February 13, 2012 1

Proposed Employee/Retiree Health Insurance Coalition

Agreement

FY2013-FY2015

Town of Lexington and the

Lexington Public Employee Committee

February 13, 2012 2

Summary of Negotiated Agreement• Negotiated Under Coalition Bargaining Statute,

Rather than New Health Insurance Law• Join the State’s Group Insurance Commission

(GIC) Program, Effective July 1, 2012• Three-Year Agreement, FY2013-2015• New Employee/Retiree Contribution Rates• Creation of Two Health Reimbursement Accounts

(HRA) to Mitigate New Deductibles and Co-pays• New Medicare Part-B Subsidy for Retirees, Funded

by Lower Town Contribution Rates

Town of Lexington Proposed Employee/Retiree

Health Insurance Coalition Agreement

February 13, 2012 3

FY2013 Financial Impact

• TOWN: Estimated Premium Savings of $2.6 million in FY13. There will be a $1,120,000 set aside for employees and retirees, however, to mitigate the impact of GIC deductibles and co-pays.

• EMPLOYEES/RETIREES: Estimated Premium Savings of $1.9 million in FY13.

Town of Lexington Proposed Employee/Retiree

Health Insurance Coalition Agreement

February 13, 2012 4

New Employee/Retiree Contribution Rates

Town of Lexington Proposed Employee/Retiree

Health Insurance Coalition Agreement

Plan Type FY13 FY14 FY15

1Active Indemnity 75/25% 75/25% 75/25%

2Active HMO/PPO 85/15% 85/15% 82/18%

3Medicare Indemnity 75/25% 75/25% 75/25%

4Medicare HMO 85/15% 85/15% 82/18%

February 13, 2012 5

Mitigation for Employees/Retirees

1. HRA-Part 1: Debit Card to cover out-of-pocket deductibles equal to – 75% in year 1; 50% in year 2 and balance in account in year 3

2. HRA-Part 2: Reimbursement of high out-of-pocket co-pays between $2,000 and $5,000 for individual plans and $4,000 and $10,000 for family plans.

3. Contribution by Town of 40% of the monthly premium of Medicare Part B for eligible retirees

Town of Lexington Proposed Employee/Retiree

Health Insurance Coalition Agreement