Board discussed surviving-spouse medical coverage and interplay of Medicare and PEB benefits

At the Feb. 26 meeting the Law Enforcement Officers' and Fire Fighters' Plan 2 Retirement Board discussed questions about medical insurance for surviving spouses and the difference between coverage for surviving spouses and for catastrophically disabled retirees.

Steve, staff member, summarized the legislative history: an earlier bill that would have placed certain surviving spouses into the Public Employees Benefits Board (PEBB) was not enacted, and the board later recommended a different approach for catastrophic disability retirees. "At that time, PEB objected to including those retirees and their families in PEBB for a number of different reasons," Steve said. The board-endorsed compromise allowed catastrophic disability retirees to keep their own insurance or find other coverage that would then be reimbursed by the plan, rather than mandating inclusion in PEBB.

Steve told the board that one surviving spouse recently reached Medicare eligibility and was informed by PEBB that the spouse's plan was being moved to the PEBB Medicare plan. He noted that "Medicare premiums aren't paid by PEBB; they're paid by the retiree as a reduction out of their Social Security benefits," and that there is no reimbursement for that Medicare premium under the current arrangement.

Wolf, staff member, explained how coordination with Medicare can change net costs: "Even though there's a new cost paid to obtain Part B coverage, net net there's a reduction on the other side in the PEBB premium because they can coordinate benefits with Medicare where Medicare pays first and PEBB fills in what Medicare doesn't pay. So there is a net benefit to the retiree even though there's a new requirement to pay for something out of their pocket that they wouldn't have otherwise had to pay," he said. Steve and other staff recommended placing the topic on the board's interim work plan for the May/June planning period to allow staff time to develop options and any legislative language needed.

The board noted it had received a written comment from Renee Marziger on surviving-spouse medical insurance; staff distributed that comment to board members in advance of the meeting. Steve said any change to survivor or catastrophic disability medical coverage would require legislation.