Volume
2, Edition 2
On the inside
The 2006 Benefits enrollment process was frustrating for all but a happy
byproduct of the experience may be a new era of cooperation between the company
and its retirees.
An October 29th
E-mail to members from ARA President Robert Gilligan pointing out major
elements of the 2006 benefits plan was a big help to a number of retirees.
ANSWERS
QUESTIONS ABOUT BENEFITS
The ARA submitted
a list of questions to Aetna’s Benefits staff concerning the 2006 benefits
package, and possible future changes.
Aetna used those questions to produce a list of ten questions and
answers that they will run in the next issue of Benefits Matters.
Aetna Adding
Additional Health Benefit for 2006
In
the next few days, most retirees will receive notice from Aetna of a new health
insurance benefit. Called a Retirement Reimbursement Account (RRA), it will
provide additional funds that can be used to pay a number of health-related
expenses.
The ARA sees this announcement as a
promising sign, and hopes that it marks the beginning of a new era of
understanding and cooperation between Aetna and its retirees. To provide you
with a thorough background for understanding this action, we would like to
share this memo from ARA Chairman John Dwyer to the ARA Directors. It details
the history of ARA/Aetna contact and discussions and may help explain Aetna’s
actions.
Your ARA will continue to work with
Aetna to create a more sensitive and trusting relationship. It remains our
great hope this can be achieved to the mutual benefit of all.
TO: ARA
DIRECTORS
FROM:
JOHN J. DWYER
SUBJECT: LITIGATION STRATEGY UPDATE
DATE: JANUARY 17, 2006
This
memo is provided to summarize the essential developments in our litigation
strategy. From the earliest days of ARA’s formation, we set forth a strategy
that focused on three specific elements: public relations, legislative
initiatives and a rigorous evaluation of our legal options. This report will
focus solely on the pursuit of our legal options. The evaluation of our legal
remedies required and began with a detailed review of all documents relating to
our benefits. John Backer, who has a most extensive background in the mass tort
claim area, led the effort to develop a statement of claim based on the facts
that we could develop. We asked our members to search their personal files for
any and all documents that were related in any way to Aetna benefits. We were
able to locate many letters, brochures and other benefits materials that had
been saved by retirees, some for more than forty years. “Behind Your Paycheck”
and “Your Second Paycheck” along with “Aetna sphere”, “Good News” and myriad
personal documents were provided, examined and catalogued. Without John
Backer’s outstanding diligence and expertise, our research would undoubtedly
have been compromised
As the evaluation was proceeding, we
met with and discussed our potential claim with a number of law firms to
measure their competence and their willingness to represent the retirees. We
spoke or exchanged information with firms in Denver, Philadelphia, Harrisburg,
and Hartford. After considerable discussion and careful analysis of the many
options, the firm of Schatz and Nobel of Hartford was selected. Schatz and
Nobel enjoys an excellent reputation and we have been extremely pleased with
their interest in our situation, their professionalism and their overall
handling of the case in general.
Schatz
and Nobel attended our legislative hearing at the Connecticut legislature and
met with a number of retirees as well as the ARA Board. Four retirees, John
Backer, Bob Quinn, Arthur Bradbury and Robert Gilligan were identified as
representing the various categories of potential plaintiffs and each agreed to
participate in the proposed suit. As2004 drew to a close, counsel drafted and
refined a Complaint for the filing of a class action in the United States
District Court in Hartford. It was
contemplated that suit would be filed before year end 2004 to preserve retiree
rights under the Statute of Limitations. As part of the process of bringing a
claim under ERISA, it was important for plaintiff’s counsel to demonstrate that
they had made every effort to amicably dispose of the case and thus, Aetna was
notified, as part of the process of exhausting all available administrative
remedies, of our intent to file the Complaint.
Upon
receipt of our counsel’s letter, Aetna called and invited our counsel to meet
for a discussion of the merits of the case. Counsel responded that we’d be
pleased to meet but we could not let the Statute of Limitations run over into
2005. Aetna’s General Counsel, Lou Briskman, executed a tolling agreement
between Aetna and the four designated plaintiffs, which permitted us to meet
with Aetna without the time on the statute continuing to run.
There were numerous face-to-face meetings
supplemented by phone discussions wherein each side outlined its respective
positions on the facts and the law. Throughout the process, Aetna made it clear
that management was comfortable with their position from a legal perspective
and quite uncomfortable with the prospect of litigation with its retirees.
