Ordinance 2021-4420 ORDINANCE NO. 2021-4420
AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, AMENDING MIAMI BEACH CITY
CODE CHAPTER 78, ARTICLE II THEREOF, ENTITLED "EMPLOYEE
BENEFIT PLANS;" AMENDING SECTION 78-81, "ENTITLED GROUP
HEALTH INSURANCE," TO PROVIDE THAT ANY EMPLOYEE WHO
ELECTS TO DECLINE PARTICIPATION IN THE CITY'S GROUP
HEALTH INSURANCE PLAN FOLLOWING RETIREMENT AFTER THE
EFFECTIVE DATE OF THIS ORDINANCE MAY RESUME COVERAGE
AND BE ELIGIBLE FOR THE CITY'S CONTRIBUTION TOWARDS THE
COST OF COVERAGE IF IT IS DEMONSTRATED THAT THE RETIRED
EMPLOYEE HAS MAINTAINED CONTINUOUS COVERAGE UNDER
ANOTHER GROUP HEALTH PLAN SINCE THEIR DATE OF
RETIREMENT OR SINCE THE DATE ON WHICH THEY LAST OPTED
OUT OF THE CITY'S GROUP HEALTH INSURANCE PLAN; REPEALING
SECTION 78-82, ENTITLED "HEALTH MAINTENANCE
ORGANIZATION;" PROVIDING FOR REPEALER, SEVERABILITY,
CODIFICATION AND FOR AN EFFECTIVE DATE.
WHEREAS, the City provides medical and dental insurance ("the Plan") to its
employees and retirants through a self-funded plan that is currently administered by
Cigna Health; and
WHEREAS, the City contributes toward the cost of retirant health insurance
coverage that is determined by the City Commission each year as part of the City budget
process, based on available funds as set forth in Code of the City of Miami Beach Sec.
78-81 (for Group Health Insurance Plans) and Sec. 78-82 (for Health Maintenance
Organizations); and
WHEREAS, offering post-employment health benefits that are partially funded by
the City is a recruitment tool that aids in the City's hiring process; and
WHEREAS, on March 8, 2006, the Mayor and City Commission adopted
Ordinance No. 2006-3505, that made changes to the City's contributions to its Group
Health Insurance Plans and to its Health Maintenance Organizations ("HMOs") for retiring
employees; and
WHEREAS, Ordinance No. 2006-3505 required that an employee who intended
to participate in the City's health plan upon retirement, must make a one-time irrevocable
written election, prior to termination of City employment, to continue to participate in the
City's health plan upon retirement; and
WHEREAS, Ordinance No. 2006-3505 was silent on the matter of retired
employees who become employed with organizations that provide employer-sponsored
healthcare coverage. This meant that when retired employees were provided with an
opportunity to enroll in another employer-sponsored healthcare plan, they were only able
to do so with an understanding that reenrolling in the City's Plan in the future could only
be done at their expense, with no City contribution toward the cost of coverage; and
WHEREAS, the proposed changes to Sec. 78-81 (for Group Health Insurance
Plans) and Sec. 78-82 (for Health Maintenance Organizations) would allow unclassified
employees who retire with the City, to reject retirant health insurance, and thereafter to
elect to come back to the City's Plan at a future date and obtain the applicable City funding
toward their healthcare coverage. Pursuant to these changes, the returning retirant must
demonstrate that there were no gaps in coverage upon their return to the City's Plan;
WHEREAS, the Administration engaged the City's healthcare benefits consultant,
Gallagher Benefits Services, Inc. ("GBS"), who has prepared a projected financial impact
of adopting this proposal and has found that in the short-term and medium term the City
can expect to reduce costs and save money for the City, and in the long term, the City
can expect to see some increased costs, with the short and medium term savings more
than compensating for any long terms costs;
WHEREAS, based on the analysis completed by GBS, the Mayor and City
Commission have determined that it is in the best interest of the City and its retirants to
enact the following amendments to Code Sec. 78-81 (for Group Health Insurance Plans)
and Sec. 78-82 (for Health Maintenance Organizations), which will provide retired
employees the flexibility to choose the best healthcare plan for themselves and their
families as well as to provide the City with the cost savings associated with allowing
retirants to opt out of the City's healthcare Plan.
NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA:
SECTION 1.
DIVISION 3. -CONTRIBUTIONS
Sec. 78-81. - Group health insurance.
(a) Member. For all employees, Tthe contribution of a member to the costs of the
benefits provided for in his/her agreement, shall be a specific amount as
determined by the amount of funds available each year and approved by the city
commission as part of the annual city budget.
(b) City. For employees hired before March 18, 2006, Tthe contribution of the city on
behalf of the members to the cost of the benefits provided for in his/her agreement,
shall be a specific amount as determined by the amount of funds available each
year and approved by the city commission as part of the annual city budget.
(c) Medicare pensioners'contributions. For employees hired before March 18, 2006,
Tthe contribution of those employees, retirants, pensioners and dependents age
2
65 and over, eligible for Medicare benefits and who are members of the plan, to
the costs of the benefits provided for in the plan for those employees, retirants,
pensioners and dependeants age 65 and over, eligible for Medicare benefits, shall
be a specific amount as determined by the amount of funds available each year
and approved by the city commission as part of the annual city budget, plus the
same specific amount of the contribution for Medicare benefits, but in no event
shall such total contribution exceed the contribution of members of the plan who
are not eligible for Medicare benefits and have a similar agreement for individual
membership or for a family basis.
(d) City's contribution to Medicare pensioners. For employees hired before March 18,
2006, Tthe contribution of the city on behalf of the members of the plan age 65 and
over and eligible for Medicare benefits to the costs of the benefits provided for in
his/her agreement, shall be a specific amount as determined by the amount of
funds available each year and approved by the city commission as part of the
annual city budget, plus the same specific amount of contribution for Medicare
benefits; but in no event shall the total of such contribution by the city exceed the
amount of contribution respectively for any other agreements under the plan which
covers members only who are not eligible for Medicare benefits or which covers
members and their families, none of whom are eligible for Medicare benefits.
(e) Husband and wife or domestic partner members. Whenever a husband and wife
or domestic partners are both members of the plan, and either has an agreement
with the plan providing for benefits on a family basis, and either is making
contributions for the same, the other spouse or domestic partner shall not be
required to contribute to the plan. Any members believing they qualify under this
provision shall file a notice with the personnel director on a form prescribed by him.
Such notice shall be signed by both husband and wife or by both domestic partners
and shall indicate from which spouse's or domestic partner's pay contributions are
to be deducted. Such notice shall become, effective as of the first pay period
following the date of the election, subject to review by the board, which shall
disallow any election it finds to be improper. Thereafter contributions shall be made
as provided in the notice, but there shall be no refund of any contributions made
prior to the effective date of any notice.
(f) Election by employees retiring before the effective date of this fOrd. No. 7
to continue participation in group health insurance following retirement. Any
employee who retired prior to the €effective on and aftcr the date of this
ordinance [Ord. No. 2006 3505] is adoptcd, any cmploycc who intends to
participate in the city's group health insurance er=k14449=plan upon retirement must
make a one-time, irrevocable written election, prior to termination of city
employment, to continue to participate in the city's group health insurance Of
1410 plan upon retirement, in order to be eligible for such continued participation
3
upon retirement. A retiree who timely makes such an election prior to termination
of city employment shall be eligible for the applicable city contribution toward that
coverage if coverage is maintained uninterrupted. Any employee who elects to
continue under the city's health insurance or HMO plan upon retirement in
accordance with this subsection (f), but thereafter discontinues or is discontinued
from such coverage, may resume coverage only at the employee's expense, with
no city contribution toward the cost of such coverage. Notwithstanding—the
ratified that provides for such election.
(g) Ten year service requirement. Effective on thc date this ordinance [Ord. No. 2006.
