Managing Public-Sector Retiree Health-Care Benefits Under the Affordable Care Act

KTP agrees that ACA exchanges, whether federal – or state-based, are the best and most cost-effective solution for pre-Medicare retirees, provided that collectively-bargained agreements do not prevent their use by union members.  There are many reasons for this, some of which are mentioned in the article, Managing Public-Sector Retiree Health-Care Benefits Under the Affordable Care Act.

However, we strongly disagree with the following statement on page 15: “With the Medicare Part D donut hole gradually closing… some state and local governments may find that continuing to provide an employer-designed and administered pharmacy plan for Medicare-eligible retirees and beneficiaries is no longer the best use of their health-care dollars.”

Discontinuing supplemental drug coverage to Part D would be catastrophic for most retirees.  Even after the “donut-hole” closes 75% in 2020, that still leaves 25% to be covered by retirees on fixed incomes.  This is problematic because the average cost of new specialty drugs on the market in 2014, is $75,000 per year.

If a retiree’s former municipal employer is receiving the Retiree Drug Subsidy (commonly called the “RDS”), there is no free catastrophic reinsurance that kicks in and the retiree is stuck paying the full 25%, which can total upwards of $18,750. That can bankrupt a retiree on a fixed income and with no means of further employment.

However, if the municipality’s drug plan is structured as a Series 800 Employer Group Waiver Plan under the Medicare Modernization Act, the retiree’s claims over a catastrophic threshold, are 80% paid by the federal government, 15% paid by a supplemental plan and no more than 5% paid by the retiree.

For these reasons and many others, KTP believes that proper structure and maintenance of municipal retiree prescription drug plans will be essential to every municipality’s fiscal health and ability to Keep The Promise made to retirees.



GASB to Propose Improvements to OPEB Reporting

Eye on GASBThe Governmental Accounting Standards Board (GASB) will releasing two proposals this June aimed to improve US State and local government OPEB accounting and financial reporting.  The objective of these two proposals being to improve comparability and transparency across governments.

To read the full article from, click here.

For a printer friendly version of the full article from, click here.

Private Health Exchanges and the Consulting Firms Behind Many

Private health exchanges are the hot topic in healthcare right now.  Many large human resource consulting firms have launched their own private exchanges, spurring the potential for biased advice and conflict of interest.

The May 2014 digital edition of Employee Benefit News features Blurred Lines by Andrea Davis.


As employers begin to look at private exchanges as a means to provide health care benefits to their active employee population – 45% of employers surveyed recently by the Private Exchange Evaluation Collaborative said they have implemented or plan to consider using a private exchange for full-time active employees before 2018 –  questions are being raised about potential conflicts of interest for consulting firms that also act as exchange purveyors.

“I think that the private exchanges are rife with conflict of interest, because they’re being mounted by people who are supposedly advising them, and so there are issues there,” says Brian Klepper, president and CEO of the National Business Coalition on Health.

For the full article from EBN, please click here.