New York City Has 25 Days to Settle Retirees’ Switch to Privatized Insurance, Arbitrator Rules

The ruling puts pressure on the city to finalize a Medicare Advantage plan for a quarter million retirees — and may lead to the elimination of Senior Care.

Sam Mellins   ·   December 15, 2022
Retirees protested the planned shift in their healthcare outside City Hall last year. | Sam Mellins

This article was published in partnership with THE CITY.

AN ARBITRATOR’S RULING Thursday cleared the way for New York City to switch over 250,000 retired city workers and their dependents to privatized health insurance plans.

The move, a long-sought goal under both the Adams and de Blasio administrations, would take the retirees off of their existing Medicare plans, for which New York City currently provides supplemental benefits free of charge.

Arbitrator Martin Scheinman wrote that the new plan — which has yet to be finalized — must be negotiated within 25 days, setting a deadline of January 9.

After the shift, New York City retirees will receive coverage from health insurance giant Aetna through Medicare Advantage, a program that allows the federal government to contract with private insurance companies in place of Medicare. With the change, the city will eliminate its current responsibility to provide supplemental coverage, saving an estimated $600 million per year.

The savings would go to a cash fund jointly controlled by the city and the unions.

Retirees have voiced opposition to the switch since New York Focus and THE CITY first revealed the plan in April 2021, arguing that it could leave them with smaller networks and greater out-of-pocket costs. City retirees contend that they worked for these benefits during their careers — some spanning decades — and say they are entitled to maintain them now.

Angry retirees formed an organization in opposition to the switch and sued to block it last year, resulting in an October 2021 ruling that put the effort on hold while the case was being litigated.

“Unions are supposed to protect retired labor. Sadly those days are over,” wrote Marianne Pizzitola, president of the New York City Organization of Public Service Retirees, the group that assembled against the plan, in a statement to New York Focus and THE CITY.

In March, a judge ruled that the New York City charter barred the city from charging retirees to maintain their current insurance, which most receive through a city-funded plan known as Senior Care. Under the first plan proposed for the shift, retirees could have chosen to opt out of Medicare Advantage and maintain their Senior Care for $191 per month.

By allowing retirees to opt out for free, the March ruling placed the savings that the city hoped to get at risk, so Mayor Eric Adams and the unions pushed the City Council to change the charter to allow the city to charge retirees for Senior Care. The council refused.

The March ruling said that the city could also choose to eliminate Senior Care altogether. Scheinman’s decision from Thursday concurred: If the council does not change the charter within 45 days to allow the city to charge for Senior Care, it will be eliminated.

“We are not moving forward unless everybody has the rights and benefits they currently have and additional ones,” said Michael Mulgrew, president of the United Federation of Teachers and vice chair of the Municipal Labor Committee, a coalition of city unions that has supported the switch. “I do hope that the City Council acts because I want to have the option to offer our retirees Senior Care.”

In October, the New York Times found that every year, tens of thousands of people enrolled in Medicare Advantage plans nationally are denied coverage for needed medical care that traditional Medicare would likely have covered.

Mulgrew said that he’s aware of the problems with some Medicare Advantage plans, but he’s working to ensure that the plan maintains all the benefits that retirees currently have and covers things that their current insurance doesn’t, like transportation to and from some medical appointments, and coverage outside the United States.

Pizzitola was less convinced. “If the City seeks to violate Retirees’ rights again, Retirees will once again have to seek judicial intervention to protect their healthcare rights,” she wrote.

Scheinman ruled that if the city doesn’t achieve the desired savings through Medicare Advantage, it will need to seek other sources, such as imposing insurance premiums on active employees, who currently receive premium-free insurance.

Mulgrew said this option is off the table. “I’m never going to impose premiums on active city workers. I’ve been fighting for eight years to not do that,” he said.

The offices of Mayor Eric Adams and City Council Speaker Adrienne Adams did not respond to requests for comment.

In a statement, Aetna spokesperson Rose Miller wrote: “Aetna looks forward to working collaboratively with the City of New York over the next 25 days to negotiate a contract that provides high-quality, convenient access to care for retirees who have devoted their careers to serving New Yorkers.”

Sam Mellins is senior reporter at New York Focus, which he has been a part of since launch day. His reporting has also appeared in The San Francisco Chronicle, The Intercept, THE CITY, and The Nation. 
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