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Thursday, April 24, 2014

Fund renews health insurance with Aetna
New policy shows 18.31 pct. reduction in premiums

Retirees and members of the NMI Retirement Fund can now heave a sigh of relief after the pension agency renewed its insurance policy, this time with a significant reduction in premiums.

According to Fund counsels Braddock Huesman and Daniel Berman, trustee ad litem Joseph C. Razzano successfully negotiated a new and lower health plan that will save the agency, its members, and the government up to $4 million.

On Nov. 30, 2012, the court authorized the trustee ad litem to negotiate for the Fund members’ Group Health Life Insurance Program. The policy expired on Dec. 31, 2012.

Using emergency procurement, Razzano negotiated and executed a one-year renewal of the Aetna Health Insurance Policy so that health coverage would be preserved for both current employees and retirees. Due to the board’s lack of quorum, the insurance policy was never acted upon by the previous board until it expired in December.

Under the 2013 renewal policy, there will be an 18.31-percent reduction from the 2012 rates. Depending on the number of enrollees, the 18.31 percent reduction equates to savings of approximately $4 million. The government, which pays 50 percent of the premiums, stands to save up to $2 million and the employees and retirees will realize a similar savings.

According to the Fund, Aetna initially offered to renew the policy at a decrease of 6.22 percent from the rates paid in 2012. After negotiations, Aetna agreed to a reduction of 18.31 percent for the 12-month period of the coverage, which will expire on Dec. 31, 2013.

The Fund disclosed that there are approximately 2,400 individuals who benefit from the health coverage plan.

Some 1,078 members are enrolled as employees. They used to pay $428.79 for their health coverage. This was reduced to $350.28 per annum, a reduction of 18.31 percent.

For an employee with one dependent, the rate was $879, which was reduced to $718.06 under the 2013 policy. Records show that there are 804 enrolled under this category.

For an employee with family category, the rate was $1,372.10, later reduced to $1,120.87, an 18.31-percent adjustment. There are 500 members enrolled in this category.

The new policy will bring $339,644 monthly savings—or $4.075 million in 12-month period.

Govt excluded

The governor’s legal counsel, James Stump, in a letter dated Jan. 9 to Joyce H. Tang of Civille & Tang, PLLC, refused to provide the government’s comment on the new health insurance policy, saying the government was never accorded the opportunity to review the actual contract with the insurance carrier.

“First it would be improper for the administration to comment on the health and life insurance contracts without ever reviewing the actual full contract,” stated Stump in his letter, which was filed in court. He said that, although the Fund provided a summary of some terms of the new policy, a complete copy of the contract was never attached.

According to Stump, in negotiating the 2013 policy, the Fund excluded the CNMI government from the negotiation process, despite its fiduciary duties.

“In fact, I offered to assist Joseph Razzano, the trustee ad litem, in this process in order to compensate for his unfamiliarity with Commonwealth health insurance contracts and procurement laws. However, the [trustee ad litem] threatened court action against me if I did not refrain from actions meant to assure compliance with Commonwealth procurement laws requirements,” said Stump, adding that he is concerned that the government has not received a full copy of the contract or documentation to ensure proper procurement regulations have been followed.

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