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New plan saves single parents hundreds of dollars

A mistake will cost seven Fluvanna County retirees their supplemental health insurance.

But the decision to change insurance providers will slash the costs of 19 employees by hundreds of dollars, and save all employees a premium increase.

When the Board of Supervisors voted March 15 to switch health care providers as of July 1 from Anthem to Cigna, no one knew that meant some county retirees would lose their supplemental coverage.

No health insurance company will offer a full insurance plan to a Medicare-eligible retiree, said Gail Parrish, county human resources manager. But some, like Anthem, will offer a supplemental plan. Cigna does not.

While researching plans, Parrish said she asked Cigna if retirees would be eligible under their program. “The answer I got was yes,” she said.

But as it turns out, Cigna only covers retirees who are under 65 and therefore not eligible for Medicare. They do not offer a Medicare supplemental plan.

“I did not specify Medicare and non-Medicare,” Parrish said. “When I finally saw it, after it had been approved and everything, and we were working out how to set things up, that’s when I found out that they did not have a supplemental plan, and therefore Medicare retirees would not be eligible.”

A retiree’s perspective
Will Shaw, 67, said he worked for three and a half years as Fluvanna’s assistant director of public works before his Feb. 1 retirement. He also taught math and science at Fluvanna County High School for two years.

Shaw received a letter dated March 24 from the county that read in part, “The county will no longer be able to offer you a group retiree Medicare supplement plan… Your current…coverage will end at midnight on June 30. Accordingly, you may wish to obtain new coverage from another source.”

Shaw wasn’t pleased. “It seems like a crappy thing to do to retirees, whether they worked for a year then retired, or 30 years then retired,” he said.

He and his wife are theoretically able to purchase supplemental insurance on their own, but without being part of a group, rates will almost certainly be higher. “The key thing is, you get dumped from your group, so you’re not part of a group plan anymore, unless you can find one that will take you,” he said.

The provider switch saved either the county or its employees, depending on how the increase would have been allocated, at least $100,000, according to data presented in March.
“Find some other way to save money and don’t throw retirees under the bus,” Shaw said.

County contributions

The letter Shaw and other retirees received stated, “You will still continue to receive the health care credit with your pension.”

Parrish explained that county retirees have always received a health insurance credit, or an additional amount in their pension each month intended to help with medical costs.

The amount each retiree receives varies. “It depends on how many years of service and what their salary was,” Parrish said. “It’s determined in a formula.”
Shaw said he doesn’t know how much money he receives via his credit.

The county is not obligated to continue to provide health insurance or supplemental coverage to its retirees. “But if our health insurance is able and willing to let us include the retirees, we do,” Parrish said.

Before the county switched to Anthem nearly five years ago, an option for supplemental coverage did not exist. “This was just under Anthem,” Parrish said. “It’s just something we were able to offer because of the plan we were on.”

Parrish noted that retirees paid 100 percent of their premiums for Anthem supplemental coverage. “We don’t pay anything toward retirees,” she said. “That’s why they receive the health care credit to help cover medical costs.”

Though Shaw and others like him paid the full price of their supplemental coverage, “they got the benefit of our group cost rather than going out and getting it individually,” Parrish said.
Parrish said she has done her best to help the seven retirees affected by the switch. “I contacted Anthem and got a name, and even offered for him to come here and have a meeting with [affected retirees] to set up insurance,” she said. “I only had one person respond, so I connected him directly with” the Anthem representative.

The other side
If the county had stayed with Anthem, costs would have gone up between 8.5 and 10 percent, Parrish said. Traditionally the county shares the premium increase with its workers, which means all 180 full-time employees would have had to pay more. By contrast, the overall increase by switching to Cigna was 1.3 percent.

“With Cigna I have negotiating powers, which is one of the great advantages of this change,” Parrish said. “With [Anthem] I can’t negotiate anything different than what the plan is.”
For example, Cigna offered $10,000 worth of wellness activities. But the county is working with the health department on a grant for wellness activities. Parrish was able to convince Cigna to put the $10,000 toward the cost of premiums, which resulted in savings.

