Financial Woes Force Mid-Western Municipality to Alter Retiree Health Program
BUSINESS CHALLENGE
A large Mid-Western municipality needed to change its retiree benefits program due to serious financial challenges including rising retiree health care costs and major deficits in unfunded liabilities. The municipality elected to move to a defined contribution model in a private exchange environment with a stipend to offset retiree health insurance costs. Shortly after, they were served with a lawsuit for violating the union agreement and needed to amend their benefits program once again.
SOLUTION
After contacting AmWINS Group Benefits, the broker was able to provide the municipality with a unique retiree benefits program called Retiree Benefit Choice (RBC). This program offered a choice of three group plans similar to the retirees' current options or the option to shop the Medicare marketplace. RBC helped the municipality control costs, ensured pre and post-65 retirees would have healthcare through the municipality, and satisfied the union agreement.
RESULTS
The municipality felt RBC would meets its financial and retiree obligations better than any other available options. First year savings totaled approximately $20 million, and also resulted in a reduction in Other Post-Employement Benefits (OPEB) Liability of $300 million on their balance sheet.
| OBJECTIVE | BENEFITS ACHIEVED |
| Lock in fixed costs for current and future healthcare expenditures | Municipality was able to control retiree heatlhcare spending |
| Outsource administration | AmWINS handled all billing, eligibility and customer service |
| Ensure all retirees had access to healthcare | Retirees were automatically enrolled in the program, with the option to switch to a different option |
| Provide retiree advocacy | AmWINS' call center works on behalf of the retiree and not the insurance carrier |
| Ensure every retiree had coverage | 100% of retirees were covered |