3505] is adopted, any employee who previously elected or thereafter elects to
participate in the defined contribution retirement system shall be required to have
retiree health benefits. Notwithstanding the preceding sentence, employees in
bargaining units shall not be required to meet the minimum employment
requirement in this subsection (g), unless and until a collective bargaining
sentence of this subsection (g), any mayor, membcr of thc city commission, city
manager or city attorney who previously elected or thereeaftcr elects to participate
years of city employment before becoming eligible for retirec health benefits.
(g)Election by employee retiring on or after the effective date of this ordinance to
participate in the city's group health insurance following retirement. On and after
the effective date of this ordinance fOrd. No. 1, any current or former
retirement eligible Unclassified employee or Other classified employee who is not
otherwise included in a collective bargaining unit, who participated in the City's
defined benefit pension plan or the City's defined contribution pension plan, retiring
after the effective date of this ordinance who desires to participate in the city's group
health insurance or HMO plan upon or after retirement may make a written election
at any time at or after employment termination to participate in the city's group
health insurance or-HMO plan. Any retirement eligible Unclassified employee, or
Other classified employee who is not otherwise included in a collective bargaining
unit, who elects to participate in the city's health insurance or HMO plan upon or
after retirement in accordance with this subsection (g), but thereafter discontinues
or is discontinued from such coverage, or who elects not to participate in the city's
group health insurance or HMO plan upon retirement, but thereafter desires to
begin participation, may begin or resume coverage onl at any time after
retirement. If the retiree can demonstrate continuous health insurance coverage
with no lapses in coverage from the time of retirement until the date that the retiree
applies to join or rejoin the city's health insurance plan, the retiree shall be eligible
for the applicable city contribution toward that coverage. If the retiree cannot
4
•
demonstrate continuous unlapsed health insurance coverage from the date of
retirement until the date that the employee applies to join or rejoin the city's health
insurance plan, the retiree may loin or reioin the city's plan at the retiree's sole
expense.
(h) City contribution toward retiree health coverage for employees hired on or after
March 18, 2006. For employees hired on or after March 18, 2006 and who are
eligible for a city contribution pursuant to subsection (g), and upon receipt of
normal retirement benefits from a city retirement plan, they shall also receive a
monthly payment toward the cost of continued participation in the city group health
insurance or HMO plan in the initial amount of $10.00 per year of creditable
service, up to a maximum of$250.00 per month until age 65; and $5.00 per year
of creditable service up to a maximum of $125.00 per month thereafter. This
benefit shall be paid every month that the retiree participates, without lapse of
coverage, in a city group health insurance plan for the lifetime of the retired
employee, and shall cease upon a lapse in health insurance coverage or the retired
employee's death, whichever comes first. - - - - - - - •- - - - -
_ eee e. L z. mm- m
(h) if the employee has made an election to continue to participate in the city's
group health insurance or HMO plan prior to termination of city employment
1 - - -
discontinued from such coverage; and if such employee participates in the defined
contribution retircment system the employee must also satisfy the employment
requirement in subsection (g), above. Any such eligible employee shall, upon
•- _ _ - _ - L., * _ _ - -- •-• •- - - - - •• '.'! _- -- - "- - - -
servicc, up to a maximum of$250.00 per month until agc 65; and $5.00 per year
of creditable service up to a maximum of $125.00 per month thereafter. This
benefit shall be paid during thc lifetime of thc retired employee, and shall cease
upon the retired employee's death. Notwithstanding the foregoing, employees in
classifications within the AFSCME, GSA and any other bargaining unit excluding
the CWA bargaining unit, shall not be eligible for the benefit described in this
provides for such benefit.
(i)
Sec. 78 82. Health maintenance organization (HMO).
5
(a) Mcmbcr. For all employees, Tthc contribution of an HMO member to the costs of
commission as part of the annual city budget.
(b) City.
