OP&F News

OP&F responds to retiree health care questions

During the public comment session of the Jan. 23, 2019 meeting of the OP&F Board of Trustees, members asked several specific questions that the Board will address here. We are providing the information below for those members at the meeting and all our members. The Board continues to consider member feedback in monitoring and improving the program.

1. Why not keep the retiree group plan and have those who enroll pay the difference?
This was considered, and perhaps was the first option OP&F examined. However, the cost to insure the approximately 8,000 retirees who make up our under 65 population would be extremely expensive (and is the primary reason OP&F needed to make changes). Remember, for the pre-65 group in our self-insured group plan, OP&F paid the entire costs of claims, from dollar-one. With most group health care plans there are a variety of people enrolled (young and old). The younger people in the plan have fewer health care claims and therefore are more attractive customers than the older population. This is why the OP&F plan has been self-insured by the pension fund and pays all claims from dollar one. To keep the self-insured model and extend the health care fund to 15 years would have meant monthly premiums that would have been cost-prohibitive for retirees. Additionally, these rates would have increased annually based on claim experience.

2. Can retirees use the stipend toward a spouse’s COBRA health care coverage, or their own?
No. The stipend cannot be used toward a spouse’s COBRA premium. However, those who retire while in treatment for a serious illness or injury may use the stipend for their COBRA premiums until open enrollment or the expiration of COBRA benefits. Also, those who are in the process of a filing for disability benefits through OP&F and have separated from service and selected COBRA coverage, may use the stipend for these premiums. The Board is currently considering member feedback on this issue.

3. How many companies responded to RFP for the retiree health care transition?
Seven firms responded to the Request for Proposal for retiree health care services. Three finalists were interviewed: Conduent, UnitedHealthcare and Aon.

4. We heard several carriers including Aon made bids for our coverage. Did someone have a working relationship with Aon?
No one at OP&F or on the Board has had a prior working relationship with Aon Retiree Health Solutions. The Townsend Group, has been our investment real estate consultant since 1986 and is based in Cleveland. The Townsend Group was purchased by Aon in late 2017 and the sale announced in 2018, after OP&F had contracted with Aon for the retiree health care transition.

5. Why no advanced warning of what the prices would be prior to Nov. 1?
Under the deferral law, plan information is not available until Nov. 1. Forecasting this market is extremely difficult and OP&F did its best to anticipate the availability and pricing in partnership with our consultant, Gabriel Roeder Smith..

6. Why were insurance carriers allowed to take two months premium from accounts prior to being able to be reimbursed? Why weren't people told about this?
The timing of reimbursements depends on a number of factors:
• When the member elected to pay the first premium;
• When a member returned their reimbursement forms;
• What method of reimbursement the member selected; and
• When premiums are due to the insurance carrier.

The timing of premiums is unique to each carrier and should be covered by the licensed agent. We have asked Aon to look to improve how this can be made clearer in the future. Member choice can play a role as well.

During the transition, the first reimbursement may require more time (initial premium auto reimbursement for a Medicare member may take 6 to 8 weeks), subsequent reimbursements for the remainder of the year may be provided on a monthly basis, typically by the 7th business day of the month Medicare members may also submit a manual claim form in order to avoid the 6 to 8 weeks lead time for the initial reimbursement.

7. Why do retirees have to deal with four different companies (Aon, eHealth, Alight and the insurance provider)? Was it so each could get a commission?
Members do not have to deal with four different companies. Members should only work with the Aon Retiree Health Exchange. There is one number (1-844-290-3674) and one website for retirees. Aon representatives were present at our January board meeting and heard from our members directly about these issues. We are working with them to make improvements. If needed Aon representatives will connect you with an expert at eHealth or YSA to get a resolution to your inquiry.

