STUMP » Articles » Public Pensions Followup: Public Employees and Medicare » 5 October 2014, 09:43

In the prior post about Chicago and its retiree benefits, I wrote the following:

Two items: they’re getting rid of the city subsidy for retiree health insurance, meaning the retirees have to go on Obamacare (if under 65) or Medicare (if over), I suppose. If Chicago is successful in pushing its retirees… and then employees… on federal healthcare subsidies, it does fix the acuteness of Chicago’s problem.

Second item: people who retired before August 1989 retired over 25 years ago. Shouldn’t most of them be on Medicare already, even if they retired at an insanely early age? Kind of curious what kind of coverage is being subsidized for those over 65. I’ll have to find out later.

Thanks to Tia Goss Sawhney as well as a few other people to let me know that public employees are not necessarily covered by Medicare. I knew they weren’t necessarily covered by Social Security (which causes its own problems with unraveling public pensions), or when they are there can be nasty windfall clawbacks — but I wasn’t sure about the Medicare situation.

First, straight from the Social Security Administration:

Except for workers specifically excluded by law, employees hired after March 31, 1986, also have Medicare protection. States also may obtain Medicare coverage for workers not covered for Social Security who have been continuously employed by the same state or local governmental employer since before April 1, 1986.

Those workers covered for Social Security under a Section 218 agreement are
automatically covered for Medicare. State and local government employees who
are covered by Social Security and Medicare pay into these programs and have the same rights as private sector workers.

So, two items: those who retired before 1986 from Chicago would not have been covered by Medicare. That’s clear enough.

So I then decided to check out official sites for Chicago retirees. Here’s one: Laborers’ and Retirement Board Employees Annuity and Benefit Fund of Chicago

They have a page regarding Medicare status:

It is very important that both the Fund and the City Benefits Management Office (BMO) know your (and/or your covered spouse’s) Medicare status.

Your health insurance premium is deducted from your monthly annuity from the Fund and paid to the BMO. Once the BMO has received your payment, Blue Cross and Blue Shield is notified so that your claims can be paid correctly.

Your deductions for health insurance will be less if you are enrolled in Medicare parts A & B. Please be sure to provide a copy of your (or your spouse’s) Medicare card to the Fund and the BMO when you become Medicare eligible.

Also, it is very important that you cooperate with the BMO if contacted about Medicare Part D coverage. Medicare advises the BMO if you try to enroll in a Part D plan or if you have successfully enrolled in a Part D plan. Both Medicare and the BMO have to maintain the same information in order for your prescription drug claims to be processed correctly. If you have enrolled in a Part D plan, your Plan (the City of Chicago Annuitant Healthcare Coverage for participants eligible for Medicare) pays claims after your Part D plan.

Remember, you do not need to sign up for a Part D prescription drug plan as you already have prescription drug coverage through the City plan.

So it sounds like a lot of the Chicago retirees aren’t actually Medicare eligible. Pretty much all of them who had a work start date before 1986 would not have Medicare coverage. That’s going to be a lot of the current retirees.

(Separately, couldn’t they make a cleaner PDF of rates than this?)

Here is something clearer about the retiree health coverage changes, which covers the impact for those on Medicare and those not.

So even when people are on Medicare, they do get supplemental coverage (which has to be coordinated with Medicare coverage, which is not unique to public retirees — even some private employers have retiree coverage that works similarly. Medicare doesn’t cover everything, even if you do parts A, B, and D.)

So anyway, just as public employees not being eligible for Social Security causes some problems when trying to reform pensions for those already retired, some public employees are not Medicare-eligible, which also creates problems.

Something to keep in mind.