{1) For employees hired before March 18, 2006, Tthe contribution of the city on
behalf of HMO members to the costs of the benefits as provided for in his/her
agreement shall be a specific amount as determined by the amount of funds
budget
came rate on behalf of retirants who elect to continue their agreements and
pensioners who elect to become members of the plan. The board shall ascertain
administrative costs to the city manager for his review, recommendation and
budget
(c) Medicare pensioners'contributions. For employees hired before March 18, 2006,
65 and over, eligible for Medicare benefits and who are members of the plan
provided for in the agreements of those employees, retirants, pensioners and
commission as part of thc annual budget, plus the same specific amount of the
basis.
(d) City's contribution to Medicare pensioners. For employees hired before March 18,
2006, Tthc contribution of thc city on behalf of the members of the plan age 65
and over and eligible for Medicare benefits to the costs of the benefits provided
which covers members only who are not eligible for Medicare benefits or which
benefits.
6
with the plan providing for bcncfits on a family basis, and either is making
contributions for the samc, thc other spouse or domestic partner she
required to contribute to the plan. Any members believing they qualify under this
partners and shall indicate from which spouse's or domestic partner's pay
contributions are to be deducted. Such notice shall become effective as of the
contributions made prior to the effective date of any notice.
(f) Election b cm.lo ees retirin• before thc effective datc of this ordinance Ord.
No. to continue participation in group health insurance following
retirement. Effective on and after the date this [Ord. No. 2006 3505] is adopted,
intends to participate in the. city's group health-insurance or HMO plan upon
retirement must have made a one time, irrevocable written election, prior to
- _ „ a - - --- - - - -
to termination of city employment shall be eligible for the applicable city
employee who elects to continuc under the city's health insurance or HMO plan
upon retirement in accordance with this subsection (f), but thereafter
discontinues or is discontinued from such coverage, may resume coverage only
at the employee's expense, with no city contribution toward the cost of such
the GSA and any other bargaining unit excluding the CWA and AFSCME
bargaining units, shall not be required to make the above election unless and
(g) Ten year service requirement. Effective on the date this ordinance [Ord. No.
2006 3505] is adopted, any employee who previously elected or thereafter
required to have at least ten years of regular, full time city employment before
CWA, AFSCME or GSA bargaining units shall not be required to meet the
collective bargaining agreement is ratified that provides for such requirement.
7
thereafter elects to participate in the defined contribution retirement system
cligiblc for retiree health bcnefits.
(g) Election by employees retiring on or after the effective date of this ordinance to
participate in the city's group health insurance following retirement. On and after
the effective date of this ordinance[Ord. No. 1, any unclassified pension
eligible cmploycc or former cmploycc retiring after the effective date of this
plan upon or after retirement may make a one time, irrevocable written election
at any time at or after employment termination, prior to termination of city
employment, to continue to participate in the city's group health insurance or
upon _ retirement. Any pension eligible employee who elects to participate
in accordance with this subsection (g), but thereafter discontinues or is
discontinued from such coverage, or who elects not to participate in the city's
group health insurance or HMO plan upon retirement, but thereafter desires to
begin participation, may begin or resume coverage only at the employee's
continuous health insurance coverage with no lapses in coverage from the time
of retirement until the date that the retiree applies to join or rejoin the city's health
insurance plan, the employee shall be eligible for the applicable city contribution
toward that coverage. If the retiree cannot demonstrate continuous unlapsed
heap-insurance coverage from the date of retirement until the date that the
cmploycc applies to join or rejoin the city's health insurance plan, the retiree may
join or rejoin the city's plan at the retiree's sole expense.
the effective date of this ordinance [Ord. No. 2006 3505], except as otherwise
provided below, shall be eligible for a city contribution toward the cost of
continued health insurance coverage in accordance with this subsection (h).
