RHC Tier 2

Los Angeles County Retiree Healthcare –Tier 2

On June 17, 2014, the Los Angeles County Board of Supervisors (County) authorized a new retiree health insurance program for new County employees who are hired after June 30, 2014 and are eligible for LACERA membership.¹ The program, titled the Los Angeles County Retiree Healthcare Benefits Program – Tier 2 (Tier 2), offers benefits covering hospital services, medical services, and dental/vision services to County retirees and their eligible dependents. Retiree Healthcare Benefits are not changing for current active, deferred, and retired members, and their eligible survivors.

Basic Tier 2 Provisions:

• County retiree medical and dental/vision subsidy applies to retiree-only coverage.
• Medicare-eligible retirees and eligible dependents must enroll in Medicare Parts A and B and in a corresponding Medicare health plan, such as Medicare Advantage Prescription Drug Plan (MA-PD) or Medicare Supplement Plan.
• Retiree and his/her eligible dependents must be enrolled in the same medical plan, unless some, but not all family members are Medicare-eligible. In such case, the Medicare-eligible individuals must enroll in a Medicare plan and non-Medicare-eligible individuals must enroll in the corresponding non-Medicare health plan.

County Retiree Healthcare Subsidy: How It Works

As a LACERA member, you earn service credit for each payroll period of County employment in which you make a retirement contribution. A LACERA member who retires with at least ten years of County service credit is eligible for the County Retiree Healthcare Subsidy.²

The County subsidy is based on retiree-only coverage, regardless of whether the retiree includes an eligible dependent(s) on his or her healthcare plan. Subsidy percentages apply to the monthly premiums on the retiree's selected medical and/or dental/vision plans or the benchmark plan(s) premium, whichever is less, up to a maximum of 100 percent for a member with 25 years of service credit. Upon the retiree's death, the subsidy extends to the retiree's survivor; eligibility requirements apply.³

Benchmark Plans:

• Medicare-ineligible retirees – Anthem Blue Cross I & II
• Medicare-eligible retirees – Anthem Blue Cross III
• Dental/vision – Cigna Dental Indemnity Plan

We've created three hypothetical examples to illustrate how the subsidy works. In Example I, a retiree with 15 years of service credit has selected a benchmark plan for him/herself. Based on the 60 percent subsidy, the retiree pays a monthly premium of $360. Without the $540 benchmark subsidy, the retiree's premium would be $900.

Effect of Subsidy on Retiree + Dependent(s) Plans: In Example II, the retiree includes his/her eligible spouse on a benchmark plan and is required to pay the difference on any monthly premium that exceeds the retiree-only benchmark amount.

In Example III, by selecting a lower cost "family" plan for him/herself and eligible spouse, the retiree is able to apply the (higher) benchmark retiree-only subsidy amount to the monthly premium.

Retirees Eligible for Medicare

• Mandatory enrollment in LACERA-administered Medicare Plans
  • Must enroll in Medicare Parts A and B
  • Must enroll in Tier 2 Medicare Advantage Prescription Drug Plan (MA-PD) or Medicare supplement plan
  • Also applies to eligible dependents who are Medicare-eligible
• County subsidizes the full amount of the retiree's standard self-only Medicare Part B Premium; subsidy is tax-free provided the retiree meets eligibility requirements
• Medical benchmark plan: retiree-only coverage in the Anthem Blue Cross III plan

Retirees Ineligible for Medicare

• Medical benchmark plan: retiree-only coverage in the Anthem Blue Cross I & II plan

Eligible Dependents

Eligible dependents include the member's spouse, domestic partner, minor child(ren), or disabled dependent children who meet the eligibility requirements, as defined by LACERA's Retiree Healthcare Administrative Guidelines.⁴

County Retiree Healthcare Subsidy: Service-connected Disability Retirement

A LACERA member who retires with a service-connected disability (SCD) will receive a County retiree healthcare subsidy equal to the greater of:

• 50 percent of the cost of the applicable benchmark plan retiree-only premium (members with less than 13 years of service credit), or
• the County healthcare subsidy to which the retiree is otherwise entitled

¹Affected new employees first became eligible for LACERA membership on or after August 1, 2014 and were not eligible for reciprocity with a reciprocal agency based on service prior to August 1, 2014.
²Reciprocal Los Angeles City Employees' Retirement System (LACERS) service credit also applies to the extent granted under the 2004 Reciprocal Agreement between L.A. County and the City of Los Angeles.
³Retiree must have eligible spouse or domestic partner or minor child at retirement and designate him or her to receive a monthly continuing benefit.
⁴Refer to booklet entitled "Exploring Your Healthcare Benefits Through LACERA," available on the Retiree Healthcare Brochures & Forms page on lacera.com.

For medical and dental/vision premium rates and other retiree healthcare information, visit the Retiree Healthcare section of lacera.com or call 800-786-6464 and press 1. Email: healthcare@lacera.com.