San Angelo's Square Dance with Early Retirees

In the last City Council meeting, Mayor Alvin New choreographed his health insurance moves.  New said he wanted to recombine the City's two health insurance plans, one for current employees and the other for early retirees.  GoSanAngelo reported:

A a year ago ..., when the council voted to split retirees and employees into two separate insurance pools to help the city comply with a federal law. That split resulted in higher insurance premiums for retirees this year.

Retirees face a second year of premium increases under the proposal.  It's not clear from the public presentation how much of the $1 million increase comes from the employee vs, early retiree side.

On August 31, 2010 the City learned of its acceptance in the Early Retiree Reinsurance Program.  Consultants project ERRP reimbursement of $650,000 over a two year period.  ERRP.gov speaks to the issue:

Q.  Can retiree-only plans participate in the ERRP?

A.  Yes. The Affordable Care Act does not prohibit retiree-only plans from participating in the ERRP, provided the employment-based plan and its sponsor satisfy all applicable requirements.

The City's having two plans could be a constraint under ERRP.  Guidance states:

(F)or purposes of ERRP, a sponsor may consider multiple health benefit arrangements as one employment-based plan, unless (1) it is clear from the instruments governing an arrangement or arrangements to provide health benefits that the benefits are being provided under separate plans, and (2) the arrangement or arrangements are operated pursuant to such instruments as separate plans.

Until the two plans are combined, the City may be constricted in using ERRP money outside the early retiree plan.

(F)or purposes of ERRP, a sponsor may consider multiple health benefit arrangements as one employment-based plan, unless (1) it is clear from the instruments governing an arrangement or arrangements to provide health benefits that the benefits are being provided under separate plans, and (2) the arrangement or arrangements are operated pursuant to such instruments as separate plans.

Q.  If a sponsor combines plans during or at the end of a plan year but after it has submitted its application to participate in the program, does the sponsor have to submit a new application?

A.  If plans are being combined into an existing plan that has been certified for ERRP purposes, the sponsor should not submit a new application. The sponsor will need to make HHS aware of the change in plan structure through a process that will be developed and announced by HHS.

ERRP funds have to used to stem cost increases inside the approved plan.  This makes the City's stated use of ERRP funds in the HHS application critical.  That information should be made public.

It's clear City leaders want to hold onto ERRP funding until 2012.  The Mayor's desire to combine the two plans could be driven by the aforementioned information.

Separate..., Combine...,  Do-Si-Do.  Watch to see what New calls next..