Any such employee shall be eligible for the benefit provided in this subsection
(h) if the employee has made an election to continue to participate in the city's
• - - - - _ _ - _ _ LI * - - - - - - -- - - - ' . - - _ _ • - -
- - - - - - - - - ' - -- • - - - • - - - - -- - - - -- - - --- -
discontinued from such coverage; and if such employee participates in the
defined contribution retirement system the employee must also satisfy the
shall, March 18, 2006 and who arc eligible upon receipt of normal retirement
benefits from a city retirement plan, th v shall also receive a monthly payment
toward the cost of continued participation in the city group health insurance or
•- -- •- I! - - e - -
maximum of $250.00 per month until age 65; and $5.00 per year of creditable
service up to a maximum of $125.00 per month thereafter. This benefit shall be
8
. .. • - - -
bargaining unit, shall not be eligible for the benefit described in this subsection
for such benefit.
SECTION 2. REPEALER.
All ordinances or parts of ordinances in conflict herewith be and the same are
hereby repealed.
SECTION 3. SEVERABILITY.
If any section, subsection, clause or provision of this Ordinance is held invalid, the
remainder shall not be affected by such invalidity. portions of this ordinance.
SECTION 4. CODIFICATION.
It is the intention of the Mayor and City Commission of the City of Miami Beach,
and it is hereby ordained that the provisions of this ordinance shall become and be made
a part of the Miami Beach City Code. The sections of this ordinance may be renumbered
or relettered to accomplish such intention, and the word "ordinance" may be changed to
"section," "article," or other appropriate word.
SECTION 5. EFFECTIVE DATE.
This Ordinance shall take effect on the day of ate, 2021.
OR
This Ordinance shall take effect 10 days after enactment.
PASSED AND ADOPTED this /2' day of may , 2021.
ATTEST:
Dan Gelber, Mayor
Rafael E. Granado, City Clerk
Underline denotes additions
S ethreugh denotes deletions 11;1ORP toRATEU
*11'
3 0,
denotes deletions at Second Reading
. 5
APPROVED AS TO
(Sponsored by GONGORA) FORM & LANGUAGE
&FOR EXECUTION
9
City Attorney Date
Ordinances-R5 K
MIAMIBEACH
COMMISSION MEMORANDUM
TO: Honorable Mayor and Members of the City Commission
FROM: Rafael A. Paz,Acting City Attorney
DATE: May 12, 2021
2:20 p.m. Second Reading Public Hearing
SUBJECT:AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, AMENDING MIAMI BEACH CITY CODE
CHAPTER 78, ARTICLE II THEREOF, ENTITLED "EMPLOYEE BENEFIT
PLANS;" AMENDING SECTION 78-81, "ENTITLED GROUP HEALTH
INSURANCE," TO PROVIDE THAT ANY EMPLOYEE WHO ELECTS TO
DECLINE PARTICIPATION IN THE CITY'S GROUP HEALTH INSURANCE
PLAN FOLLOWING RETIREMENT AFTER THE EFFECTIVE DATE OF
THIS ORDINANCE MAY RESUME COVERAGE AND BE ELIGIBLE FOR
THE CITY'S CONTRIBUTION TOWARDS THE COST OF COVERAGE IF IT
IS DEMONSTRATED THAT THE RETIRED EMPLOYEE HAS MAINTAINED
CONTINUOUS COVERAGE UNDER ANOTHER GROUP HEALTH PLAN
SINCE THEIR DATE OF RETIREMENT OR SINCE THE DATE ON WHICH
THEY LAST OPTED OUT OF THE CITY'S GROUP HEALTH INSURANCE
PLAN; REPEALING SECTION 78-82, ENTITLED "HEALTH MAINTENANCE
ORGANIZATION;" PROVIDING FOR REPEALER, SEVERABILITY,
CODIFICATION AND FOR AN EFFECTIVE DATE.
ANALYSIS
See attached memorandum.
SUPPORTING SURVEY DATA
N/A
Applicable Area
Not Applicable
Is this a"Residents Right Does this item utilize G.O.
to Know" item, pursuant to Bond Funds?
City Code Section 2-14?
