September 23, 2004
Dear Welfare Fund Participant:
Throughout the years, the Trustees of the District Council Iron Workers Welfare Fund of Northern New Jersey have worked hard to provide you and your family with generous health care benefits, benefits that make it possible for you to take proper care of yourself and your dependents. As health care costs have risen in recent years – the result of increased use of expensive medical technology, higher spending for prescription drugs, and the aging of the Baby Boom generation, among other factors – we have held the line against passing these cost increases on to participants.
However, faced with a cost increase of over 13% in fiscal 2004, projected double digit percentage increases in fiscal 2005 and 2006, and lower contribution income due to declining hours worked, the Fund cannot continue to maintain the current benefit program and retiree subsidy as is. Left unchecked, rising costs will lead to further operating deficits and further weaken the financial stability of the Fund. We must take action immediately to ensure the future of the Fund.
Coverage Changes
We will make the following coverage changes effective January 1, 2005:
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ACTIVE PARTICIPANTS
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RETIRED PARTICIPANTS
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· Office visit copays will increase from $10 to $25.
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· Office visit copays will increase from $10 to $25 under both the POS and PPO plans.
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· Out-of-Network coinsurance will increase to 20% for all services (up from 5% for facility expenses and 15% for all other eligible expenses).
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· The Out-of-Network deductible will increase from $300 to $500 per person. For family coverage, the deductible will increase from $800 to $1,000 per family.
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· There will be a $50 copay for emergency room visits (the copay will be waived if the patient is admitted to the hospital from the emergency room).
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· The emergency room copay will increase from $35 to $50 (the copay will be waived if the patient is admitted to the hospital from the emergency room).
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Contribution Changes for Current Retirees
In addition, effective January 1, 2005, monthly contributions for current retirees – that is, those who retire before January 1, 2005, and elect to continue coverage – will be based on your age at retirement and depend on whether you have individual or family coverage, and will increase as follows:
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AGE AT RETIREMENT
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MONTHLY RETIREE CONTRIBUTIONS FOR CURRENT RETIREES
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Individual
(for single retirees and surviving spouses)
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Family
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52, 53, 54
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$400
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$500
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55, 56, 57
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$360
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$450
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58, 59, 60
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$320
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$400
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61, 62, 63, 64
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$240
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$300
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Enrolled in Medicare
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10% of monthly pension amount, subject to a $50 minimum and a $200 maximum
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15% of monthly pension amount, subject to a $75 minimum and a $300 maximum
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Your age-based contribution will stay in effect until you reach age 65 and enroll in Medicare. Then, it will be reduced to the “Enrolled in Medicare” amount. For example, if you retired two years ago at age 57 and you currently pay $350 a month for coverage, starting January 1 you would pay $360 a month if you’re single or $450 a month if you’re married. In other words, you’d pay the rate that applies to an age-57 retiree, even though you’ll be 59 when the rate goes into effect. Then, when you reach age 65 in six years and enroll in Medicare, your contribution will be reduced to 10% (single) or 15% (married) of your monthly pension amount, subject to the minimum and maximum amounts shown above.
Contribution Changes for Future Retirees
For members who retire on or after January 1, 2005, and elect coverage, the monthly contributions also will be based on your age at retirement and will depend on whether you have individual or family coverage, as follows:
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AGE AT RETIREMENT
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MONTHLY RETIREE CONTRIBUTIONS FOR FUTURE RETIREES
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Individual
(for single retirees and surviving spouses)
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Family
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52 through 59
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$400
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$600
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60 through 64
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$300
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$500
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Enrolled in Medicare
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$200
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$400
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Your age-based contribution will stay in effect until you reach age 65 and enroll in Medicare. Then, it will be reduced to the “Enrolled in Medicare” amount. For example, if you retire on or after January 1, 2005 and you’re 57 years old and single, you would pay $400 a month until you reach age 65 and enroll in Medicare, and $200 a month thereafter. If you’re married, your monthly contribution requirement would be $600 until you reach age 65 and enroll in Medicare, and $400 a month thereafter.
Taking Action Now to Ensure Our Future
We do not make these changes lightly, especially where our retirees are concerned. It has been seven years since retiree contributions were last adjusted, and we would be happy if we could wait another seven years before changing them again. Unfortunately, the facts of our financial position due to rising costs, leave no time for delay.
As Trustees, we are committed to both your current and future well-being. We strive to achieve the best possible balance between what you can afford now and what’s necessary to ensure that the Fund will continue to be there for you in the future. The changes we are adopting as of the first of the year are made with this balance in mind. We are confident that the steps we are taking now will help us preserve the Welfare Fund for the future – your future. However, the adequacy of these rates will continue to be reviewed annually and, if necessary are subject to change at the discretion of the Trustees’.
Fraternally yours,
The Board of Trustees
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