Management & Labor

Despite Court Challenge, Chicago to Start Phasing Out Health Insurance Subsidies for Retired Workers

Mayor Rahm Emanuel expects to save $18 million next year by starting a three-year phaseout of city-subsidized health insurance for most retired City Hall workers.
October 10, 2013

Mayor Rahm Emanuel expects to save $18 million next year by starting a three-year phaseout of city-subsidized health insurance for most retired City Hall workers.

The administration said Tuesday that the previously announced phaseout will start as planned Jan. 1, even though the move is being challenged in court.

The savings would chip away at a projected budget shortfall of $339 million. Emanuel, who is scheduled to deliver his budget address Oct. 23, is expected to announce a series of cost-saving measures. He also hasn't ruled out increasing taxes and fees.

Although retired city workers will see no increase in copays and deductibles, they will have to come up with more money to cover the cost of the insurance.

For former city workers who retired between Aug. 23, 1989, and June 30, 2005, the city health insurance subsidy would drop to 41.25 percent from 55 percent. If the former workers retired after June 30, 2005, current subsidies that vary depending on years of service would drop to a range of 37.5 to 30 percent.

The changes would affect 21,160 former city workers and 1,908 of their dependents. Another 4,638 retired workers would not be affected because they retired before Aug. 23, 1989.

If Emanuel's effort withstands a court challenge, the city subsidies will be eliminated at the start of 2017. Some retirees could end up looking for coverage under the federal Affordable Care Act, known as Obamacare.

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