Insurance premiums increase for V.I. Government retirees over 65

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ST. THOMAS - Government retirees 65 and older will see their health insurance premiums go up in their April 30 annuity checks.

Those who signed up for Plan "F" in October but have not been charged the added premium, will have the correct rates taken from the April 30 checks as well.

The rates were changed effective April 1, but it took some time for the Division of Personnel to get the information to the Government Employees' Retirement System, which issues the checks.

Starting Oct. 1, the government switched health insurance for government retirees 65 and older 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 65 and older, the insurance acts as a supplement for Medicare, although it also provides primary prescription drug coverage. V.I. Personnel Director Kenneth Hermon Jr. said the government is saving $1.5 million a month by switching the retirees' coverage to United Healthcare.

The increase is the result of an annual negotiation between United Healthcare and Medicare, Hermon said.

The rate change varies depending on where the retiree lives, but the average increase is about 2 percent, he said.

The change typically is implemented Jan. 1 each year, but because the territory's plan was only put into place Oct. 1, the increase was delayed until April 1, according to Hermon.

"When we went live with the plan, we advertised that there would be a mid-year rate change," Hermon said. "All the members should have received communication from United Healthcare almost a month and half ago."

Seven months after government retirees 65 and older switched to United Healthcare insurance, the correct premium rates for those who signed up for Plan F will be deducted from their annuity checks, Hermon said.

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

Single coverage under Plan N was a $40.09 premium, deducted from each annuity check. The upgrade to Plan F was another $24.80, for a total premium payment of $64.89, according to Hermon.

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

The lack of payment did not affect individuals' health care coverage, Hermon said. About 3,000 retirees were affected by the Plan F error, 2,000 who chose to upgrade to Plan F and another 1,000 retirees who live on the mainland, according to Hermon.

Those living off-island were affected because each state, and sometimes county, charges different rates, Hermon said. He said Tuesday that the division has approximately 500 different rates of which to keep track.

"Managing the post-65 memberships between two health insurance carriers and four database systems, coupled with the April 1, 2014, rate change, delayed the collection of the Plan F premiums. However, it was better to delay and get it right before we affected those retiree's annuity payments," Hermon said in a written statement.

To make up the balance of payments, Hermon said he is working with GERS to devise a way to spread it out and deduct it from annuity checks. It would not be requested as a lump sum from retirees, he said.

"That's the simplest and cleanest way for GERS, the Division of Personnel and the employee to keep track of the payment of the premiums that are owed," Hermon said.

When a plan to pay the balance of premiums for Plan F is finalized, Hermon will inform the retirees affected, he said.

For more information, contact UHC Representative Rena Sarrauw at 774-8588 on St. Thomas and 718-0341 on St. Croix.

- Contact reporter Aldeth Lewin at 714-9111 or email

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