No No
Legislative Tracking
Office of the City Attorney
Page 399 of 859
Sponsor
Vice-Mayor Michael Gongora
ATTACHMENTS:
Description
❑ Commission Memorandum
❑ Ordinance
Page 400 of 859
DocuSign Envelope ID:CDOCEEEF-64BE-49AD-B1F6-E8A4446C5921
r, 1 f, .. .`.�`, I f) a- FA 3 i.
t E
OFFICE OF THE CITY ATTORNEY
RAFAEL PAZ,ACTING CITY ATTORNEY COMMISSION MEMORANDUM
TO: MAYOR DAN GELBER
MEMBERS OF THE CITY COMMISSION SECOND READING
FROM: RAFAEL A. PAZ,ACTING CITY ATTORNEY DocuSlgned by:
KaF tL a. PM,
DATE: MAY 12, 2021 4B242F61639E4B0...
SUBJECT: AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, AMENDING MIAMI BEACH CITY
CODE CHAPTER 78, ARTICLE II THEREOF, ENTITLED "EMPLOYEE
BENEFIT PLANS;" AMENDING SECTION 78-81, "ENTITLED GROUP
HEALTH INSURANCE," TO PROVIDE THAT ANY EMPLOYEE WHO
ELECTS TO DECLINE PARTICIPATION IN THE CITY'S GROUP
HEALTH INSURANCE PLAN FOLLOWING RETIREMENT AFTER THE
EFFECTIVE DATE OF THIS ORDINANCE MAY RESUME COVERAGE
AND BE ELIGIBLE FOR THE CITY'S CONTRIBUTION TOWARDS THE
COST OF COVERAGE IF IT IS DEMONSTRATED THAT THE RETIRED
EMPLOYEE HAS MAINTAINED CONTINUOUS COVERAGE UNDER
ANOTHER GROUP HEALTH PLAN SINCE THEIR DATE OF
RETIREMENT OR SINCE THE DATE ON WHICH THEY LAST OPTED
OUT OF THE CITY'S GROUP HEALTH INSURANCE PLAN;
REPEALING SECTION 78-82, ENTITLED "HEALTH MAINTENANCE
ORGANIZATION;" PROVIDING FOR REPEALER, SEVERABILITY,
CODIFICATION AND FOR AN EFFECTIVE DATE.
On April 21, 2021, the Mayor and City Commission approved the above-referenced Ordinance,
sponsored by Vice Mayor Gongora, on first reading. The proposed Ordinance is submitted for
the Mayor and City Commission's consideration on second reading, and is discussed more fully
below.
BACKGROUND
The City provides medical and dental insurance("the Plan")to its employees and retirees through
a self-funded plan that is currently administered by Cigna Health. The City contributes toward the
cost of retiree health insurance coverage that is determined by the City Commission each year
as part of the City budget process, based on available funds. See City Code Secs. 78-81 (group
health insurance) and 78-82 (Health Maintenance Organization (HMO)).
Some governmental entities are moving away from funding retiree health benefits, especially at
the rate equal to those of active employees. However, offering post-employment health benefits
that are funded by the City is a recruitment tool that aids in the City's hiring process. The Plan
Page 401 of 859
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currently has approximately 2,800 members, including active employees, retirees, and
dependents (excluding police and fire). Twenty-seven (27%) percent of the plan members are
retirees and their dependents. The City is currently funding approximately 50% of the premium
cost for retiree health benefits.'
On March 8,2006,the Mayor and City Commission adopted Ordinance No.2006-3505,that made
changes to the City's Group Health Insurance Program for retiring employees. The changes
adopted in this Ordinance included (1)election to continue participation in group health insurance
following retirement; (2) employees who participate in the Defined Contribution Retirement
System (401a Plan) must have ten years of full-time City employment to be eligible for retiree
health benefits2; and (3)any employee hired on or before the effective date of the Ordinance shall
be eligible for a City contribution toward the cost of continued health insurance coverage if the
employee has made an election to continue to participate in the City's group health insurance
prior to termination of City employment, and has not thereafter discontinued or been discontinued
from such coverage. The contribution shall be an initial amount of $10 per year of creditable
service, up to a maximum of$250 per month until age 65, and $5 per year of creditable service,
up to a maximum of$125 per month thereafter.
