Massachusetts Municipalities

City of Brockton, MA

Municipality Overview:

Confronting persistent budget stress exacerbated by health care costs, increasing from 11 percent to 17 percent of the city of Brockton’s budget over the past decade, and an unfunded OPEB liability of $693 million, the Massachusetts municipality turned to KTP Advisors for help.

Major Objectives:

  • Reduce costs for the city and its Medicare-eligible retirees, starting January 1, 2013
  • Maintain the same benefits level as currently provided to the city’s Medicare retirees
  • Generate $7.3 million in total savings between active employee and retiree health benefits
  • Transition from a self-funded plan starting July 1, to a fully-insured plan on January 1, to enable savings throughout calendar year 2013
  • Structure the plan to reduce the city’s OPEB liability


Thanks to the process that KTP Advisors ran, the city was able to reduce the cost of its Medicare supplement plans with prescription drug benefits, net of federal subsidies, from $437 per Medicare-eligible retiree per month to $331 per month. In addition, the city was able to transition the plan from   self-funded to fully-insured, thereby eliminating the city’s risks associated with large claims.

The plan year shifted from July 1 to January 1, so the city and its more than 1,900 eligible retirees were able to save $106 per month sooner than if the plan were to remain as a July 1, plan year. In total, this resulted in savings of approximately $2.4 million per year. Because Brockton’s retirees pay 25 percent of the cost, each will save more than $450 per year and the city will save annually in excess of $800 per Medicare retiree per year.

This 24 percent reduction in total costs was accomplished without cutting benefits or shifting costs to retirees. Although many national Medicare providers were included in the RFP process run by KTP Advisors, the city ended up staying with its incumbent provider. Even though the city has transferred  the risk to the insurer, it is getting the same benefits as before KTP Advisors got involved, but thanks to KTP it is paying 24 percent less.

An independent actuary for the city of Brockton recently reported that KTP’s structural recommendations and competitive process reduced the city’s Annual Required Contribution (ARC) by $10 million and its OPEB liability by about $160 million.

Town of Greenfield, MA

Municipality Overview:

Facing a fiscal deficit, strict state regulations on benefits and impending GASB 45 requirements, in 2005 this municipality located in the northeastern Unites States turned to KTP Advisors for help in developing and implementing new Retiree Benefit Solutions©.

Major Objectives:

  • Reduce and simplify the number of plan offerings
  • Generate meaningful savings for the city to avoid increasing taxes, spending cuts to city services or possibly impacting the bond rating
  • Shift the plan year from July 1 to January 1 to coincide with the Medicare plan year (previously, retirees received two rate changes per year, one based on the city’s fiscal year end and one based on changes to Medicare deductibles and rates at calendar year end)
  • Determine the best way for the city to take advantage of the Medicare Modernization Act — apply for the direct RDS or offer an Employer Group Waiver Plan (EGWP)


For the city’s plan year, effective July 1, 2005, KTP negotiated a 1.2% rate decrease from the existing rate compared to the average 11.1% increase in the national trend for similar plans in 2005. The 1.2% reduction is even more dramatic when compared to the renewal rate of the previous plan which, left unchanged, would have resulted in a rate increase of approximately 32% for 2005.

KTP successfully transitioned the plan year to January 1, 2006 and, in seeking additional savings, made the following changes for the 2006 plan year:

  • Replaced regional HMOs with nationwide indemnity plans while keeping the medical benefits virtually identical
  • Transitioned the Rx plan from $2 and $15 co-pays to a co-insurance structure incorporating Part D in the form of an EGWP
  • Increased the Rx deductible from $140 to $250

These changes resulted in a 25% decrease in rates for 2006. During the renewal process for the 2007 plan year, KTP Advisors™ completed an RFP process that generated competing proposals from several different national medical and prescription drug plans. KTP was able to reduce the initial bids by an average of 18.2% through multiple rounds of complex negotiations.

Based on KTP’s recommendations, the selected plan offering represents savings over the city’s former plan of 14.8% and included the following benefit improvements:

  • Elimination of all deductibles
  • A more comprehensive Rx formulary
  • A four-tier co-payment structure
  • Improved customer service