HomeMy WebLinkAboutTeamster retiree healtcare report �• J'' S 1 1. CITY OF LANSING
INTERNAL AUDITOR
124 W MICHIGAN AVE FL 10
LANSING MI 48933-1605
(517)483-4159
Fax(517)483-7630
cHIG
REPORT
DATE: September 11, 2014
TO: Denise Estee
FROM: Jim DeLine, Internal Auditor
RE: Charges to Teamster 580 Ref' s for Healthcare Coverage
CC: Council President A'Lynne Bole
City Council
Mayor Virg Bernero
City Clerk Chris Swope
City Attorney Janene McIntyre
I. Background / Research
Denise, on June 19, 2014 1 was visited by you and four other City retirees who had
retired at various times but were all former members of the Teamsters 580 CTP or
Supervisory bargaining units. They expressed frustration with, what appeared to them to
be, an inconsistent application of bargaining unit agreements related to having retirees
contribute to their healthcare coverage.
As you recall, your group had documents and anecdotal information gathered from the
Employees Retirement System board, the Office of the City Attorney, Labor Relations /
Human Resources, the Finance Department, and Teamster representatives. This report
is based on actual documents, many of which are attached. Documents cited but not
attached are available upon request. As you will recall, the group asked that you be the
contact for all correspondence related to the matter as I worked on the project, thus this
report is being sent to you for distribution as you see fit.
This report was prompted by that visit. As you can see, copies are also being supplied
to the City Council President, the City Council and the Mayor, as well as being placed
on file with the City Clerk and a copy to the City Attorney. It is not considered an audit
but simply a review of the research conducted.
Teamster 580 Collective Bargaining Agreements (CBAs):
February 1, 2000 — January 31 , 2003
Retirement Health Care Coverage "Complimentary Health Care Coverage. The
City will provide 100% paid complimentary health care coverage as the base plan ..."
Page 1 of 4
"Benefits and coverages under complimentary health care coverage shall not be
reduced from that provided in the base plan in effect."
February 1, 2003 — January 31, 2007
"Retirement Health Insurance for Defined Contribution Members Hired After
October 29, 1990" "Effective October 1, 2000, the City agrees to provide and pay one
hundred present (100%) of the premium (including dental insurance) for single, double,
or full family coverage (up to the appropriate premium under the base plan) ..."
February 1, 2007 — January 31 , 2011*
Tentative Agreement signed January 7, 2010
New CBA expiration date of January 31, 2012
Retirees contribute healthcare. It is capped at 1% of annual pension benefit. Paid
monthly. Capped at $200 / $500 / $650 annually.
CBA Modification*
Ratified by Teamsters June 23, 2011
New CBA expiration date of January 31, 2013
No language pertaining to retirees
February 1, 2013 — January 31, 2016*
Tentative Agreement signed May 12, 2014
Current employees' retiree health insurance: same as / changes with active
employees'
New hire retiree health insurance: defined contribution health care account
funded by the City at the rate of 4% of the employee's wages per year with portability
after a three year vesting period.
For employees already retired: Language clean-up only. "Bargaining agreement
language as pertains to current employees remains in the body of the bargaining
agreement. Historical language pertaining to retired employees will be placed in an
appendix to the bargaining agreement."
*Based on signed Tentative Agreements. Actual CBA not published.
City of Lansing Code of Ordinances. Chapter 292 — Employees' Retirement
System
A local ordinance exists related to employee healthcare (292.37C), note however it is
superseded by collective bargaining agreements and contains the caveat, "The
retirement health care benefits provided may be changed from time to time to be
consistent with health care plans available to active City employees in the bargaining
unit or employee group classification that the member was in at the time of his or her
retirement."
Correspondence authored by City of Lansing personnel
March 29, 2010
Page 2 of 4
In a memo to Teamster 580 retirees, Mark Colby (no title given) states, "As a Teamsters
580 retiree retiring February 2004 or after your health benefits are the same as active
teamsters 580 members and are changing as a result as (sic) recently negotiated
contract." Changes included initiation of premium sharing beginning March 31, 2010
with the cost not to exceed 1% of the retiree's monthly pension benefit. See attachment
A.
August 19, 2010
In a letter to Teamster 580 retiree Denise Estee, Susan Graham, Labor Relations
Manager, stated, "... we selected February 20, 2004 as the date to implement all of
these changes to retiree benefits because it was logical ..." See attachment B.
Information from Teamsters 580
A questionnaire from the office of the Internal Auditor dated July 22, 2014 (see
attachment C), was completed by the Teamster office and returned. See Attachment D.
