CITY OF LANSING DEPARTMENT OF HUMAN RESOURCES ‘Bi Floor, Ciy al ‘BeneftsClassiications (617) 483-4004 (VorcsI TDD) 4124 W. Michigan Avenue Labor Relations Recruitment (617) 483-6064 (General Fax) Lansing, Michigan 48933, Safety/Selection/Training ‘wwuwllansingmigov (Website) ‘Andy Schor, Mayor Worker's Compensation Linda Sanchez-Gazola, HR Director ‘September 16, 2020 RE: City of Lansing 2021 Retiree Healthcare Overview Dear City of Lansing Retiree: We are writing to inform you of changes to your Retiree Healthcare plan. ‘According to the Michigan Department of Treasury, the City of Lansing’s combined net (unfunded) pension and retiree healthcare liability of $736.6 million, puts Lansing in the bottom 1% of cities statewide. To put this into perspective, if you look at the combined net (unfunded) pension and retiree healthcare liability of other cities statewide, their liability was $10.4 million, that is approximately $726.2 million less than the City of Lansing's liability. Because of the magnitude of this liability, we can no longer wait to take action. Why are we making these changes? + If not addressed, the retiree pension and health care (also known as legacy costs) will cause severe financial distress to the City, significantly affect future retiree healthcare coverage, and reduce City services for Lansing residents. + We must protect our current employee's future retirement healthcare and wages. + We must ensure that our citizens continue to receive public services and support from the City of Lansing, * To do nothing is irresponsible and could lead to dire outcomes for our residents and the City. * COVID-19 has increased our awareness of the fact that General Fund revenues are vulnerable and significantly impacted by economic and statutory factors beyond the City’s control. As revenues decline and expenses continue to increase, we must take actions that are fiscally responsible in order to preserve our City and way of life for our citizens and employees. “Equal Opportunity Employer”City of Lansing Retiree Page 2 September 16, 2020 Effective January 1, 2021, Lansing will be making the following changes to our retiree health plans: ‘+ The retiree healthcare plans will be modified to duplicate the active plans as closely as possible. > Pre Medicare retirees will maintain coverage with either BCBS of Ml or PHP. > Medicare retirees will receive their medical and prescription drug coverage from Humana * After initial proposals for cuts, Dental and Vision benefits will remain as currently offered, + The City will provide a hardship program to soften the financial impact to low income retirees: > Retirees whose taxable income is less than 2x federal poverty level ($25,520) will be eligible > Ifyou qualify, you will receive a taxable check to be used on healthcare expenses > Ifyou think you qualify for the hardship program, the City will require that you complete IRS Form 4506-T to verify eligibility > The hardship fund would not be accessible to any retirees currently enrolled on a plan that resembles active levels (either future retiree or recent retiree) > The City will provide more information about the hardship program and the 4506-T in the next few weeks ‘+ Any retiree who is currently receiving a Medicare Part A or B reimbursement from the City will continue to receive reimbursement. “Equal Opportunity Employer”City of Lansing Retiree Page 3 September 16, 2020 The following illustration gives a high-level overview of the medical / Rx programs effective January 1, 2021: Deductible et eres erry ers (BCBS or PHP) $500 single / $1,000 family Deter eet eis (Humana) $500 per Indivdidual Preventive Services 100% 100% iCoinsurance ‘80% most services 80% most services, [Deductible /Coinsurance Out of ‘$1,500 single 7$3,000 $1,500 per Individual, [Prescription Drugs $40 preferred brand $80 non preferred brand Pocket Maximum family [Annual Out of Pocket Maximum $6,350 single /$12,700 | _ *cludes Pharmacy (Deductible, Coinsurance, Copays) family _ Office Visits $30 $30 30% Emergency Room a maximum $120 copay [Urgent Care 350 $50 $10 generic $10 generic $40 preferred brand $80 non preferred brand Prescription Drugs - 90 Day Supply (Retail or Mail Order) $20 generic $80 preferred brand $160 non preferred brand $20 generic $80 preferred brand $160 non preferred brand The City has dedicated customer service centers available for retirees to call with questions and concerns about the new plans, as well as many other concierge services, The customer service centers are available to aid retirees in the following ways: > Explain coverage and coordinate benefits > Research and resolve insurance claims and medical billing issues > Identify leading in-network doctors using our proprietary MEDIS quality care evaluation approach and > make appointments > Facilitate any required pre-authorizations for medical services, Durable Medical Equipment and prescription drugs > Research ways to reduce prescription drug and other costs > Facilitate the transfer of medical records between physicians “Equal Opportunity Employer”City of Lansing Retiree Page 4 September 16, 2020 * The customer service centers are different based on whether you are a Pre Medicare or Medicare retiree: > Pre Medicare retirees can contact Health Advocate at (866) 695-8622 > Medicare retirees can contact Amwins at (866) 286-5154 + There will be additional information provided to all retirees in the coming weeks regarding the new benefit information, the carrier change to Humana for Medicare retirees, the Customer Call Centers and delivery of new ID cards. Thank you for your time and attention to this important matter. Sincerely, Human Resources Benefits & Pension Administration City of Lansing “Equal Opportunity Employer”