The 2006 Ordinance requires that an employee who intends to participate in the City's health plan
upon retirement, must make a one-time irrevocable written election, prior to termination of City
employment, to continue to participate in the City's health plan upon retirement. The Ordinance
is silent on the matter of retired employees who become employed with organizations that provide
employer-sponsored healthcare coverage. This means that when retired employees are provided
with an opportunity to enroll in another employer-sponsored healthcare plan, they are only able
to do so with an understanding that reenrolling in the City's Plan in the future could only be done
at their expense, with no City contribution toward the cost of coverage.
The currently proposed Ordinance would reverse this requirement, and allow City retirees to reject
or leave the City's health insurance Plans, but retain the ability to rejoin and receive payment of
1 At First Reading, Deputy City Attorney Rob Rosenwald misspoke in response to a question from
Commissioner Arriola, stating that a young employee who was employed by the City for just five
years would be entitled to receive 60% of his health insurance payments paid by the City from
retirement age until death. While retirees hired before 2006 receive an approximately 50% city
contribution toward health insurance, retirees hired after 2006 get a graduated stipend that
increases with years of service. So, the five-year employee would only receive a small city
contribution of$50 per month toward the cost of City health insurance after retiring.
The stipend schedule for the Tier C employees that we currently use is as follows: For employees
hired on or after March 18,2006 and who are eligible for a city contribution,they receive a monthly
payment toward the cost of continued participation in the city group health insurance in the initial
amount of$10.00 per year of creditable service, up to a maximum of$250.00 per month until age
65; and $5.00 per year of creditable service up to a maximum of$125.00 per month thereafter.
2 Employees of the Miami Beach Employees' Retirement Plan shall have at least five (5) years of
regular, full-time City employment before becoming eligible for retiree health benefits.
2
Page 402 of 859
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the City's contribution so long as they can demonstrate unlapsed coverage from another source
for the period that they were not insured by the City.
On March 26, 2021, the City's Finance and Economic Resiliency Committee discussed the
substantive amendments contained in the Ordinance proposed for First Reading, and forwarded
it to the City Commission with a positive recommendation for First Reading. The Ordinance was
submitted and passed on First Reading by the Mayor and City Commission at the April 21, 2021
City Commission Meeting. It is submitted for second reading today.
ANALYSIS
The proposed change to Ordinance 2006-3505 would allow employees who retire with the City,
reject retiree health insurance, and thereafter are employed with organizations that provide
employer-sponsored healthcare coverage,to elect to come back to the City's Plan at a future date
and obtain the applicable City funding toward their healthcare coverage. The returning retiree
must demonstrate that there were no gaps in coverage upon their return to the City's Plan. If the
employee cannot demonstrate continuous unlapsed health insurance coverage since opting out,
they can join or rejoin the City Plan but not receive the City contribution toward the premiums.
The Administration looked at the group of new retirees for the calendar year of 2020. There was
a total of fifty-three (53) vested retirees that began their pension benefit in 2020; however, only
45% of them chose to enroll in the City's healthcare Plan. If we were to implement the proposed
change to the Ordinance-the remaining 55% of retirees who declined to enroll in the plan at the
outset of their retirement would be eligible to reenroll in the future with the applicable City subsidy
only if they are able to provide proof of continuous medical coverage for the entire period of time
following their retirement date. It is difficult to determine the actual fiscal impact of this proposed
change, mainly because we do not know the reasons why employees who are retirement eligible
age choose not to elect the City's Plan.
The Administration engaged the City's healthcare benefits consultant, Gallagher Benefits
Services, Inc.("GBS"),who has prepared a projected financial impact based on various scenarios.