According to Lynne Meade, President and Business Representative for Teamsters
Local 580 who completed the questionnaire, the City gives retiree healthcare to those
members of the union retiring prior to February 20, 2004 for no cost but charges
premium sharing to those who retired after that date. She states, this is done "for some
reason not known to me."
In answer to the question as to whether, within the two groups mentioned above, there
is any inconsistency in contribution scheme, she answered, "yes." Per Ms. Meade the
effective agreement with the City is to cap the cost of premium sharing at 1% of the
retiree's pension benefit with dollar caps equal to $125 / single coverage, $225 / double
coverage and $325 /family coverage. She was unable to document the perceived
inconsistency.
Information from City of Lansing Human Resources / Labor Relations.
The same July 25, 2014 questionnaire mentioned above was placed in the City of
Lansing mail receptacle for completion by the City's Human Resources Department.
The envelope had a US Postal Return Receipt Requested card attached, which was not
returned. On July 30, 2014 1 was doing volunteer work for the Lansing Jazz Festival and
HR Director Terri Taylor was present and acknowledged receipt of the request. The
questionnaire had a requested return date of August 8, 2014. Neither the questionnaire
nor any correspondence was received from City of Lansing Human Resources.
On August 14, 2014 a follow-up email was sent reminding the questionnaire recipients
of the need for their responses in order to complete this report. See Attachment E.
Again, neither the questionnaire nor any correspondence was received from City of
Lansing Human Resources.
On August 28, 2014 a final reminder was sent to Director Terri Taylor requesting either
the questionnaire be returned or, at her option, a statement be provided for this report.
Page 3 of 4
See Attachment F. Again, neither the questionnaire nor any correspondence was
received as a result of this correspondence.
II. Analysis
A detailed analysis of rates charged to Teamster retirees to determine whether there is
any inconsistency in application of charges is not possible due to the lack of cooperation
from the City's Human Resources Department. Repeated requests from the office of the
Internal Auditor were ignored. Failure to provide the financial and other information
requested by the Internal Auditor is in violation of the City Charter.
Even if the Human Resources Department had answered our request to provide
documentation on contribution consistency, the amount allowed to be charged is also
not clear. The union's statement of permissible caps of $125 / $225 / $325 are
inconsistent with the signed January 7, 2010 agreement. It could also be argued that
any collective bargaining agreement replaces and supersedes previous ones, which
would permit premium sharing be charged to all Teamster retirees with no one receiving
it for free.
III. Recommendation
It is clear that between retirees, the union and the City, there is no agreed-upon
interpretation as to the contractual obligation of individual retirees to contribute to
healthcare premium sharing. It recommended that a legal interpretation be requested
funded jointly by the City and the union. An audit of current rates charged to Teamster
retirees should also be conducted simultaneously so that consistency can be
determined and rates can be modified, if necessary to meet the legal opinion once
accepted. It is recommended that all Teamster retirees be included in the audit as
accusations of inconsistent charges even after retirees are folded into the Federal
Medicare program have been made.
Page 4 of 4
FINANCE DEPARTMENT
124 W. Michigan Avenue, 8t' floor
Lansing, Michigan 48933-1603
(517) 483-4508
fir\c1�G� http://www.lansingmi.gov/finance
Virg Bernero, Mayor
TO: ALL RETIRED MEMBERS OF TEAMSTERS LOCAL 580
Supervisory and CTP retired February 2004 or after.
FROM: Mark Colby
DATE: March 29, 2010
RE: BENEFIT CHANGES
The purpose of this memo is to inform you of changes in insurance benefits.
As a Teamsters 580 retiree retiring February of 2004 or after your health benefits are the
same as active teamsters 580 members and are changing as a result as recently
negotiated contract.
The following items have changed as a result of the Teamsters 580 February 1,2007 thru
January 31,2012 contract:
MEDICAL INSURANCE CHANGES:
Effective May 1, 2010
Blue Care Network will no longer be an option to retirees or active employee
Plan changes in both Blue Cross Community Blue PPO and Physician's Health Plan
include:
$20 Office/Urgent Care Visit co-pay
$50 Emergency room co-pay
Mail order prescription co-pay of 90 days for 2 co-pays
Retail of 90 days for 2 co-pays
Mandatory Generic prescription fill that means that unless prior approval is
received from the carrier by your physician, the member must accept the
generic brand or pay the brand name co-pay PLUS the difference in cost
between the generic and brand name drug cost.
Attachment A - Page 1 of 2
Prescription co-pays will change to:
BCBS PPO $10 generic, $20 name brand, $40 non-formulary drugs
PHP $15 generic, $25 name brand, $50 non-formulary drugs
To access formulary lists visit the web sites www.bcbsm.com or www.phpmm.com.
