Detroit May Force Retirees to Buy Insurance Through Obamacare Exchanges

Thursday, 12 Sep 2013 01:27 PM


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Detroit emergency manager Kevyn Orr may replace healthcare coverage for retirees under 65 with a $125 per-month stipend to purchase coverage from insurance exchanges established under the U.S. Affordable Care Act, according to a local news report.

Retirees over 65 would be covered by the U.S. Medicare program, but officials have discussed the potential changes for younger retirees at a meeting of Detroit's General Retirement System, the Detroit Free Press reported.

The plan would reduce the city's annual retiree healthcare costs to less than $50 million from $170 million, Lamont Satchel, the city's director of labor relations, told the newspaper. All retirees under 65 who belong to the General Retirement System or the Police and Fire Retirement System would be affected.

Satchel said the city has not finalized the plan for the $125 monthly stipend, but Orr could make a decision as soon as this week.

Detroit officials could not be reached immediately for comment. The city's offices were closed on Thursday after a widespread power outage knocked out electricity throughout downtown Detroit.

Orr's spokesman, Bill Nowling, declined to comment, saying nothing has changed since June, when Orr told the city's unions and pension boards that the city was looking to reduce $5.7 billion in liabilities for healthcare and other retiree benefits.

Detroit has more than $18 billion in debt, and in July became the largest city in U.S. history to file for municipal bankruptcy protection.

There are about 23,500 retired city workers, more than double Detroit's current city payroll. Orr has said he wants to move some retirees onto insurance exchanges set up under federal healthcare reform, but he hasn't released details.

Michigan's insurance exchange, which will be run by the federal government because the state Legislature didn't approve a state-run exchange, is scheduled to launch on Oct. 1, with coverage to go into effect on Jan. 1, 2014.

On Wednesday, the General Retirement System said it will contribute more than $1.3 million toward new healthcare plans for current employees, the Free Press reported.

Last month, Orr proposed changes to health benefits for current city workers that are projected to save the city $12 million annually by reducing the number of plans available and by raising deductibles.

The annual deductible for a single city worker would nearly quadruple to $750 from $200 under the new proposal.

The annual deductible for married employees would increase to $1,500 we know from what?, and out-of-pocket expenses for a family will be capped at $4,500, up from $3,000 currently.

© 2014 Thomson/Reuters. All rights reserved.

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