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Board directs actuary to model equalizing retiree rate ratios, citing excise-tax risk and potential impact on dependents
Summary
After a lengthy debate, the Health Service System board instructed its actuary to model three options — status quo, immediate equalization and a three-year phase-in — for equalizing rate relativities for early retirees, to assess exposure to a future federal excise tax and the cost impact on members with dependents.
The Health Service System board on Thursday instructed its actuary to prepare detailed scenarios showing how equalizing "rate relativities" — the formulas that determine retiree-only, retiree-plus-one and retiree-plus-two premiums — would affect members and the system's exposure to a future federal excise ("Cadillac") tax.
Board members and Aon Hewitt consultants said the current structure for Kaiser and Blue Shield early-retiree tiers departs from longstanding industry ratios and may accelerate excise-tax exposure for some groups. Aon presented three modeling options for the board to consider: maintaining the status quo, applying immediate equalization across all members, or phasing…
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