Throughout Aetna has acknowledged that its communication with retirees had been
“botched.” At one point we joined counsel for one of the face to face meetings
to demonstrate that Schatz and Nobel really had a live and committed client.
During the course of this meeting, I outlined several principles that had to be
a part of any settlement. Briskman reaffirmed Aetna’s confidence in its legal
position, and again acknowledged how poorly the communications had been
handled. He reported that our personal appearance and demeanor at the Annual
Meeting of Shareholders in Philadelphia had a salutary effect on senior
management’s perception of the Association. (We still wonder what we said or
did that led them to that conclusion.)
At
one point, Aetna made available all related Company documents for a review by
our counsel and provided copies of materials as requested.
By early summer
it was clear that some sort of settlement would be proposed but Aetna kept
describing concepts when only a proposal would move the process forward. In
July we learned that the General Counsel would be returning to his former
employer, and while we all hoped to have the matter concluded before his
departure, it was the height of vacation season, and getting all the right
people involved didn’t occur.
It
would be pure speculation on my part but I’m reasonably certain that Briskman,
who was not at Aetna when the dental subsidy decision was made, was not
burdened with trying to defend the earlier decision. I’m also certain that
convincing Aetna management to change or deviate from its prior course was not
an easy task. During these initial discussions we also gained insights into how
management was reacting to our public relations and legislative initiatives,
and it was clear that Aetna was quite concerned.
On a conceptual basis, Aetna was unwilling,
under any circumstances, to conclude a multi-year settlement taking the view
that they could not predict future financial performance. ARA maintained the
position that we could not relinquish our “right to sue” unless we had a
multi-year or permanent solution. Aetna also consistently took the position
that any “offer” that might result should be taken as Aetna’s sole and
unilateral decision, and unrelated in any way to our threatened suit. We made
it clear that taking credit for “the settlement” wasn’t critical to our mission
or strategy. At the same time we
suggested that retirees would view a gratuity as suspicious and likely turn to
ARA for an explanation which would likely worsen a damaged relationship which
Aetna sought to improve.
Aetna’s
final offer of $132 to each retiree was a disappointment to put it mildly.
Measured against the lost dental subsidy it represented about 17% of single
year subsidy. It would be impossible and unproductive to recount all of the
factors that we reviewed as part of our evaluation of the “proposed
settlement.” Ultimately, we went back to Aetna and told them that while we
might get comfortable with their $132 for the post 1988retirees, we could not
accept that for the pre 1988 retirees and would have to sue. Aetna acknowledged the distinction and
quickly agreed to reconsider those retirees and a different proposal. After
weeks of additional discussion, a separate formula for pre 1988 retirees was
developed. Recall that those retirees previously paid no premium for their
benefits and thus the dental subsidy was a significantly greater loss for them.
The revised proposal provides that the “1988 and prior” retirees will receive
$332 for the retiree with no spouse or dependant and $532 for the retiree with
a spouse or dependant.
As the likelihood of a “settlement”
became more likely, it became clear to us that Aetna could hardly maintain the
position that the establishment or announcement of an intended payment was
unrelated to any discussions they had with ARA, the named plaintiffs or our counsel.
In that context we have reviewed language that Aetna intends to use in the
announcement of the Retirement Reimbursement Accounts (RRA’s). In that draft announcement, they make it
clear that the new accounts are the result of discussions with our Association
and they look forward to further discussions in the coming months and years.
Just
before year-end, the four named plaintiffs and counsel executed a Cooperation
and Standstill Agreement. Among its provisions is the establishment of the RRA
accounts for all 11,600 retirees in the amounts described above and an
agreement that the four plaintiffs and the law firm would refrain from
initiating any litigation prior to September of 2006. The RRA can be used to
pay for eligible health expenses and we believe that the definition of eligible
will be fairly broad. While we are hopeful that by September 1, 2006 a further
agreement will be reached for the coming year, there are no guarantees and
Aetna’s posture will depend on its then-current financial performance. This agreement as it is presently
constituted contemplates a one-time payment. Aetna believes that the
RRA’s will be tax-efficient: that no tax will attach to these accounts. The
tolling agreement previously in place remains in place and the terms for
triggering it have been extended from ten days to thirty. Sums that are not
spent in 2006 can be rolled into subsequent benefit years. The agreement
contains a confidentiality agreement that confines discussion of these accounts
and the process to members of ARA and their counsel. Finally, the funding of
the RRA’s will occur on or before February 1, 2006.
