MONTGOMERY, Ala. In a significant move, Montgomery Mayor Steven L. Reed has vetoed a City Council ordinance that sought to intervene in the management of the city’s supplemental health insurance program for retired Medicare-eligible employees. This decision comes amidst a complex backdrop of financial and healthcare considerations for the city’s retirees.
The Ordinance and its Implications
The City Council’s ordinance aimed to cancel the city’s contract with AMWINS Group Benefits, LLC, a decision that would have left retirees without supplemental coverage after December 31, 2023. This move was controversial, as it would have potentially resulted in the city being unable to revert to its previous, higher-cost plan until the end of the first quarter of 2024.
Mayor Reed’s Rationale for the Veto
Mayor Reed’s veto is rooted in both financial and healthcare concerns. By maintaining the coverage plan with AMWINS, which includes lower premiums, minimal or no copays, and reduced out-of-pocket expenses for retirees, the city stands to save at least $6 million. This amount would have otherwise been owed to providers for breach of contract, a cost not budgeted by the Council.
Moreover, the new plan with AMWINS, set to begin in January 2024, is projected to save the city approximately $1.92 million compared to the 2022–2023 charge rates, with retiree premium savings estimated at around $655,613.
The Context of Medicare and Supplemental Insurance
Medicare serves as the primary health insurance provider for Montgomery’s retirees aged 65 and above. However, it does not cover all expenses. Montgomery is one of only two cities among Alabama’s “Big Ten” that offers supplemental insurance coverage to retirees for additional costs, and it is the only city to offset coverage costs.
The Process Behind the AMWINS Contract
The contract with AMWINS was signed in September after extensive review, discussions with City Council members during the budgeting process, and consultations with representatives from the city’s retiree community. This included Lloyd Faulkner, president of the City of Montgomery Retirees Association.
The Impact on Retirees
The City Finance Director, collaborating with Mayor Reed, identified a supplemental benefit package that offers more options at a lower cost for retirees. This plan has been welcomed by many retirees, who have expressed gratitude for the savings it will bring, particularly in terms of prescription and treatment costs.
Looking Ahead
Mayor Reed emphasized the potential confusion and financial strain that the council’s action to cancel the AMWINS contract would have caused. His veto is a step towards ensuring stability and affordability in healthcare for Montgomery’s retired Medicare-eligible employees.