City Teamsters 580 retirees that are married to City retirees are entitled to one contract
only and are not entitled to opt out payments.
Teamster 580 Retirees will participate in a premium share beginning 03/31/2010. The
monthly maximum amounts are as follows:
BCBS PPO Single $16.66 Double $41.66 Family $54.16
PHP Single $16.66 Double $41.66 Family $54.16
The contract does put a cap on the amount of premium share a retiree will pay. The retiree
pays the lower of the above amount, for the coverage selected, or 1% of their monthly
pension benefit.
If 1% of your monthly pension benefit is less that these amounts, for the coverage you
have selected, then we have deducted this lower amount.
If you have questions please feel free to call Esther Croff at (517)483-4518 or Mark Colby
at (517) 483-4517.
Please be advised that this is merely a summary of your changes related to insurances.
This summary does not alter or change the provisions of the Teamsters - Local 580
Bargaining Agreement or City policies.
Attachment A - Page 2 of 2
s 1 CITY OF LANSING
v DEPARTMENT OF HUMAN RESOURCES
124 W.Michigan Ave Benefits/Classifications (517)483-4004(VoicerMD)
4th Floor,City Hall Labor Relations/Recruitment (517)483-4490(Jobs Hotline)
Lansing,Michigan 48933 Safety/Selection/Training (517)483-6064(General Fax)
�)1 1 CA i Worker's Compensation www.lansingmi.gov(Website)
Virg Bernero, Mayor
August 19, 2010
Denise Estee
2923 Greenbriar Avenue
Lansing,MI 48912
Re: Teamster Local 580 Clerical,Technical,Professional Unit (Retiree Healthcare Benefits)
Dear Ms. Estee,
This letter is in response to your correspondence dated April 14, 2010 regarding your Teamster Local
580 Clerical,Technical, Professional Unit retiree healthcare benefits. I apologize for the delay in responding fo
your inquiry and trust that this letter is responsive to you inquiry after researching the issue. In your
correspondence, you inquire why February 20, 2004 was selected as the date to make effective the provision
that retirees follow active employees with healthcare benefit changes.
We selected retirees on or after February 20,2004 as the date to go back to because the 20th of the
month of February began our new plan year at that time and this was the first February 20th that occurred after
ratification of the 2003 - 2007 agreement. This same agreement provided that no changes would be made to
current retirees until February 20, 2006.However, the changes were not made due to an oversight.
Subsequently,negotiations for the 2007—2012 agreement resulted in changed in healthcare benefits and
the changes that had inadvertently not been made previously were made at that time. So,we made them during
the implementation of the changes resulting from negotiation of the most recent contract ratified in January
_ 2010. The changes were effective May 1, 2010 because that was the soonest BCBSM could make the changes
effective. Simply put,we selected February 20, 2004 as the date to implement all of these changes to retiree
benefits because it was logical to select that date since other changes were required as well.
Thank you for your inquiry. If you have further questions or require additional information,please do
not hesitate to contact me directly at(517) 483-4016.
Sincere,
le�ll 2 4e9
Susan C. Graham
Labor Relations Manager
Cc: Jerry Ambrose
Terri Singleton
Mark Colby
Lisa Thelen
"Equal Opportunity Employer" Attachment B - Page 1 of 1
` PN S I `�c CITY OF LANSING
INTERNAL AUDITOR
124 W MICHIGAN AVE FL 10
LANSING MI 48933-1605
(517)483-4159
Fax(517)483-7630
rcHIG
TEAMSTERS RETIREE HEALTHCARE QUESTIONNAIRE
Questionnaire Regarding Charges to Teamster 580 Retirees for Healthcare Coverage
July 22, 2014
The office of the Internal Auditor is attempting to establish whether the City is being
consistent in its healthcare options offered to, and the contribution levels required of,
retirees who retired as members of the Teamsters 580 CTP or Supervisory bargaining
units in groups as defined by their dates of retirement from the City.
I have reviewed past Collective Bargaining Unit Agreements (CBAs) and now need
information from those who negotiated and are responsible for implementing them.
Please complete this questionnaire and return to me by August 8, 2014. Upon request,
this questionnaire will be provided to you as a Microsoft Word document. If you have
any questions, please do not hesitate to contact me. Thank you.
Jim DeLine
Internal Auditor
Person completing questionnaire
Date completed
1. Do Teamster retirees consist of groups defined by retirement date which have
differing healthcare options and contribution requirements?
2. How many groups are there?
3. What are the parameters that separate each group?
4. City Human Resources Only: Please provide plan options and contribution
requirements for each group of Teamster retirees.
Page 1 of 2
Attachment C - Page 1 of 2
5. Is grouping a set of retirees based on retirement date appropriate or should all
Teamster retirees have the same options at the same contribution rate
regardless of retirement date?
