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Section 18 Election

Section 18 Election. 2006 Wellesley Town Meeting. 600%. 500%. 400%. Group Insurance Budget Growth (%). 300%. 200%. 100%. 0%. % Growth - Group Insurance Budget. Growth in Group Insurance. $12. $10. $8. $6. Group Insurance Budget ($ Millions). $4. $2. $-. 1990. 1991. 1992.

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Section 18 Election

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  1. Section 18 Election 2006 Wellesley Town Meeting

  2. 600% 500% 400% Group Insurance Budget Growth (%) 300% 200% 100% 0% % Growth - Group Insurance Budget Growth in Group Insurance $12 $10 $8 $6 Group Insurance Budget ($ Millions) $4 $2 $- 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total Group Insurance Budget

  3. Year-Over-Year % Growth Group Health Insurance

  4. Growth in Health Insurance as % of Prop 2 ½ Revenue Increase

  5. Chapter 32B • Basic program of health insurance (1965) • Optional provisions adopted • Indemnity Plans • HMO Plans • Retiree Coverage • Collective Bargaining Issues

  6. Wellesley vs. Peer CommunitiesTown Cost * Pays 50% of Part B premium ** No subsidy for Part B premium

  7. Coverage Eligibility • Active Employee: Any non‑seasonal employee who regularly works 20 or more hours/week • Retiree: Any employee with 10 years of full-time equivalent service

  8. Employees/Retirees Receiving Health Benefits – 1/1/06

  9. What Have We Done? • West Suburban Health Group • Wellness Initiatives • $600,000 OPEB Appropriation • Healthcare Working Group

  10. Section 18 Election • Vote by Town Meeting • Medicare eligible retirees required to enroll in Medicare Supplement Plans • Plans must be of “comparable actuarial value”

  11. Medicare Insurance • Part A: Coverage of hospitalization & hospice care • Part B: Coverage of physician services and outpatient care • Supplement Fills in gaps in coverage gaps & provides Plans: prescription drugs

  12. Cost ShiftingFederal Government Medicare Insurance • Part A: Coverage of hospitalization & hospice care

  13. Cost ShiftingIndividual Plan Black = Benefit Red = Cost

  14. Cost ShiftingBoth Spouses over 65 Black = Benefit Red = Cost

  15. Selectmen Vote If Town Meeting accepts Section 18, the Board of Selectmen directs the staff in its implementation of Section 18 to grandfather those retirees who are age 65 on or before July 1, 2006 and who have retired. March 21, 2006

  16. Retirees Affected by Election

  17. Retirees/Employees Affected by Election

  18. Benefits to Town • Immediate Impact/OPEB Liability: $8M↓ • Future Savings • Retirees under age 65 • Active Employees • Active Plan Premium Savings • Trend in WSHG and neighboring towns

  19. Section 18 AdoptionWSHG Towns

  20. Other Towns

  21. Future Options • Legislative changes • Wellness initiatives • Contract negotiations • OPEB funding • Enrollment growth control • Board education on costs of hiring practices

  22. Good News! People are living longer than ever! Bad news – we don’t get to choose which people.

  23. OPEB Funding Programwithout Section 18 election 101M 56M

  24. OPEB Funding Programwith Section 18 election 101M 93M 56M 56M

  25. National Healthcare Expenditures as % of GDP $ Billons Healthcare as % of GDP

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