Tuesday, December 07, 2010

San Angelo's ERRP: Bank or Lottery?

City Council acted on health insurance coverage.  As a result, early retiree health insurance coverage for dependent spouses will soar from $377 to over $500 per month, at least a 33% increase.

The monstrous burden will occur in 2011, a period when the City of San Angelo will get federal money intended to help early retirees, via the Early Retiree Reinsurance Program (ERRP).  Benefit consultants project ERRP will save retiree plans 25 to 33%.

Why are San Angelo's retiree rates going the opposite direction?  It's the result of a strategic decision to bank ERRP funding for 19 months.  The decision was made outside City Council, given members were unaware of the program.  Human Resources admitted they had not informed elected leaders and City Council minutes bear this out.

When asked why a portion of ERRP funds were not used to offset retiree increases, Mayor Alvin New and City Manager Harold Dominguez stuck to the "iffy" script on funding?  Councilman Johnny Silvas compared ERRP funding to buying "a lottery ticket." 

For those in the know, ERRP is more akin to a bank.  Uncle Sam is shouldering 80% of claims from $15,000 to $90,000.  Funds are coming, soon.  The question is how much?  In that regard, the city has years of experience, six months are directly reimbursable.  I've never seen a lottery ticket with those attributes.

How many of the City's 51 retiree dependents will drop coverage, unable to pony up more than $500 a month?  The irony is this.  The more retirees the City drives from the plan, the less opportunity for ERRP reimbursement.

Retired spouses may have $377 to spend on lottery tickets in 2011, one option for funding future health care expenses.  It's a high risk strategy, but what alternative do they have?

Update:  KLST noted that a family of four would pay $200 a month more for coverage.   The Standard Times live reported on the meeting.  Neither mentioned, much less investigated, the city's weak ERRP assertions.

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