Rate Increase For 2004 and "Service-Based" Subsidy
To help preserve retiree coverage as a benefit, the Board of Trustees elected to change the way retiree medical coverage is subsidized. As you may know, retiree medical coverage has traditionally been subsidized by working carpenters – sometimes by as much as 50%. Two years ago, the Board directed the plan to cap the subsidy at 25%. This 25% subsidy was provided to all retirees uniformly in each of the past two years. Now, the Board of Trustees is implementing a “service-based” subsidy.
A “service based” subsidy means the actual cost of retiree medical coverage will be reduced by a subsidy that is based not uniformly as in the past but by the total number of hours of covered service you worked under the Carpenters Health and Security Plan of Western Washington prior to your retirement. Reciprocal service and post-retirement service do not count toward this total. Specifically, your monthly contribution rate will equal the actual cost of retiree medical coverage less a “service-based” subsidy of between 0% and 25%, depending on the total number of hours you worked under the Carpenters Health and Security Plan of Western Washington prior to your retirement.
For those of you who are already covered under retiree medical covereage, your subsidy level will be phased in over the next three years. This phase-in period was designed to lessen the financial impact for those of you who will receive less than a 25% subsidy. The chart on page 3 shows the subsidy levels for the next three years for each of six work categories. Again, we will provide you with your total number of hours in the next few days.
| Retiree Medical Coverage – Financial Experience 1999-2002 | |||
| Year | Contributions | Claims Paid | Subsidy |
| 1999 | $3.3 million | $6.1 million | $2.8 million |
| 2000 | $3.2 million | $8.0 million | $4.8 million |
| 2001 | $4.1 million | $7.6 million | $3.5 million |
| 2002 | $5.1 million | $7.9 million | $2.8 million |
As you can see from this chart, all retirees and their families covered under the plan received a 25% subsidy from the plan in 2003 (the subsidy was even higher in previousyears). This subsidy will remain at 25% for those retirees who had 55,000 or more covered hours under this plan during their careers. However, the subsidy will be reduced over the next three years for retirees who had less than 55,000 covered hours.
A personalized letter will be mailed to all retirees currently covered
This letter will be mailed to you during the week of November 3, 2003. If you have any questions about this information, please contact the Eligibility Department at the Trust Office. |
If you currently have retiree medical coverage, a letter will be mailed to you during the week of November 3, 2003 listing the total number of hours you worked under this plan prior to retirement, your 2004 subsidy level based on those hours of work, and your new monthly contribution rate effective in December 2003 for January 2004 coverage.
The following is an overview of how the new “service-based” subsidy works:
- The eligibility rules for this plan did not change. A retiree must have 7,500 hours (for which employer contributions were received by the Carpenters Health and Security Trust of Western Washington) in the 120 months immediately preceding his or her retirement effective date to be eligible for this plan. However, the total number of hours contributed to this plan during your career as a carpenter will partly determine the monthly contribution rate you and your dependents pay for coverage.
- The new rates are based on
the actual cost of retiree
coverage less a specific
subsidy. The size of the
subsidy is based on the
number of hours worked
under the Carpenters
Health and Security Plan
prior to retirement (does
not include reciprocal
service or post-retirement
service). The more hours
you worked under the plan,
the greater your subsidy
(0% to 25%). For example,
the rate for early retirees in
2004 who receive the full
25% subsidy is calculated
as follows:
Actual Cost - Subsidy = Monthly Contribution
$595.00 x .75 (25% subsidy) = $446.00
Similarly, the rate for early retirees in 2004 who receive the 15% subsidy is calculated as follows:
$595.00 x .85 (15% subsidy) = $505.00
The new rates for 2004 are presented on page 4.
| Retiree Medical Coverage – Service-Based Subsidy Current Retirees – Retired Before 1-1-2004 |
||||||
| Career Hours In This Plan | Less than 15,000 | 15,000-24,999 | 25,000-34,999 | 35,000-44,999 | 45,000-54,999 | Greater than 54,999 |
| 2003 | 25% | 25% | 25% | 25% | 25% | 25% |
| 2004 | 15% | 15% | 20% | 25% | 25% | 25% |
| 2005 | 10% | 10% | 15% | 20% | 25% | 25% |
| 2006 | 0% | 5% | 10% | 15% | 20% | 25% |
- For those of you who are already retired or will retire prior to January 1, 2004, the subsidy level will be phased in over three years (2004- 2006). This is to lessen the financial impact for those of you who will receive less than the 25% subsidy. For those of you who retire on or after January 1, 2004, the subsidy level will not be phased in. You will immediately receive the 2006 subsidy level.
- The new “service-based”
subsidy levels apply for
retirees and dependents. It
also applies to early retirees,
Medicare-eligible retirees,
the prescription drug
supplement, and those of
you covered by Secure-
Horizons.
- The new monthly
contribution rates will
appear on the December
2003 billing or deduction
from your retirement
benefit for January 2004
coverage.
- The trust will review paid
claims each year in
October. We will then notify
you in November of each
year of your rate for the
following year. This new
rate will be effective on the
first of the year but will be
reflected in your December
billing or deduction from
your retirement benefit.
- For those of you who are still working, your total number of hours under the Carpenters Health and Security Plan of Western Washington will be listed on your Quarterly Benefit Statement beginning with the March 2004 statement. If you are working out of this jurisdiction but contributions are being transferred to this plan under “Money Follows the Carpenter,” these hours will count toward your total. Career hours for Lathers will also count toward this total.
The 2004 monthly contribution rates for those of you who are currently retired are presented below. Remember, you will receive a letter sometime during the first week of November confirming your total number of hours worked under the Carpenters Health and Security Plan and your new monthly contribution rate.
| Retiree Medical Coverage – 2004 Monthly Contribution Rates (Per Person) Current Retirees – Retired Before 1-1-2004 |
||||||
| Career Hours In This Plan | Less than 15,000 | 15,000-24,999 | 25,000-34,999 | 35,000-44,999 | 45,000-54,999 | Greater than 54,999 |
| Retirees not eligible for Medicare | $505 | $505 | $476 | $446 | $446 | $446 |
| Retirees eligible for Medicare | $204 | $204 | $192 | $180 | $180 | $180 |
| Retirees covered by Secure- Horizons | The monthly contribution rates for SecureHorizons are still under negotiation. The new rates will be provided to those of you with SecureHorizons shortly. | |||||
| Prescription drug supplement | $204 | $204 | $192 | $180 | $180 | $180 |
| Retirees age 80 and over on 1-1-1999 | $204 | $204 | $192 | $180 | $180 | $180 |
| If you retire on or after January 1, 2004 and qualify for the Carpenters Health and Security Plan – For Retired Carpenters, your subsidy level will not be phased in. Your monthly contribution rate will be based on the 2006 subsidy levels presented in the “Retiree Medical Coverage – Service-Based Subsidy” chart on page 3. |