Title
Proposal to Change the Formula Used to Calculate the City's Contribution to Retiree's Health Insurance Premiums (B)
This Item involves a request for the City Commission to hear a presentation regarding changes to the Retiree Health Insurance Program
Explanation
The City's current retiree health insurance program allows retirees to participate in the City's health insurance plan and pays a portion of the monthly premium cost for eligible retirees. The formula used to calculate the amount the City contributes was last changed in the 1990's when an actuarial valuation was performed on the retiree health insurance program to determine the true scope of the liability. This initial valuation determined the liability was approximately $92 million. Subsequent changes in the Retiree Health Insurance Program reduced the liability to $29 million. However, rapidly escalating health care costs and an increasing number of retirees over the last decade have resulted in the liability increasing to $49 million and made it necessary for the City to re-visit this program in order to increase the probability that some portion of the retiree health premium cost will be able to be funded by the City on a long-term basis. As always, the cost of this program must be balanced against other City priorities.
The proposed changes would align the structure of our retiree health insurance program with the plans being provided by Alachua County and UF through the Florida Retirement System (FRS). The FRS plan provides a retiree health insurance contribution benefit of $5 per month for each year of service up to a maximum of thirty years. Utilizing the FRS formula to determine the City's contribution would lower the liability to $11 million, but would have a dramatic impact on the City's current retirees, lowering the monthly City contribution for nearly all retirees. In an effort to lower the impact and utilize some of the actuarial savings associated with the prog...
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