When evaluating the data, GBS determined that currently a vast majority of employees retire prior
to age 60. The City has 200 actives between the ages of 55 and 59, but only 78 between 60 and
64. That information supported GBS's decision to use 55 and 58 as the "anchor" years for
assumed retirement.
The GBS analysis s sown below is the projected impact of allowing retirees to leave the City's
health plan at retirement and return later and still receive the City's subsidy. The analysis includes
the following key assumptions:
1. Average cost and contributions based on most recent GASB 75 valuation
2. Forty-five (45) eligible retirements per year
3. Annual medical inflation of 5%
Assumed Average Aqes Leaving/Returning to Plan
Age Leaving 55 58 58 55
Age Returning 65 65 62 62
Distribution 20% 30% 20% 30%
3
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Summary of Assumed Elections at Retirement
Decision Class Assumed% Impact to City
of Retirees
Would have stayed on the plan anyway and still 1 50% None
stay on the plan
Would have stayed on the plan but now leave 2 20% City saves cost while
and return for the subsidy retiree is not on plan
Would have left the plan and never come back 3 15% City pays cost of
— now come back for subsidy coverage after return
to plan
Would have left the plan and come back without 4 0% City pays cost of
subsidy—now get subsidy subsidy
Would have left the plan and never come back 5 15% None
and still do not come back
Projected Annual Impact to City:
Year Estimated
Savings/ (Cost)to
City
1 $100,476
2 $210,999
3 $332,324
4 $465,254
5 $546,528
6 $634,766
7 $730,462
8 $740,811
9 $750,369
10 $759,031
11 $732,845
12 $702,143
13 $666,539
14 $625,618
15 $578,940
16 $526,029
17 $466,380
18 $399,451
19 $324,664
20 $241,398
21 $148,995
22 $ 46,748
23 ($66,097)
24 ($190,342)
25 ($326,847)
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Caveat: These values are very sensitive to the assumptions used and even small changes in the
assumptions will cause material changes in the results. We are confident that the City would see
lower costs in early years but take on more expense in later years. Our best estimate is that the
early savings will more than offset later expense.
Based on the analysis completed by GBS, The Administration is comfortable in making an
amendment to the current Ordinance No. 2006-3505. The following changes are recommended
which will provide retired employees the flexibility to choose the best healthcare plan for
themselves and their families as well as to provide the City with the cost savings associated with
allowing retirees to opt out of the City's healthcare Plan:
1. Retired employees will be provided the opportunity to opt out of the City's group health
insurance plan and subsequently reenroll at a future date with the City's contribution toward
the cost of coverage only after submitting documented proof that demonstrates that they have
been continuously enrolled by another group health plan without a lapse in coverage for the
duration of time since they opted out. If the employee cannot demonstrate continuous
unlapsed health insurance coverage since opting out, they can join or rejoin the City Plan but
not receive the City contribution toward the premiums.
2. The above change should only be implemented to Unclassified or "Other' employees who
retire on or after the effective date,of the amendment and should remain a subject of collective
bargaining for any employees who are a part of a collective bargaining unit. Employees who
retired before the effective date of this Ordinance will still be subject to the prior rule, which is
now set forth in Sec. 78-81 (f).
Additionally, the Administration and the City Attorney's Office have cleaned up language in Code
sections 78-81 and 78-82 to remove references to City HMOs, because we currently do not offer
any HMO Plan to any employee. We used the term "city group health insurance plan" broadly
enough to encompass HMOs if the City should, at some point in the future, again elect to offer an
HMO Plan. Consistent with that cleanup, Sec. 78-81 was edited to redact any reference to
HMOs,3 and Sec. 78-82, which deals solely with HMO Plans, has been repealed entirely in our
draft Ordinance for Second Reading.
CONCLUSION
The City Attorney's Office and Administration recommends that the City Commission approve the
pr+::posed Ordinance amendments on Second Reading.
RAP/RR/ym
3 Three references to "HMO Plans" were inadvertently left in the First Reading draft of Sec. 78-
81. Those references have been removed from the proposed amended Ordinance on Second
Reading.
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