Message from Roberta Conroy
October 4, 2011
Dear LACERS Members,
At our September 27, 2011 meeting, three Active LACERS Members addressed our Board with respect to the retiree medical subsidy freeze for some Members. From these comments it was clear that our Members would like us to provide more information about LACERS’ view of these developments.
Currently, there is differing legal advice with respect to the vested nature of the subsidy increases. The City’s advice that the subsidy increases are not vested is contrary to the advice provided by outside counsel to the Los Angeles Fire and Police Pensions Plan (LAFPP) Board. Our outside fiduciary counsel has advised us that the LACERS Board may, but is not obligated to, get our own advice on the vested nature of the benefit, however we do continue to seek fiduciary advice on how to best proceed within the framework of our responsibilities. Our duty is only to deliver the benefits promised by the City, as employer, to its employees. The Board is obliged to take those promises as they are written unless and until they are declared unlawful by a court of law. This means that the LACERS Board and staff are legally required to administer the benefits as stated in the Los Angeles Administrative Code (LAAC), including the LAAC Sections (4.1103, 4.1106, and 4.1107) which now include language that freezes retiree medical subsidy benefits for certain Active Members. (Click here for LACERS administrative interpretation of the retiree medical subsidy benefit.)
LACERS Board, staff, and health and welfare consultant were able to negotiate excellent health premiums for calendar year 2012, including a zero percent increase in the Kaiser rate. Because the Kaiser rate did not increase, the retiree medical subsidy for 2012 did not increase. For this reason, most Members retiring after July 1, 2011 – even those presumably subject to the medical subsidy freeze – will not be impacted by the City Council imposed freeze in 2012.
One of the three Members who addressed our Board also asked if there has been any time when the maximum retiree medical subsidy has not provided for two-party Kaiser premium coverage. In the twelve-year history of LACERS administration of the retiree health program (the City’s Personnel Department administered the program prior to that time) the maximum subsidy has always covered the two-party Kaiser premium.
I want to thank the Members who addressed our Board at our September 27, 2011 meeting. We will continue to provide information regarding this very important topic. If you have additional questions, please feel free to send an email to firstname.lastname@example.org or call (800) 779-8328.
Roberta Conroy, Board President