As many private and public organizations are ditching health insurance programs that help their retirees bridge the gap between employment and Medicare, the city of Chattanooga is window-shopping for a better plan to cover more than 1,000 retirees older than 65.
For much of the private sector, offering medical benefits to retirees even up to age 65 is becoming a thing of the past.
In 2013, about 28 percent of companies with 200 or more workers offered retiree health benefits, according to a 2014 study by the Kaiser Family Foundation. That number was down from 66 percent in 1988, according to the study.
And some public institutions are backing away from retiree medical benefits too.
In November, Erlanger Health System -- the county's fourth-largest employer -- cut off all its retirement health care programs for about 160 retirees under the age of 65. The move is expected to save the hospital about $1.2 million a year.
Both the Chattanooga and the Hamilton County governments offer medical plans for long-serving employees between retirement and Medicare.
In October, County Commissioner Tim Boyd questioned the county's plan, which offers retirees with 30 years of service full health benefits with no personal contribution until they qualify for Medicare. Since July 2011, the county's plan has cost $4.7 million, county records show.
But the city is accepting medical benefit proposals for post-Medicare age retirees until Jan. 20. Madeline Green, the city's director of risk management and employee benefits, said Friday nothing is being cut -- the city is shopping for a better-quality plan for retirees at a better price.
"We are trying to benefit our retirees and find them a better option," Green said.
The city's "lifetime" insurance plan is for a certain number of employees who were employed at a certain time. The coverage is slowly being phased out as retirees die.
Employees who had 25 years of service, or were at least 62 years old with 10 consecutive years of service as of July 1, 2010, will get medical coverage for life on this plan, Green said.
That amounts to 990 retirees who have the option to stay on a self-insured PPO plan that acts as a Medicare supplement, or join a Medicare Advantage plan through BlueCross BlueShield of Tennessee.
Retirees with at least 25 years of active service have to contribute up to 1 1/2 times the amount active employees contribute to pay for premiums. Retirees who worked less than 25 years contribute more, Green said.
Another 67 city retirees are on an older legacy plan. Their premiums are set at $20 for individuals and $40 for families, Green said. The median age in that group is 82.
The cost of the city's current retiree benefits program was not immediately available Friday.
Brent Wick, the benefit adviser at Russ Blakely and Associates who helped write the request proposal for the city, said post-65 medical benefits are becoming incredibly rare.
Most companies and organizations are moving retired employees toward exchange plans made available through the Affordable Care Act, Wick said.
"The private sector has moved heavily that way, and the public sector is starting to move in that direction," he said.
Contact staff writer Louie Brogdon at lbrogdon@timesfreepress.com, @glbrogdoniv on Twitter or at 423-757-6481.