Glitch causes incorrect amount to be taken out of annuity checks for some government retirees

Font size: [A] [A] [A]

Government retirees over age 65 who chose "Plan F" for their United Health Care coverage may have noticed that the incorrect amount was being taken out of their annuity checks.

Division of Personnel Director Kenneth Hermon Jr. said he is aware of the issue and it will soon be corrected.

Starting Oct. 1, health insurance for government retirees over 65 was switched from Cigna to United Healthcare's fully-pooled "AARP Medicare Supplement Plan N."

CIGNA continues to handle coverage for active employees and for retirees younger than 65.

For retirees older than 65, the insurance acts as a supplement for Medicare, although it also provides primary prescription drug coverage. Hermon said the government is saving $1.5 million a month by switching the retirees' coverage to United.

When the switch was made, retirees had the option to choose to a higher level of Medicare Supplement - United's Medicare Supplement Plan "F."

Single coverage under Plan N is a $40.09 premium, taken out of the retiree's annuity check. To upgrade to Plan F is another $24.80, for a total premium payment of $64.89, according to Hermon.

The problem, is that the people who signed up for Plan F have only been charged for the cheaper plan.

Since Oct. 1, those with Plan F have only been paying the $40.09 basic premium charge.

"All those retirees know, if they went up to Plan F they have Plan F coverage," Hermon said. "It's just some administrative back end issue that we're addressing."

About 3,000 retirees were affected by the error, he said. About 2,000 who chose to upgrade to Plan F and another 1,000 retirees who live on the mainland. Those living off-island were also affected because each state, and sometimes county, charges different rates, Hermon said.

The fact that different people were paying different premium rates is what confused the system, he said.

"It's not as simple as what we were accustomed to where it was all just one amount to send to the Government Employees Retirement System," Hermon said.

"In the switch from Cigna to United, the most important thing for us wasn't collecting the premiums right, it was making sure that each retiree had the coverage that they selected," Hermon said.

Now that the problem has been identified and the Division of Personnel is working to fix it, Hermon is devising a way to get the retirees caught up with their premiums payments.

He said the government recognizes the retirees are on a fixed income and paying the balance in one lump sum would be devastating for most people.

"It's our error, so we will take it out in smaller portions," Hermon said.

He said the goal is to start with the Jan. 31 annuity check deduction, and spread out the payments so that by the end of the fiscal year they will be caught up.

He urged retirees to wait for the new amount to be withdrawn from their annuity checks, and not try to come to the office to pay the balance.

For more information, contact Personnel at 774-8588 on St. Thomas and 718-0341 on St. Croix.

- Contact reporter Aldeth Lewin at 714-9111 or email

We welcome user discussion on our site, under the following guidelines:

To comment you must first create a profile and sign-in with a verified DISQUS account or social network ID. Sign up here.

Comments in violation of the rules will be denied, and repeat violators will be banned. Please help police the community by flagging offensive comments for our moderators to review. By posting a comment, you agree to our full terms and conditions. Click here to read terms and conditions.
St. Croix Daily Deals powered by ReferLocal

Best of the VI

Best of the VI: After more than 100,000 text and Facebook votes were cast, it is time to unveil the winners.

Daily News

Try our e-newspaper delivered to you every day

Island Trader

Good stuff, best buys, great fun

Crucian Trader

Celebrating St. Croix History, Culture and People

Island Action

Your complete guide to where to go and what to do this week in the Virgin Islands.