Dear Retiree or Surviving Spouse:
The City of Flint recently discovered that some retiree contributions were not updated for plan years beginning on or after July 1, 2020. The City of Flint is notifying all retirees of this issue regardless of whether they paid the correct amount, underpaid, or overpaid for their health insurance.
Please know that the contributions for Medicare were corrected for the plan year beginning on January 1, 2022. Pre-Medicare retirees will soon be receiving information regarding a special open enrollment and all contributions will be corrected as of March 1, 2022. We are also implementing a process to repay qualified retirees for overpayments made since July 1, 2020.
We are working diligently with our health insurance consultants and a third-party auditing firm to ensure that we have an accurate accounting of any underpayments and overpayments made by retirees. You will receive a follow-up communication from the City during the next six (6) weeks, which will contain information about your specific account.
We appreciate your patience as we remedy this situation and assure you that we have taken steps to avoid any miscalculations in the future.
Eddie L. Smith, Director of Human Resources and Labor Relations
Department of Human Resources and Labor Relations
City of Flint
What is the purpose of this correspondence?
To notify retirees that the City of Flint recently discovered some retiree contributions were not correctly updated for plan years beginning on or after July 1, 2020.
The City of Flint is notifying all retirees whether they paid the correct amount, underpaid, or overpaid for their health insurance. Retirees who paid a higher contribution than the City’s calculation would have yielded will be reimbursed for any overpayment.
There are several different formulas used to calculate retiree health insurance contributions. These formulas are based on the date of the retirement, City policy, and Collective Bargaining Agreements (where applicable). Prior to each open enrollment, these formulas are used to determine the correct City and retiree contributions for each retiree group. Those contributions are then communicated to retirees. However, for plan years beginning on or after July 1, 2020, this process was not followed, and the contributions were not recalculated. Rather, the contributions that were calculated for the previous plan year were frozen. Had the formulas been applied to the premiums for plan years on or after July 2020, different retiree contribution amounts would have been established.
When did the City learn about this and what has been done to date?
As a result of an audit, the City learned about the potential retiree contribution miscalculation in September 2021 and immediately launched into a plan to complete an audit of all data, correct the contributions, and reimburse retirees who contributed a higher premium share than would have been required had the contributions been recalculated. This process has taken some necessary time due to the need for accurate calculations, data collection, double checks, and a third-party audit. During this time, the City has also aligned resources to ensure all retiree questions can be quickly and accurately answered.
How does the City know that only contributions from the above referenced time period were incorrect?
The City uses different methods to calculate retiree contributions that vary based on the unique retiree group. Retirees have different contribution calculations based on their former union groups and retirement dates. Prior to each open enrollment, retiree contributions for each unique retiree group are calculated based on the renewal rates for the applicable health insurance. These calculations are completed each year and the renewal information is communicated to retirees. However, for coverage periods of July 2020 – present, for Pre-Medicare Retirees and January 2021 – December 31, 2021, for Medicare retirees the contribution rates were not recalculated. Prior contributions were properly calculated.
Have the retiree contribution reimbursement corrections been audited by a third party?
The calculations have been reviewed by two separate organizations. First, our new retiree healthcare benefits consultant has conducted a thorough review of the data and possible over and under charges by each retiree. Second, the City utilized another third party, to conduct a final review of the calculations by the consultant for accuracy.
What happens next?
Beginning in March 2022, the City will start reimbursing any retirees who overpaid. Pre-Medicare retirees will be reimbursed, if applicable, for overpayments made from July 2020 – February 28, 2022, and Medicare retirees will be reimbursed, if applicable, for overpayments made from January 2021 – December 2021. The City will provide additional information about how reimbursements will be provided to retirees within the next six (6) weeks.
Please note: Medicare retirees were converted to the correct contributions effective January 1, 2022.
Pre-Medicare retirees will have a special open enrollment with corrected contributions effective March 1, 2022. This new open enrollment will cover the period of March 1, 2022 – June 30, 2022. The City’s pre-Medicare retirees will return to their normal 12-month open enrollment on July 1, 2022.