There
is an understandable temptation to cast this outcome in the context of a win or
a loss and in my view that would be a mistake. Rather, it should be viewed in
the context of where we were when this began. At that time, we were confronted
with a unilateral decision and neither side was talking to the other. In recent weeks we’ve met with senior Aetna
people to review their long-term strategy and we have every reason to believe
that process will continue. We have met with benefits people to critique and
improve the annual enrollment process and that serves both sides positively.
We’ve committed to provide thoughtful input to the benefits design process as
we did in September of 2005. During the Medicare Part D enrollment process, we
served as a sounding board and a facilitator for retirees, and it is clear that
Aetna has appreciated our role. Their use of our website as part of that
process can only be viewed as a compliment to our Association. I won’t attempt
to rationalize or justify the outcome; I do look forward to continuing the
dialogue with Aetna. I believe a more permanent arrangement is worth working
for and I hope they see us as a thoughtful partner, willing to collaborate with
management in the service and best interests of Aetnaretirees.
No report on this issue would be accurate
or complete without expressing our appreciation and admiration for the four
gentlemen, Bob Quinn, Bob Gilligan, John Backer and Arthur Bradbury, who had
the courage to volunteer to serve as named plaintiffs in the contemplated class
action lawsuit. Their courage and leadership provided the credibility and the
determination to persist in our demands. And each of them has participated with
the good and decent lawyers at Schatz and Nobel. I spent most of my career in
and around litigation and there is no question in my mind that we were very
fortunate indeed to have them represent us.
Enrollment woes may Lead Aetna to close
Relationship with ARA
With so many changes, Aetna Retiree
enrollment for 2006 health and dental benefits figured to be a challenge. Many
ARA members reported difficulties in understanding the various options, in
getting accurate answers, and in using the Aetna/Hewitt web site.
Aetna and
outside contractor Hewitt seemed to have troubles of their own. Deadlines were
missed and many retirees received their packages a week or more late. With a
narrow window for responding and many changes to absorb, this was a cause of
frustration. Aetna eventually granted an extension of its November 18 deadline.
The most serious
problem arose when Aetna discovered that kits that went out to employees whose
benefits are capped – those who retired before March 1, 1994 –were inaccurate.
Rates did not reflect the cap so new kits had to go out to all those so
affected. Rates were much higher than those originally quoted and new paperwork
was required.
By mid January, some retirees still did not have their new
Pharmacy Cards.
Aetna Benefits management acknowledges
that the 2006 enrollment process uncovered too many holes in their preparedness.
They also understand the need to better understand the needs of retirees, and
are committed to establishing closer working relationship with ARA and retiree
focus groups from around the country.
At Aetna’s request, a deadline notice on
benefit enrollment was published on the ARA web site in December. Discussions
between Aetna benefits personnel and ARA are ongoing.
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ARA
Communication Helpful to many Members
While your ARA is not staffed or able
to offer advice to members on enrollment choices, it is equipped to caution
members on key points and important considerations. ARA did exactly that in an
E-mail message issued October 29th from President Bob Gilligan.
Key points covered included the
separation of the indemnity plan from prescription drug benefits, the reasons
to consider keeping the indemnity plan, the two prescription plans being
offered, the ability to reenter the dental plan for those who opted out in2005,
and the need to take positive action to continue prescription coverage. The
e-mail also provided sources of assistance.
Responses
from members indicated that the e-mail was helpful to many. Here are a few
examples:
“I and many others are most appreciative of
the job you and the ARA are doing on behalf of all of us. Keep up the good
work.”
“Thank you
very much for your analysis of complicated medical choices for the coming year.
It is a real help and very thoughtful … “
“Your e-mail
is much more concise and to the point than the thick folder from Aetna.”
“Any idea
how much Rowe and Williams pay for their health insurance, if anything at all?”
“I attempted
to enroll via Aetna’s web site but was unable to make my prescription drug plan
selection because I had not returned the pink form … which I have yet to
receive.”
“Thanks MUCH
for the “Heads Up”! This e-mail alone is worth the cost of our dues!”
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2006
Benefits Enrollment Questions
We received many excellent
questions from retirees during enrollment. We’d like to share several that
might be of interest to you. If you have questions of your own, please call the
Aetna Retirement Service Center at 1-800-AETNA-HR (1-800-238-6247).
