the Part D drug coverage as part of the City's genral Senior Care coverage If the retiree chooses to not elect the MA plan, will they be able to convert to a standard Part D plan run by Medicare or a qualifying third party plan. Medi-gap insurance may offer drug coverage at a charge. The City does not pay for qualifying Part D drug coverage.

In this case, if you exercise your right to pick Medicare Part B, which you have paid for through Medicare taxes your whole working career, the City will escape paying any health insurance/welfare fund benefits for you.

The City is claiming that doctors who accept Medicare Part B must accept Medicare Advantage plans. That is not true. They know it is not true. A large majority of doctors do not accept Medicare Advantage plans. Some doctors don't accept Medicare but most do throughout the country. This makes Medicare Part B almost a universal plan.

If you are currently an active worker and have been looking for doctor who takes GHI, you will have a good sense of how many doctors will take the new MA plan.

There are huge problems with medical coverage in the US. Most of them are cost based. If you cut costs, you usually cut benefits.

If the City wants cut its health insurance costs for retirees, it needs to up front and state what they want retirees to pay to cover some of the rising costs. Why doesn't the City just state clearly that they want retirees to pay $1,000/yr towards health insurance costs? What the City is trying to do is cut costs (benefits) to retirees but not be honest about the amount. The City is trying to perform a magic act.