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NEBCO forms government agency trust to provide alternatives to state-sponsored plans
WARWICK, R.I. March 3, 2005 – National Employee Benefit
Companies (NEBCO) has formed a new group trust designed to help
government agencies contain and better manage the skyrocketing cost
of medical benefits.
NEBCO’s Government Agency Retiree Insurance Trust (GARIT) is a solution for public sector employers who are succumbing to the healthcare and prescription drug cost squeeze as more of their employees retire, said Sam Fleet, president of NEBCO, one of the nation’s leading wholesale retiree benefit administrators. Historically, both private and public sector employers have used their active employees’ lower costs to subsidize the higher costs of retirees’ medical benefits. In a time of double digit rate increases and decreasing benefits, this is no longer feasible.
“Runaway retiree medical benefits represent a financial time bomb for all government agencies and especially smaller ones,” said Fleet. “As baby boomers head into retirement, the financial burden on public sector employers is only going to get worse.”
By insuring retirees in a separate trust, NEBCO is able to pool retirees with a larger population, thus spreading the risk and stabilizing premium increases. Without the higher risk factors and higher claim levels typical of retirees, costs for active employees drop.
“Public employees in California and other states now have a new option for retiree healthcare that offers complete freedom from carrier networks,” said Bob Luthi, NEBCO regional vice president. “NEBCO’s systems are able to use any licensed providers in the country as long as Medicare is accepted. This gives retirees greater choice and greater control in meeting their healthcare needs. Additionally, participants don’t have to submit Medicare claims data and wait for reimbursement from an insurer, a process that often takes weeks”
Additionally, the trust can serve as a powerful tool for reducing legacy liability under new accounting rules put in place by the Governmental Accounting Standards Board (GASB), Fleet said. The trust also offers a way to develop a defined contribution plan that caps costs and allows for better strategic planning and stewardship of taxpayer dollars. In addition to offering this insurance solution designed to address the costs and administration of retiree healthcare, NEBCO is poised to help government agencies navigate through the challenges and opportunities presented by the Medicare Modernization Act.
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NEBCO’s Government Agency Retiree Insurance Trust (GARIT) is a solution for public sector employers who are succumbing to the healthcare and prescription drug cost squeeze as more of their employees retire, said Sam Fleet, president of NEBCO, one of the nation’s leading wholesale retiree benefit administrators. Historically, both private and public sector employers have used their active employees’ lower costs to subsidize the higher costs of retirees’ medical benefits. In a time of double digit rate increases and decreasing benefits, this is no longer feasible.
“Runaway retiree medical benefits represent a financial time bomb for all government agencies and especially smaller ones,” said Fleet. “As baby boomers head into retirement, the financial burden on public sector employers is only going to get worse.”
By insuring retirees in a separate trust, NEBCO is able to pool retirees with a larger population, thus spreading the risk and stabilizing premium increases. Without the higher risk factors and higher claim levels typical of retirees, costs for active employees drop.
“Public employees in California and other states now have a new option for retiree healthcare that offers complete freedom from carrier networks,” said Bob Luthi, NEBCO regional vice president. “NEBCO’s systems are able to use any licensed providers in the country as long as Medicare is accepted. This gives retirees greater choice and greater control in meeting their healthcare needs. Additionally, participants don’t have to submit Medicare claims data and wait for reimbursement from an insurer, a process that often takes weeks”
Additionally, the trust can serve as a powerful tool for reducing legacy liability under new accounting rules put in place by the Governmental Accounting Standards Board (GASB), Fleet said. The trust also offers a way to develop a defined contribution plan that caps costs and allows for better strategic planning and stewardship of taxpayer dollars. In addition to offering this insurance solution designed to address the costs and administration of retiree healthcare, NEBCO is poised to help government agencies navigate through the challenges and opportunities presented by the Medicare Modernization Act.
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