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Senior Star 1st Quarter 2012

Providence, RI, Mayor Asks City Retirees to Accept Reduced Pensions and Less Generous Health Care Coverage
“During a sometimes tense meeting at Rhodes on the Pawtuxet in Cranston, the mayor asked Providence’s 4,300 retirees to accept three changes: the suspension of future pension cost-of-living adjustments (COLAs) until the system gets from its 32% funded level to 70%; a 20% health insurance co-share for retirees under the age of 65; and a transition to Medicare with a supplemental plan for those 65 and older.” (


States Facing 96% Unfunded Retiree Health Care Benefits
“States haven’t financed almost 96 percent of the $627.4 bil.lion they were projected to owe for future retiree benefits in 2010, according to Bloomberg Rankings data. The estimated deficit grew from about 95 percent in 2009 as governors coped with lower general-fund revenue and rising demand for services following the longest recession since the Great Depression.” (Bloomberg)


West Virginia Reins in Public Retiree Health Benefit Costs

“West Virginia is already reaping benefits from recent efforts to rein in public retiree health benefit costs, officials say: They expect to shrink the projected funding shortfall further, by more than $1 bil.lion, and a Wall Street credit rating agency appears ready to praise the state’s handling of its last major liability.” (The Herald-Dispatch)


Employees Cannot Opt Out of Medicare Part A Without Also Rejecting Social Security Benefits, U.S. Court of Appeals for the D.C. Circuit Rules
“Several employees, who were receiving Social Security benefits, sued on the grounds that they suffered harm due to the Medicare Part A coverage because private insurers reduce the benefits they can receive once they become covered by Medicare Part A. They said they wanted to receive the benefits they would be entitled to under their employer’s group health plan.” (HighRoads)


A New Set of Best Practices for ‘Other Post-Employment Benefits’
“Fortunately, the Government Finance Officers Association (GFOA) has stepped up to the plate with a new guidance document providing best practices to public employers seeking to establish an OPEB trust. This primer covers the basic questions that most public officials and managers will face, outlines the basic legal options and pitfalls, explains in simple terms the paths available and the pros and cons of each, and directs readers to literature in the field to help support sound decisionmaking. Any finance officer can start with this roadmap and easily chart a course to implement a trust within six months.” (Governing)


Benistar Completes Record Year

BENISTAR, one of the nation’s largest administrators of group retiree medical and prescription drug plans, reported its most successful year for new business for the fiscal year ending June 30, 2011.

To open the Press Release in a new window, click here

Happy New Year! Senior Star 1st Quarter 2012

2012 Medicare Premiums, Deductibles and Coinsurance

“The standard monthly Part B premium and deductible will both decrease by just over 13 percent. This is a dramatic change from between 2010 and 2011 when they both increased by slightly more than 4 percent . . . .” (The Segal Company)

VEBA Cuts Health Care Costs for Retirees

“Thousands of retirees from auto parts manufacturers that abandoned their pension plans will be able to get health care coverage through a groundbreaking arrangement that will use a special trust to tap federal premium subsidies.” (Business Insurance)

ADEA Exemption for Coordination of Health Benefits with Medicare Does Not Permit Employer To Terminate Current Employees’ Benefits

“The ADEA provisions notwithstanding, Medicare law requires that employers who are subject to the Medicare as secondary payer (MSP) rules provide the same group health plan coverage to workers and their dependents who have Medicare coverage as they provide for other workers and their dependents who are not Medicare-covered.” (Wolters Kluwer Law & Business / CCH)

Retired California Public Workers Can Count on Promised Benefits, Court Says

“Health benefits for government retirees may not be eliminated if state andlocal governments had clearly promised workers those benefits, the California Supreme Court ruled in an Orange County case . . . .” (Los Angeles Times)

Cutting Retiree Benefits a Sore Subject for Military

“Military retiree benefits cost the Pentagon $50 bil.lion a year. . . . There are 1.9 mil.lion military retirees drawing pay and benefits, compared to 1.5 mil.lion in the active duty force. In 2010, then-Defense Secretary Robert Gates said those costs are ‘eating the Defense Department alive.'” (NPR)

New York unions sue over retiree health care change

ALBANY, N.Y. (Reuters)—Seven New York state unions filed federal lawsuits on Wednesday seeking to prevent Gov. Andrew Cuomo from increasing the amount that retired workers pay for health care.

Senior Star 3rd Quarter 2011

Health Insurance for Active and Retired City Employees: Asheville, Denver, and Oklahoma City (PDF) 10/02/2011

Although all three cities offer retiree health care benefits and require retirees who are eligible for Medicare to enroll, only one city has begun to prefund retiree health obligations. The other two cities pay for retiree health on a pay-as-you-go basis, typical of American local governments.

St. Louis Post-Dispatch Faces Second Suit over Retiree Health Benefits


According to the Riverfront Times, the CWA Local 14620, also known as the St. Louis Mailers Union No. 3, represents the 220 employees who work in the mailroom, as well as retirees . . . . It filed suit in an attempt to force the company to resume providing healthcare for the 22 retirees who were kicked off the company’s plan in March.

Measuring the Cost Impact of Changes to Government Retiree OPEB Before Contracts Are Signed


In the corporate world, it is almost unheard of for employers to adjust their retiree benefit promises without first measuring the cost impact. This is especially true of collectively-bargained pension and retiree health plans. Both sides hire an actuary to estimate the cost of these benefits and bring their numbers to the table.

