HomeMy WebLinkAbout07.a. Early Retiree Reinsurance Program ApplicationCentral Contra Costa Sanitary District X�k BOARD OF DIRECTORS Q
POSITION PAPER
Board Meeting Date: September 16, 2010
Subject: CONSIDER APPROVAL OF EARLY RETIREE REINSURANCE PROGRAM
APPLICATION
Submitted By. Initiating Dept /Div.:
Debbie Ratcliff, Controller Administrative / Finance and Accounting
REVIEWED AND RECOMMENDED FOR BOARD ACTION:
D. Ratc,' M graves ( /General ames Ily,
Manager
ISSUE: Board approval is requested to apply for federal reimbursement of
extraordinary healthcare claims by early retirees through the Early Retiree Reinsurance
Program.
RECOMMENDATION: Approve the application for the Early Retiree Reinsurance
Program.
FINANCIAL IMPACTS: The District could receive potential reimbursements based on
healthcare claims of approximately $300,000.
ALTERNATIVES /CONSIDERATIONS: The Board could decide not to apply to the
reimbursement program.
BACKGROUND: The Patient and Affordability Care Act provides $5 billion in financial
assistance to employers, state, and local governments to help them maintain
healthcare coverage for early retirees and their spouses age 55 and older who are not
yet eligible for Medicare. The amount of the reimbursement to the employer is up to
80% of medical claims costs for retiree medical claims between $15,000 and $90,000
for expenses incurred after June 1, 2010. Reimbursements for these significant claims
can only be used by the District to offset future increases in healthcare insurance
premiums. This program ends on January 1, 2014, at which time early retirees will be
able to choose additional coverage options available through the health insurance
exchanges.
Accounting and Human Resources, as well as the District's healthcare providers,
worked together to estimate the potential savings the District might receive from the
Federal reimbursement program. If the District assumed a 10% per year increase in
healthcare premiums, based on the current number of early retirees and depending on
the number of early retiree medical claims between $15,000 and $90,000,
reimbursements totaling $300,000 could be received over the next two fiscal years.
Based upon the potential savings, staff is recommending proceeding with the
application process for the Early Retiree Reinsurance Program. The applications have
been prepared and are ready to submit.
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POSITION PAPER
Board Meeting Date: September 16, 2010
subject CONSIDER APPROVAL OF EARLY RETIREE REINSURANCE PROGRAM
APPLICATION
This issue went to the Budget and Finance Committee on August 30, 2010. The
Committee was split, one for and one against, and recommended bringing this item to
the full Board for consideration.
RECOMMENDED BOARD ACTION: Approve the application for the Early Retiree
Reinsurance Program.
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