1. I
enrolled in Aetna’s Medicare Rx Plan but am receiving enrollment information
from other providers. Can I enroll in more than one Medicare D plan?
No, Medicare-eligible participants may not
enroll in more than one Medicare Part D plan. A retiree may elect medical-only
coverage from Aetna and elect drug coverage from another provider. In this
situation, the retiree would be permitted to elect drug coverage from Aetna
during next year’s enrollment.
2. My
spouse and I are both over 65. I wanted to elect Aetna Medicare Rx prescription
drug coverage for my spouse and no prescription drug coverage for myself.
However, this year’s enrollment required us to enroll in the same coverage.
Will this change for 2007?
While there are complexities involved in administering such change,
Aetna is considering unbundling retiree and spousal benefit choices. It is
unlikely that this will be implemented for 2007.
3. I
am eligible for Medicare benefits, but my spouse is not yet Medicare-eligible.
I would like to elect Aetna Medicare Rx coverage without medical or dental. Do
I need to elect medical and/or dental coverage for my spouse to be able to
elect medical coverage?
This is considered a split-family situation in which one
participant may choose from the pre-Medicare plan offerings and the other may
choose from the Medicare offerings. In this situation, you can elect Aetna
Medicare Rx coverage only from the Medicare offerings and your spouse can elect
a pre-Medicare plan.
4. For
2006 enrollment, the prescription drug benefit was separated from the medical
benefit for Medicare-eligible retirees. Were the benefits separated for those
retirees under 65?
No, since those retirees under age 65 are not eligible for
Medicare Part D, the prescription drug and medical benefits are not separate
for them. The pre-Medicare medical options include bundled medical and
prescription drug coverage.
5. I
understand Aetna is eligible to receive a28 percent subsidy from the Centers
for Medicare Services (CMS) by offering prescription drug coverage to
Medicare-eligible retirees. How is that subsidy applied to plan premiums and
retiree contributions?
The Medicare Reform legislation provides a
28%government subsidy for employers who provide drug coverage to retirees other
than through a Medicare Part D Prescription Drug Plan. Employers have
discretion over how this incentive is used in developing retiree contributions.
For 2006, Aetna, as an employer, is providing its retiree drug coverage through
a Medicare Part D prescription drug plan and therefore is not eligible for the
28 percent subsidy.
Aetna, as an employer, has contracted with a group
Prescription Drug Plan (PDP), Aetna Life Insurance Company, on an insured
basis. The PDP premium pricing we receive from Aetna Life Insurance Company is
the Medicare-approved rate and reflects the federal subsidy provided to PDPs
according to the Medicare Part D program requirements. The retiree subsidy, if
applicable, is applied to this reduced rate.
6. I
understand that 2006 increases varied greatly for different retirees. Can you
explain this?
Many factors are taken into consideration when calculating
each Aetna retiree’s contribution (i.e., date of termination, years of service,
age). The Aetna retiree subsidy ranges from zero to 100 percent of the plan
cost. So the amount retirees pay for coverage varies greatly. Also, some
retirees are subject to the medical plan subsidy cap. This cap also impacts a
retiree’s contribution.
Last year, Aetna made the decision to absorb the increase in
medical costs between 2004 and 2005 for those who receive a company subsidy for
a portion of their medical coverage. For2006, medical contributions reflect
2006 pricing and include any medical trend increases between 2004 and 2006. So,
retirees see an increase in the cost for coverage, reflecting the combined
2005and 2006 medical trend.
7. Will
Aetna consider changing the Enrollment Worksheet (included in the annual
enrollment kit) to include individual information, such as how their
contributions were calculated based on years of service, retirement date, and
caps? That way, we could see the factors that were used in calculating my
monthly contribution.
While we understand it would be helpful to receive more
details on the Enrollment Worksheet, the varying subsidies involved for the
different groups of retirees make it difficult to show a calculation for each
retiree. However, if you would like to better understand your monthly
contribution calculation, we encourage you to call the Aetna Retirement Service
Center at 1-800-AETNA-HR (1-800-238-6247). A customer service representative
will be able to provide details of your calculation.
8. My
enrollment kit arrived on November10. Can you send the enrollment kits earlier
next year so I can have more time to make my decision?