Employers Adjust Retiree Drug Plans As Tax Break Ends


The value of the tax break has been significant. ‘For corporate America, this makes a world of difference,’ said Michael S. Jacobs, national clinical practice leader at Buck Consultants L.L.C. in Atlanta. If a company receives a $500 per retiree subsidy for providing prescription drug coverage to a retiree, the subsidy’s tax-free status makes it equivalent to $1,500, he said.

Top Reasons to Change Your GASB 45 Valuation Schedule


GASB 45 requires a complete actuarial valuation of public retiree health plans to be completed every 2 to 3 years (depending on number of plan members), and sponsors usually don’t look forward to the administrative hassles of their next study. However, there are several situations where a new valuation could be advantageous and, likely, mandatory.

Sweeping Changes Could Slash Generous Retirement Benefits

Some articles the staff at Benistar think you should read:

New York Faces $200 Billion in Retiree Health Costs

Excerpt: “The daunting size of the health care obligation raises the possibility that localities will be forced at some point to choose between paying their retirees’ medical costs and paying the investors who hold their bonds. Government officials aim to satisfy both groups, and have even made painful cuts in local services when necessary to keep up with both sets of payments.”

(The New York Times; free registration required)

New Ways to Manage Retiree Benefits

Excerpt: “Milliman offers a four-step strategy for managing GASB 45 sticker shock.” (Milliman)

Sweeping Changes Could Slash Generous Retirement Benefits of Former Cincinnati City Employees and Future Retirees

Excerpt: “With the troubled city retirement system struggling to dig out of a $1 billion-plus long-term hole, a new pension board – one on which outside financial experts recently replaced city officials with personal stakes in the decisions – is reviewing changes to lower benefits, raise retirement ages and cap pensions well below the current 90 percent-of-salary ceiling.”

Maryland Panel Recommends Sweeping Retirement Benefit Changes for Public Employees

Excerpt: “Maryland state workers would have to work for 15 years instead of the current five to become eligible for pension or retiree health care benefits, according to new recommendations from a study panel. An Associated Press news report said the Public Employees’ & Retirees’ Benefit Sustainability Commission is also recommending that state employees would have to spend 25 years working for the state, instead of 16 years, to receive the maximum retiree health care premium subsidy and put in 10 years instead of five to become pension vested.” (PLANSPONSOR.COM)

Retirement Benefits Helping Employers Attract and Retain New Workers, Towers Watson Survey …

Retirement benefits — especially defined benefit (DB) programs — are giving employers an added advantage when it comes to attracting and retaining new […]


“The past cannot be changed. The future is yet in your power.”

Mary Pickford

Health Care Reform Drug Subsidy Deduction

3rd Quarter 2010
Some articles the staff at Benistar think you should read:

AARP Says Brand-Name Drug Prices Up 8% in 2009
Excerpt: “Over the last five years, according to the report . . ., the retail prices for the most popular brand-name drugs increased 41.5 percent, while the consumer price index rose 13.3 percent.”
(The New York Times; free registration required)

Health Care Reform: Elimination of Retiree Drug Subsidy Deduction
Employers that provide retiree prescription drug coverage should analyze the increased future tax liability and the current accounting charges necessary to retain retiree prescription drug coverage, and evaluate the practical and legal risks of eliminating this benefit.

N.Y. Faces $200 Billion in Retiree Health Costs
The cities, counties and authorities of New York have promised more than $200 billion worth of health benefits to their retirees while setting aside almost nothing, putting the public work force on a collision course with the taxpayers who are expected to foot the bill.

Medicare actuary: Reform will cost some seniors
A Medicare official concedes that seniors may have to dig deeper into their wallets next year thanks to the health care law.

Dealing with Medicare Part B and COBRA CoverageGenerally, the Socal Security Act provides that individuals may enroll in Medicare Part B (which covers doctors visits and other outpatient services) when they reach age 65. If they fail to do so during a seven-month initial enrollment period surrounding their 65th birthday,


2nd Quarter 2010

Group Health Insurance Rates on the Rise, According to Survey
Excerpt: “Group health insurance rates for small and midsize employers are surging for 2011 renewals, according to a survey by the Council of Insurance Agents & Brokers.”

Seniors in Medicare Drug Plans see drop.

(Business Insurance)
Sixth Circuit Holds That Cap Limits Retiree Health Care Contributions
Excerpt: “The matter in dispute was whether the caps on retiree health care contributions in the agreements continue to apply to 1993-2004 retirees, even after the close of the years covered by the agreements, and after the related CBAs expire. The Court interpreted the agreements to provide for lifetime, capped health care contributions, saying that this interpretation . . . ”
(Stanley D. Baum of Fellheimer & Eichen LLP)

Retiree-Only Plans Could Be Exempt from Health Reform Rules
Excerpt: “[According to draft regulations prepared by the Internal Revenue Service and the departments of Labor and Health and Human Services,] the exemption, if finalized, would mean retiree-only health care plans would not have to comply with . . . health care reform law requirements banning lifetime dollar limits and that coverage be extended to adult children up to age 26.”
(Business Insurance)


Benistar featured in the News

The following article about Benistar appeared in the Stamford Advocate: The Stamford Branch of a national employee health and welfare benefits administrator has moved within the city and is in the process of hiring more staff.