Retiree trusts push last call for health care compensation
Detroit — Time is running out for thousands of city retirees who are eligible to recoup millions in out-of-pocket costs for medical co-pays and prescriptions they paid for last year.
Officials for the city’s two independent health care trusts — established as part of Detroit’s landmark bankruptcy — are putting out a final call to retirees with Health Reimbursement Accounts who are entitled to more than 60 percent of reimbursement funds that have gone unclaimed for the 2015 calendar year.
A 90-day grace period to submit receipts is up on March 31, and officials say about $5.2 million in unused dollars won’t roll over.
“A lot of people fell off the map because they didn’t realize that they had that benefit coming to them, and they never applied for it,” said Greg Trozak, a Police and Fire Retirement System trustee, who formerly served as chairman of the health care trust for police and fire. “We are trying to coordinate and get everybody hooked back in.”
Since Jan. 1, 2015, health care for city retirees has been provided through independent health care trusts — known as Voluntary Employee Beneficiary Association — to help the city shed health care liabilities. One trust is for general retirees, another is dedicated to police officers and firefighters who retired by Dec. 31, 2014.
The trusts share a portion of $450 million in city funds to provide health insurance benefits for retirees, a move that significantly lowered Detroit’s $4.3 billion long-term liability for health care and other post-employment benefits.
On April 1, 2015, non-Medicare eligible participants were automatically enrolled in a Health Reimbursement Account, unless they opted out. The accounts were also provided to retirees older than 65 who elected the reimbursements over the Medicare Advantage plans offered in 2015, including: HAP, Blue Care Network and Blue Cross.
The shift to the tax free reimbursement accounts required retirees to submit receipts to recoup eligible medical expenses.
General workers can claim up to $125 per month in reimbursements and police and fire retirees can submit for up to $120, or higher based on income level or disability status.
Some retirees elected to opt out of the HRA because they were receiving coverage through an Affordable Care Act exchange that provided a higher tax free subsidy.
The retirement systems formerly held a series of town hall meetings to educate retirees about health care and have kept detailed information on their respective general and police and fire websites. In addition, the companies since contracted to deliver the benefits have sent out mailings and held an informational and registration meeting, officials said.
“We did the best we could to give them all the information they would need to make a claim,” said Thomas Sheehan, a trustee on the city’s general pension board, who chairs the general retiree VEBA and is a trustee on the police and fire VEBA.
“You have a last chance to make a claim (for 2015),” he added. “We don’t want you to miss this opportunity.”
Keith MacWilliams, a retired Detroit water and sewer supervisor, waited until the end of the year to pursue some of his reimbursements and didn’t find the claims process difficult. But the 60-year-old says it’s not what retirees had been accustomed to and for some change can be hard.
“People get frustrated,” he said.
Attorney Michael VanOverbeke, who acts as legal counsel for both of the trusts, said a combination of circumstances could be to blame for the under-use of the reimbursements.
Among them, he said, is lingering confusion among some seniors or retirees who are discouraged over the additional paperwork. Others, he added, are fully aware of the process but don’t currently have a need to file for the reimbursements.
“I would like to think that those that need it the most are fully aware and are taking advantage of it,” said VanOverbeke, noting that there has been a last-minute rush to get claims in for 2015.
Overall, the general retiree VEBA has 9,407 participants and the police and fire VEBA has 9,190. Currently, 5,952 individuals total are enrolled in the reimbursement accounts between general and public safety retirees.
In 2015, there were 6,348 VEBA participants with accounts eligible for up to about $8.2 million in total reimbursements for the calendar year, according to officials with VanOverbeke’s firm.
But the total amount paid out under last year’s reimbursement plan is just over $3 million — about $876,000 for general retiree reimbursement claims and about $2.1 million for police and fire, officials said.
The reimbursement plan provides a 90-day grace period for submitting claims following the end of the plan year on Dec. 31.
Sean Neary, a trustee for Detroit’s police and fire pension fund, said 60 to 70 police and fire retirees or their spouses have contacted pension officials over the last four months with questions about the reimbursements.
Neary said there has been “complete confusion” over a letter that went out explaining the switch to submitting for reimbursement from the stipend. Others, he said, may have inadvertently discarded the information.
If retirees don’t seek to recoup the approved medical reimbursement costs, the extra money will stay within the trusts.
The VEBAs, when they became effective in January 2015, had less than the full amount needed to cover all future retiree benefits.
The News last June reported that the trusts were running out of cash and had to secure a $50 million loan over two years with Citibank to provide short-term cash.
Officials have said the loan enabled the trusts to avoid immediate liquidation of a portion of $450 million in city-issued promissory “B Notes,” which were only valued at about 60 cents on the dollar. Today, those notes haven’t gained adequate value in the bond markets, VanOverbeke said.
“There is only so much money allocated to VEBAs under the bankruptcy. So, there’s not a separate pot. When that pot runs out, there is no more money,” he said. “So, to the extent that people potentially could have submitted some medical expenses and they don’t, that money stays there. It just means the life of that plan will likely go on longer.”
To claim reimbursements
Health Reimbursement Accounts are provided by the VEBAs to non-Medicare eligible participants as well as retirees older than 65 who elected the reimbursements over offered Medicare Advantage plans.
For health care reimbursement information for the 2015 calendar year, retirees should call Navia Benefit Solutions at (800) 669-3539.
Detroit general retirees seeking health care reimbursements for doctor visit co-pays, prescription drugs or other covered health care benefits for the 2016 calendar year should call BeneSys at (844)563-8911.
Detroit police and fire retirees seeking health care reimbursements for doctor visit co-pays, prescription drugs or other covered health care benefits for the 2016 calendar year should call Automated Benefit Services at (800) 645-9978.
Information can also be found at http://www.rscd.org.