New government health insurance plan requires retirees to pay higher premiums: 42% or more
Published: October 2, 2012
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ST. THOMAS - The territory's renewed health insurance plan for government employees took effect Monday, significantly raising rates for retirees.
The new medical and prescription drug plan with Connecticut General Life Insurance Company - CIGNA - will raise premiums for retirees younger than 65 years by more than 42 percent for individuals and families, and those older than 65 with covered families will see an even higher increase.
Retirees 65 years and older - those who are eligible for Medicare - will see an increase of about 64 percent in their premiums.
Active government employees will only have a premium rate increase of 1.6 percent.
To give employees more time to consider the changes, the open enrollment period has been extended to the end of the week.
On Thursday, Gov. John deJongh Jr. informed members of the 29th Legislature that he signed the renewal contracts as recommended by the V.I. Government Employees Services Commission/Health Insurance Board for the insurance policies covering public employees, retirees and their dependents.
The new plan will raise the premium health insurance rates for the 6,873 retirees covered by the program. According to Government House, the change better reflects the retirees' share of coverage compared with the 8,301 active government employees who have been paying more of the "overall burden" for years.
"We recognize these premium rate increases are substantial, however, based on the trend in increasing medical rates and claims experience these revised premiums also reflect the true cost for each group of employees covered in the medical plan. The retiree grouping based on their insurance claims experiences will experience the larger increase," deJongh wrote in his letter to the Senate. "But it is also this same group who will have more options because of the newly implemented national health care legislation and increased options provided by Medicare and Medi-Gap policies."
Under the renewed plan, the biweekly employee medical and dental premiums will increase as follows:
- Single employee coverage will go from $94.11 to $95.57.
- Family coverage of medical and dental will go from $165.89 to $169.54.
- Coverage for single retirees younger than 65 will go from $94.11 to $133.77.
- Family coverage for retirees younger than 65 will go from $168.88 to $240.62.
- Coverage for single retirees older than 65 will go from $41.41 to $68.13.
- Family coverage for retirees older than 65 will go from $69.52 to $113.52.
For a more detailed rate sheet, go to the "forms" page on the Division of Personnel website: www.dopusvi.org.
The plan covers thousands of V.I. government employees and retirees and their families, as well as employees and retirees of the University of the Virgin Islands, the V.I. Port Authority, Frederiksted Health Center and St. Thomas East End Medical Center.
In the Virgin Islands, employees and retirees pay 35 percent of the premium costs and the government pays 65 percent.
Law dictates that the GESC board bid for insurers every five years. After a public bid process last year, the board chose CIGNA to be the government's medical, prescription and dental insurance carrier for another five years.
The Senate approved the five-year contract in 2011. The Senate does not need to ratify the renewal each year, Senate President Ronald Russell said.
National average premiums increased by 9 percent in 2011 and are projected to increase another 4 percent this year, according to Government House.
DeJongh said the V.I. government did not see an increase in premium costs for 2012, but the current system had an uneven distribution of claims and was projected to see a double-digit increase for 2013.
In 2011, active government employees paid more than $91 million in premiums but only received about $69 million from claims made to CIGNA - a difference of almost $22 million.
Retirees older than 65 paid about $12 million in premiums but collected almost $18 million in claims. Retirees younger than 65 paid almost $17 million and collected more than $18 million in claims.
"Those uneven figures drove the decision of the Health Insurance Board, when renewing the government plans, to align premium rates to the actual claims cost of each respective category," deJongh said.
The governor encouraged retirees to evaluate all their options.
"Some other options do exist for our retirees to achieve costs savings and I encourage them to evaluate their usage of these alternatives. For example, if Medicare-eligible retirees determine those increases are indeed cost prohibitive, they can opt-out of the CIGNA plan, since Medicare is their primary insurance, or obtain a Medi-Gap policy to fill the gap left by the Medicare traditional plans," deJongh said.
V.I. Personnel Director Kenneth Hermon Jr. said the Group Health Insurance Office will be open Monday through Friday from 8 a.m. to 5 p.m. in both districts to help retirees make changes to their enrollment.
Active government employees who want to change their plans should contact the Human Resources officer in their agency.
With the one-week extension of the health insurance plan open enrollment period, the new deadline for any changes is 5 p.m. Friday.
The governor also renewed dental coverage with CIGNA; the vision contract with Standard Insurance Company; and life insurance with Aetna, Inc.
Contact the Personnel Department at 774-8588 on St. Thomas or St. John or 773-0341 on St. Croix for more.
- Contact reporter Aldeth Lewin at 714-9111 or email firstname.lastname@example.org.