But the biggest difference lies in a fourth tier, offered by Cigna but not Anthem, that dramatically lowers costs for single parents.

While seven retirees lost supplemental coverage through the switch, 19 employees have signed up for a new “employee plus child or children” plan, which slashes the cost of a traditional family plan that covers two adults and a child or children.

Not all families need coverage for two adults. Some are headed by single parents. Other families contain adults who receive health insurance through work that only covers the employees themselves – not their families.

An Anthem family plan with a $500 deductible cost employees $524 per month before the upcoming premium increase, which would have added another 8 percent, Parrish said. The new Cigna “employee plus child or children” plan with a $500 deductible will cost employees $171.07 per month.

“That’s why I said, ‘How can we not give them that?’” Parrish said. “If it’s a single mom who’s making $30,000 a year, that’s a huge savings.”

A single mom’s perspective

Sarah Redd, 32, is a single mom of three kids who has worked as a benefit program specialist with Fluvanna’s Department of Social Services for one and a half years.
“With Anthem we had no choice,” Redd said. “We had to have a family plan.”

On her entry-level salary, Redd couldn’t afford the $553 per month it would have cost to buy a plan with a $500 deductible. So she was forced to go with the high deductible plan, which cost $227 per month, but forced her to spend $5,600 out of pocket before insurance paid a dime.

Once she met the deductible, Anthem paid 80 percent of costs until she reached her out of pocket maximum of $10,000. “Unfortunately, we met both deductibles,” she said. Her son had a kidney infection that cost $8,000 and her daughter needed a $43,000 knee surgery.

“I was putting it on credit cards,” Redd said. “You think about kids – they are always getting sick, and that’s if they don’t have any major problems. It was putting me in a very deep hole. I was trying to pay to keep the bills out of collections.”

When the Cigna switch takes effect in July, Redd said she will pay $262 per month for a $500 deductible plan that includes dental and vision. That’s a $35 increase each month over her current insurance, “but I only pay $500 before they kick in,” she said. Besides, she said, the premium for her Anthem high deductible plan was going to increase in July to over $400.

“A lot of people don’t realize with the high deductible plan, you pay out of pocket for medications,” Redd said. She was forced to pay $170 for kidney medication for her son, who is allergic to penicillin. When her Cigna plan kicks in, she said, tier one drugs will cost $10 even before her deductible is met.

“To me it was a no-brainer,” Redd said. “Now I won’t be driving myself into debt to pay my medical bills.”Redd said that if the health insurance switch hadn’t happened, she would have been forced to stop working for the county. “I would have looked for another job,” she said. Her daughter needs another knee surgery next year. “Now I have coverage that will care for my daughter’s physical therapy.”

What would have happened?
If supervisors had known that seven retirees were going to lose their supplemental coverage, would they still have made the switch?

“I can’t speak for the Board, but it would not have made a difference in my recommendation, because my recommendation is for the employees,” Parrish said. “This was the best for the county because it saved the county a significant amount of money – to the point that they were able to help by covering the difference in cost.”

Supervisors voted this year to cover the entire premium increase for employees – a deviation from the typical arrangement that makes workers shoulder some of the burden.

Vice Chair Mozell Booker said she was very sorry to learn about the oversight. “We didn’t know that. I did not know that they would lose their insurance,” she said. “Nine times out of 10 I probably would have wanted to go with the plan that would support everybody, because I know how important it is at that age to have insurance. It’s a shame.”

Supervisor Tony O’Brien said he would have voted the same way. “We’re responsible to all taxpayers and not just to seven people,” he said. “It would be unfair for the county to assess a higher rate to taxpayers so these people could purchase their individual – not paid for by the county – coverage at a better rate. That is not the responsibility of the county. It is the responsibility of the open marketplace.”