8. Did you google Aon? Why did you choose them with all legal issues?
OP&F’s staff did due diligence that went far and above a Google internet search. Aon Retiree Health Solutions had no pending litigation at the time of selection. Unfortunately, many financial services firms, such as Aon, are subject to lawsuits that are currently quite common in the market. Most, if not all, of its competitors also have faced similar class action litigation that you will find when you conduct an internet search of the company.

9. Why is the Aon contract sealed? Can we get copy of AON contract?
It is not sealed. A copy of the Aon contract has been provided to a number of entities that have requested it, including the news media and labor organizations. There were minimal redactions made to protect proprietary information, as is a common practice in any public contract. Ohio law expressly provides for companies to make these types of redactions.

10. Thousands of people have the same problem. People that do not have insurance is a big problem. Isn’t this a breach of contract with Aon?
Actually, 23,000 OP&F retirees do have insurance through the Aon exchange. As of Jan. 22, 86 percent of OP&F retirees who are eligible for a stipend have enrolled in a health care plan for 2019. More individuals are enrolling during the current special enrollment period (until March 1). Aon has been in contact with nearly 97 percent of all retirees who are eligible for a stipend. For the for those who have not responded, registered letters and phone calls continued to be sent to ensure no one was missed.

In fact, the contract that OP&F signed with Aon – that has been made public – clearly outlines the tools it has to ensure the highest quality of service and to ensure Aon’s obligations are being met. Both have been working closely to overcome some of the early challenges in the new program with timely solutions, such as adding additional benefits advisors and expanding weekend appointments. We will continue that spirit of collaboration and improved service moving forward.

In addition, as per the contract, Aon began processing stipend reimbursements on Jan. 1, 2019 and through Jan. 28 had processed more than $3.4 million claims.

11. Can the pension board consider breach of contract?
Yes. See response to question 10.

12. Why was Aon told to offer only plans from affordable care act?
At no time did OP&F instruct Aon to offer any specific plans to our members. Furthermore, Aon does not have the authority to direct what plans our offered. Ours is a private, not a public, ACA exchange.

Currently, federal health care policy, including protections for people with pre-existing conditions and essential health care benefits, are in a state of flux. To ensure that we provide these benefits to our members, many of who have what an insurance provider would consider a pre-existing condition, OP&F selected ACA-certified plans in a closed HRA structure along with guidance from licensed agents. This route, we believe, was in the best interest of our retirees at transition. As the Board has noted, it is considering an open HRA for plan year 2020.

13. Why can’t more employer or employee contributions be allocated from police and fire to fund health care?
By law, employee contributions can only be used to fund pensions, not retiree health care. OP&F is allowed to allocate employer contributions toward retiree health care, as long as it does not adversely affect pension funding. As a part of the pension reform legislation in 2012 (implemented in 2013), the employer contribution allocation to retiree health care was reduced to 0.5 percent in order to keep pension funding within state-mandated requirements. While OP&F was still within state funding requirements for 2018. At the close of 2018, the economic forecast was not as favorable. The means that shifting more employer contributions toward retiree health care could jeopardize pension funding, which remains our primary responsibility.

14. Why did the fund move a half a billion dollars from the health care trust to pensions when that money was for health care?
OP&F did not remove any money from the health care trust. By law, any money in that trust must be used for health care. The allocation of employer contributions to retiree health care was reduced in 2012 to ensure adequate pension funding.

15. Why can’t we get a stipend and go where we want?
The Board is carefully considering this feedback for the 2020 plan year and beyond. For the purpose of the initial transition (which involved 26,000 retirees in a 10-week timeframe) OP&F believes Aon’s expertise in assisting members with plan selection and management of Health Reimbursement Accounts is vital.

Funds from the health care trust (which is where the stipends come from) must be used for health care expenses. OP&F is responsible for making sure these funds are spent as they are intended. It is why Aon manages the stipends and confirms enrollments with qualified health care plans. Finally, by setting up and administering a Health Reimbursement Account, the stipend has more spending power, as it is not subject to income taxes.

Posted 1/28/2019

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