Newark vows to reimburse retirees after health care debacle

NEWARK — Two weeks after an uproar unfurled at City Hall over Newark’s transition of employees to a new health benefits plan, questions swirled over why it was taking so long to address a key concern – retirees facing steeper prescription medication costs.

Business Administrator Jack Kelly assured the City Council on Tuesday that former employees affected by the change would be reimbursed for those costs through a debit card-like program. 

“We plan on keeping our promises that we made to our retirees,” Kelly said. He added that the council will vote on contracting New York-based The Difference Card to administer the cards and reimbursements on Aug. 22. 

“Yet again this is coming late we’re not going to have time to fully vet the vendor,” said Central Ward Councilwoman Gayle Chaneyfield-Jenkins, who has been critical of changes to the city’s health insurance since January. “The question still remains — how are we going to fix it and when are we going to fix it because there are people whose lives are on the line.”

It won’t just be up to the council to approve the debit cards. According to an Aug. 4 letter from the state to the city obtained by NJ Advance Media last week, should Newark want to offer a reimbursement fund to employees or retirees, “a request for approval must be discussed” with the Division of Pension and Benefits.

The city submitted that request on Aug. 8 but has not heard back. The state did not respond to repeated requests for comment on the issue. 

“On the city end, that should have been planned out a little bit in advance and ready to roll out Aug. 1,” said Chuck West, president of the Newark Firemen’s Union. “There are a lot people being damaged by it.”

“It took them eight months to get permission? They knew this was going to happen,” said Anthony Tarantino, president of Newark Fire Officers. 

The City Council approved moving to the state’s health benefits plan as a cost-cutting measure in January after proposals by the administration to hire a Jersey City-based broker to transition to a self-insured health care failed to pass. 

Kelly acknowledged the city was “a little bit short-sighted” in the move.

“We should have had those cards sooner,” he said. 

Under his proposal, retirees will be given a “difference card” to cover any cost above what retired employees contractually must pay for their prescriptions — no more than $1.50 or $5 for former public safety workers. 

Retirees, who were switched to a new prescription plan, will use the cards to pay for a majority of the cost. The remaining balance — slightly higher costs for brand name medications — will be paid out of pocket and reimbursed by the company.

“Most of the co-pay will be adjudicated right at the time (of purchase),” Kelly said. “For the balance that’s left over, they will be mailed a check.” 

On Aug. 1, the city transitioned its current and retired employees to the state’s health benefits plan — prompting immediate criticism as retirees complained of gaps in their coverage and drastic increases to their prescription co-pays.

One retired police officer previously told NJ Advance Media he went to pick up his wife’s rheumatoid arthritis medication for which he usually pays $1.50 and was charged $623. He left the prescription at the counter. 

Kelly said the city was also planning on sending out another mailing to all retirees for those who may not know about the new health plan.

“We are trying to do our best,” he said. 

Cost savings questioned

Mayor Ras Baraka also addressed the council on Tuesday, reiterating his support of moving to the state’s plan.

“One way or another (the retirees) are going to be reimbursed,” he said, adding that the reimbursement costs, paid by the city, would not cut into the $13 million Newark expects to save in the switch. Current employees maintained their prescription plan, only retirees changed plans. 

“We’re always going to save money in the direction that we’re going,” Baraka said. 

Tarantino, however, questioned those numbers and said the health care changes would not save money but instead defer a $13 million payment into the 2018 budget. 

Baraka maintained moving to the state health plan was allowing the city to hire more police officers and plug its budget deficit.

“We have to do something different here in Newark … that does not drown us all in providing health care to all of our employees,” he said. “We’re going to move into self-insurance, fighting over a broker is what caused us to waste time.”

Karen Yi may be reached at Follow her on Twitter at @karen_yi or on Facebook



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