6. On what do you base your answer to question 5?
7. Within a group do you believe there is any inconsistency in contribution scheme?
8. Please substantiate / document your answer to question 7.
Thank you for your assistance.
Page 2 of 2
Attachment C - Page 2 of 2
TEAMSTERS & CHAUFFEURS
LANSING, MICHIGAN
LOCAL UNION NO. 580 P
- Affiliated with the International Brotherhood of Teamsters =��t►+Eatoo c�
t
o �
MIKE PARKER ? ;
Secretary-Treasurer
Principal Officer
Lynne Meade
President
August 6, 2014
City of Lansing Internal Auditor
124 West Michigan Avenue
10`h Floor,City Hall
Lansing, Michigan 48933-1605
R.E.,Questionnaire Regarding Charges to Teamster 580 Retirees for Healthcare Coverage.
Person completing questionnaire: Lynne Meade
Date completed: August 6,2014.
1. Do Teamster retirees consist of groups defined by retirement date which have differing
healthcare options and contribution requirements? Answer: Yes. For some reason not known
to me,we have retirees that have been separated by the City. There are those retirees who
retired before February 20,2004 who pay nothing towards their healthcare. There are those
retirees who retired after February 20, 2004 who are charged for their healthcare.
2. How many groups are there? Answer: Two(2)groups that are further broken down into eight
(8)separate groups by the City according to the healthcare coverage that they are able to
choose.
3. What are the parameters that separate each group? Answer: Date of retirement.
4. N/A
5. Is grouping a set of retirees based on retirement date appropriate or should all Teamster
retirees have the same options at the same contribution rate regardless of retirement date?
Answer: For a time,Teamster retirees upon retirement where given a certain healthcare
"package" at no cost. If this was the case when those individuals retired,then the City should
5800 Executive Dr., P.O.Box 25096, Lansing, MI 48909-5096• (517) 887-2944• FAX (517) 887-3069 ®
Attachment D - Page 1 of 2
honor this agreement with the retiree. Both collective bargaining agreements have language
regarding retirement health care coverage for those who are eligible upon retirement.
6. On what do you base your answer to question 5? Answer: Teamster collective bargaining
agreements as well as memorandums of understanding between the City of Lansing and
Teamsters Local 580.
7. Within a group do you believe there is any inconsistency in contribution scheme? Yes.
8. Please substantiate/document your answer to question 7. Representation here at Teamsters
Local 580 has never really understood the February 20, 2004 date of when the complimentary
health care coverage was no longer offered for any coverage other than the designated "base"
plan. When the agreement was made with the City to"cap"the cost of the health care at 1%of
the retirees pension benefit,with the annual dollar amount cap at, $125 for single coverage,
$225 for double coverage and $325 for family coverage,this language is still in the agreements
today. No changes to this language or any retirement health care language has been made.
New language regarding employees hired after the ratification of the 2013—2016 bargaining
agreements was made for retiree healthcare only.
Lynne Meade
President, Business Representative
Teamsters Local 580, Lansing, Mi
Attachment D - Page 2 of 2
DeLine, Jim
From: DeLine, Jim
Sent: Thursday, August 14, 2014 3:10 PM
To: Taylor, Terri; Lynne Meade
Subject: Need questionnaires back
Lynne and Terri:
A couple weeks ago I sent you questionnaires related to retiree healthcare charges with a request
that they be returned to me Friday, August 8. 1 would like to wrap up this report in the next week or
so. Can we set a time for me to stop by and pick up the questionnaire from you? Once I go over each
of them, I anticipate that I will have some follow-up questions.
Thank you for your cooperation.
,f
Jim DeLine
Jim.DeLine(a1lansingmi.gov
Internal Auditor
Voice: (517) 483-4159
Fax: (517) 483-7630
1 Attachment E - Page 1 of 1
DeLine, Jim
From: DeLine,Jim
Sent: Thursday, August 28, 2014 2:37 PM
To: Taylor, Terri
Subject: Retirement Questionnaire
Terri: I hope your recruitment drive is going well.
On July 25, 2014 1 sent you a questionnaire regarding the premium share amounts being charged to
Teamster retirees. I requested it be returned by August 8, 2014. On August 14, 2014 1 sent a
reminder noting that I would be writing my report soon. Next week I will be writing my report. If you
will not be responding to my request for financial and other records which were requested in the
questionnaire, you are invited to provide a statement for inclusion in my report.
�4 �f
Jim DeLine
Jim.DeLine(a)lansingmi.gov
Internal Auditor
Voice: (517) 483-4159
Fax: (517) 483-7630
}
Attachment F - Page 1 of 1
i