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

County Retiree Healthcare Subsidy Chart (Click to view.)

County Retiree Healthcare Subsidy

Years of Service Credit County Subsidy Years of Service Credit County Subsidy
10 40% 18 72%
11 44% 19 76%
12 48% 20 80%
13 52% 21 84%
14 56% 22 88%
15 60% 23 92%
16 64% 24 96%
17 68% 25 100%

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.

Example I (Click to view.)

EXAMPLE I: Retiree on Tier 2 Benchmark Medical Plan

Full Monthly Premium Amount: $900 Years of Service Credit County Subsidy How Subsidy is Applied Monthly Amount Retiree Pays
15 60% $900 X 60% = $540: Dollar amount of County subsidy
$900 – $540 = $360: Subsidy deducted from full premium
$360

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.

Example II (Click to view.)

EXAMPLE II: Retiree with Eligible Spouse on Tier 2 Benchmark Medical Plan

Full Monthly Retiree & Spouse Premium Amount: $1,600 Full Monthly Retiree-only Premium Amount: $900 Years of Service Credit County Subsidy How Subsidy is Applied Monthly Amount Retiree Pays for Self and Spouse
15 60% $900 X 60% = $540: Dollar amount of County subsidy
$1,600 – $540 = $1,060: Subsidy deducted from full retiree & spouse premium
$1,060

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.

Example III (Click to view.)

EXAMPLE III: Retiree with Eligible Spouse on Tier 2 Benchmark Medical Plan

Full Monthly Retiree & Spouse Premium Amount: $1,295 Full Monthly Retiree-only Premium Amount: $650 Years of Service Credit County Subsidy How Subsidy is Applied Monthly Amount Retiree Pays for Self and Spouse
15 60% $650 X 60% = $390: County subsidy dollar amount for this plan
$900 X 60% = $540: Maximum County subsidy dollar amount (based on benchmark plan)
$1,295 – $540 = $755: Benchmark subsidy deducted from full retiree & spouse premium
$755

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.

7/24/14