Aetna is dependent upon the Centers for Medicare
Services (CMS) for information that determines the rates used to calculate
retiree premiums. Since this is the first year Medicare Part D plans have been
offered, the process delayed the timeliness of communications. Aetna and other
insurers are working with CMS to improve this process in future years.
To help with this situation, Aetna provided
a correction and change period that extended beyond the enrollment period. In
addition, the Aetna Retirement Service Center will continue to accept Medicare
enrollments through May 15, 2006.
9.
What is the Aetna Medicare Preferred Drug List?
To qualify as a federally-sponsored
Medicare Part D plan, Aetna’s Medicare prescription drug plans have a
formulary, which is a government-approved list of drugs that it covers. This
formulary, called the Aetna Medicare Preferred Drug List, includes medications
selected by Aetna in consultation with a team of health care providers,
including geriatric specialists.
Aetna’s
Medicare drug plan is a closed formulary plan that limits coverage of Medicare
Part D medications to only those generic and brand-name medications included on
the Aetna Medicare Preferred Drug List. Aetna will generally cover the drugs
listed as long as the drug is medically necessary and the plan rules are
followed.
For an
updated Aetna Medicare Preferred Drug List, call Member Services toll-free
at1-888-972-3862. It is also available on Aetna Navigator at www.aetnanavigator.com. Once you have logged on, select
“Benefits,” then “Summary.” The formulary is located under “Related Shortcuts.”
10. I have received multiple ID cards in
the mail; can you please explain the differences to me?
You
may have received more than one ID card for 2006, depending in your benefit
elections. If you are a pre-Medicare retiree, you would have received one
medical ID card that can be used for both medical and pharmacy coverage. If you
are a Medicare retiree, you would have received separate ID cards for medical
and Aetna Medicare Rx pharmacy coverage (unless you enrolled in an Aetna Golden
Medicare Plan, in which case you would have received one ID card that can be
used for both medical and pharmacy coverage).
In addition, a separate dental ID card was
provided for pre-Medicare and Medicare retirees who enrolled in dental
coverage.
Please note: if you made a change to your
health election after the enrollment period closed, you would have received a
replacement ID card.
You
can visit Aetna Navigator at www.aetnanavigator.com to verify your enrollment
or to request replacement ID cards. Once you have logged on, click on “ID
Card.” If you have any questions about your ID(s), please call Medicare Member
Services toll-free at 1-888-972-3862.
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Letters to the ARA NEWS
Aetna Message on Planning Contradicted by Actions
Aetna was front and center at a Capitol
Hill Briefing October 20, urging pre-retirees, especially women, to plan better
and save more for health care in retirement. The company, in cooperation with
two partners, Financial Planning Association and Women’s Policy Inc., cited a
new national survey and offered additional planning tools.
All this is important and commendable, but is it not also
ironic that Aetna wishes to be seen as helping women plan for good health in
retirement at the same time it takes away health benefits from many women who
served the company well for many years?
I thought I had done an excellent job of planning for my own
health needs in retirement. I worked for a large and respected insurance
company that promised, as a part of my compensation package, to provide me with
medical and dental insurance in retirement. We were reminded regularly that
these benefits were a part of our paycheck, and
the Aetna we worked for then kept its promises.
The unilateral elimination of the subsidy on our dental plan
was a shock. The company was already
eliminating the subsidy for current workers. Is this the beginning of
eliminating the subsidy for retirees?
While I recognize that companies do have the obligation to
remain competitive, this change came at a time when company stock, profits and
executive compensation were all sky high, it was difficult to accept or
understand. Aetna claimed need but it looked a lot more like greed. And if the
new Aetna was willing to walk away from this obligation to us, what might we
expect in the future?
The new Aetna may posture in Washington as a model corporate
citizen, but we know better. Talk is cheap. Better to look at actions! If the
stock in trade of an insurance company is its ability and willingness to keep
its promises, Aetna is on shaky ground.
Elaine McDonald
ARA Lauded for its efforts
After reading the recent ARA newsletter I am now more
encouraged that our retiree benefits are going to be considered much more
carefully by management than before ARA existed. You have given all of us more
hope that the company's promises will be kept.
I was also very glad to learn that our association and Aetna
are inconstant touch regarding future benefit changes. The fact that we are no
longer looked on as a "nuisance" is heartening.
"Great job” to all concerned and a huge “Thank you” for
all you are doing on our behalf.
Don Nolan
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