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P
CITY OF MIAMI• FLORIOA
INTER -OFFICE MEMORANDUM
To The Honorable Mayor and DATE April 27, 1983 FILE.
Members of the City Commission
S;,B:EZ. Health Benefit
✓ Cost for Retirees
FROM Howard V. Gary r REFERENCES
City Manager N fill,
`°'ZLosuREs
At the April 6, 1983 meeting of the City Commission, you requested
certain data concerning the impact on retirees of the recently im-
posed rate increase.
As of April 1, 1983, there were 1,486 retirees enrolled in the
employee health benefit plan. Normally a deduction is made from
the pension check each month to cover the retirees share of this
benefit. Of the 1,486 retirees, it is necessary that 72 of them
make a cash payment to the City to cover the cost of life insurance
or the cost of the health benefit plan they selected. A breakdown
of the type benefit plan utilized by the 72 retirees is as follows:
2 life insurance coverage
5 individual health coverage
23 individual and dependent coverage
42 dependent health coverage only
72
Florida law prohibits the City from paying for coverage for depen-
dents of a retiree.
A review of the records was made to determine the reasons some re-
tirees monthly payments were insufficient to cover the cost of
employee health benefits. The reasons found in order of frequency
are as follows:
1. The retiree elected to withdraw his contributions in cash
upon retirement, thus receiving a pension based only upon
City contributions.
2. Retiree elected to take an early service retirement, (some
withdraw their cash at the same time), thus receiving a
small monthly pension.
3. Retiree retired prior to 1972 (Old pension plan) when
monthly pensions were small.
4. Retirees elected to allot a significant portion of his
pension to a surviving spouse upon his death, thus establish-
ing a smaller pension.
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I
A
Honorable Mayor and
Members of the City
Commission
Page - 2 -
About 95% of the above employees are members of the Pension Plan
(General Employees), 5% are members of the Pension System (Police
and Fire).
When the new rates are implemented, it is estimated that an
additionalthree people will be added to the cash contribution
list should they elect to continue the health benefit coverage.
Failure to increase the rates for the retirees will cost the
fund $43,000 per month or a loss for the year of $515,000.
You will recall last March when new rates were established, you
directed the administration not to increase rates for retirees
over 65 years old. This cost approximately $150,000 and that
special subsidy is still in place.
Additionally, the cost of living allowance for retirees funded
through the general fund will cost an additional $25,000 this
year.
It is important that the rate structure which supports the Em-
ployee Health Benefit Fund be kept current. Adjustments to the
rates should be made periodically to preclude disproportionate
increases being necessary.