Six thousand city retirees are in line for some extra Christmas cash, thanks to a court order in the long-running battle over Mayor Rahm Emanuel’s now-completed phaseout of the city’s $130 million-a-year subsidy for retiree health care.
Last year, an attorney representing retired city employees demanded to know why the city kept for itself $2.1 million in overcharges instead of refunding that money to retirees.
An audit and reconciliation process was required annually before Emanuel’s three-year phaseout of retiree health care coverage and a 55 percent city subsidy for anyone who did not retire by Aug. 23, 1989.
It was through that process that retirees discovered that the city received a $10.5 million settlement in 2013 from Blue Cross-Blue Shield, the company hired to administer health insurance claims for both active city employees and retirees.
Roughly $1.07 million of that money was credited to retiree health care, including refunds. An additional $7.3 million stemmed from payments claims made by active city employees.
That left $2.1 million unaccounted for.
Last June, the retirees’ attorney Clint Krislov “inadvertently learned” that there was “some number of reconciliation refund checks that had not been cashed” and that the city had “made no effort to contact the recipients.” That essentially gave the city an interest free loan.
Three months later, a judge ordered the city to disclose the number of retired city employees involved and the specific amount of the refunds due to each of those retirees. But a confidentiality order required Krislov not to disclose the information.
On Friday, that gag order was lifted, leaving Krislov free to go public.
Law Department spokesman Bill McCaffrey said Krislov “mischaracterized the facts, as nothing was ever hidden from retirees. “
In an emailed statement, McCaffrey said the city “previously mailed checks to all who were due refunds, and for reasons unbeknownst to the city, the checks were never cashed or returned.”“As a result, the city agreed to post information on its website and create a new claims process to ensure the funds continue to be accessible,” he wrote.
There were 8,000 outstanding checks totaling $837,715. The average check will be $100. Some individual checks will exceed $1,400. Some date all the way back to 2005.
That’s thirteen years that the city has been keeping this information secret. In the meantime, about 2,000 of the 8,000 retirees have died.
According to Krislov, the city has now written to the last known addresses for the remaining 6,000 retirees.
Beginning Dec. 26, the city will start running ads about the refunds in Chicago newspapers. There will also be a search engine on the city’s website that will allow retirees and their families to find out whether they are in line for refunds.
In the meantime, retirees can call the city benefits office at 312-747-1600 to find out if they or a family member are on the list.
“The city’s concealment extending over thirteen years is unfortunate, because nearly one-third of them have not survived to receive and enjoy their own refunds, from a city that is cutting off their promised health care,” Krislov said Monday.
“This just compounds the city’s maltreatment of people, most of whose city employment did not qualify them for participation in the federal Medicare program, because they began their public service prior to April 1, 1986. We encourage family and friends to search for their family members on the list so that their survivors and descendants may obtain their refunds.”
Even with a looming, $1 billion spike in pension payments, mayoral candidates Paul Vallas and Garry McCarthy have promised to restore the abolished retiree health-care subsidy.
Vallas has promised to make the specific amount the “product of strategic bargaining” with union leaders.
He has argued that there are “multiple pathways for providing a subsidy that will not impose a permanent, long-term funding mandate on the city.”
Those possibilities include diverting “a portion of the salary increase in the next contract” to fund retiree health care and requiring a “small annual contribution from active employees, which could be tied to income,” Vallas has said.
Without offering specifics, McCarthy has also promised to find the $130 million a year needed to restore the subsidy for retirees, 10,000 of whom started working for the city prior to April 1, 1986 and, therefore, are not eligible for Medicare.
Trade union leaders are not about to hold their breath.
They’ve formed a nonprofit organization with potential to save 7,000 retirees who draw their benefits from the Municipal Employees and Laborers pension funds up to $10 million-a-year.
Fran SpielmanFollow me on Twitter @fspielman Email: firstname.lastname@example.org Currently Trending
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