San Jose Municipal Code Part 16 Medical Benefits for Certain Retirees and Survivors

Subject to the provisions of this Chapter, a member, other than a new employee or a member described in Section 3.28.1950.E or Section 3.28.1955.B., may be entitled to medical insurance coverage in an eligible medical plan as specified in Section 3.28.1970 if the member satisfies the requirements of subsection A., subsection B., or subsection C below. Members who would otherwise be eligible for coverage under this Part 16 shall be provided a one-time irrevocable election to instead be covered under Chapter 3.58, in accordance with the process described in Chapter 3.58. Coverage under Chapter 3.58 shall not become effective until receipt of IRS approval to transfer member contributions previously contributed under Part 16 and Part 17 to the funding vehicle established under Chapter 3.58. The contributions to the Plan by members and the City shall be as determined under Section 3.28.381.

A. The member is retired for service or disability under the provisions of this Chapter and at the time of such retirement meets any of the following requirements:

1. Is entitled to credit for fifteen (15) or more years of service; or

2. Receives an allowance equal to at least thirty-seven and one-half percent (37.5%) of the final compensation of such member; or

3. Would be receiving an allowance equal to at least thirty-seven and one-half percent (37.5%) of the final compensation of such member if the workers' compensation offset set forth in Section 3.28.1040 did not apply.

B. The member is entitled to credit for twelve (12) or more years of service as of May 14, 1993, and the member is retired for service on or after May 14, 1993, but prior to June 20, 1993.

C. The member voluntarily resigns from City service and satisfies all of the following requirements:

1. The effective date of the voluntary resignation is on or after May 14, 1993, but prior to June 20, 1993; and

2. As of the effective date of the resignation, the member is entitled to credit for at least twelve (12) years of service; and

3. The member elects to continue membership in this System by allowing all of his or her accumulated contributions to remain in the retirement fund; and

4. The member is not reinstated to City service prior to the member's retirement; and

5. The member retires for service under the provisions of Section 3.28.1110.

D. Any member who meets the requirements of subsection A, subsection B or subsection C of this Section 3.28.1950 and is thereby eligible for coverage but instead elects to participate in the "in lieu" premium credit option described in Section 3.28.1965, and later elects to again be covered under the City's medical coverage during the annual open enrollment period or upon qualifying events upon the occurrence of an event identified by the medical plans as providing such individuals with an opportunity to elect to be covered under the City's medical coverage shall be required to pay the full member portion of the cost of coverage less any available premium in lieu credits that the member may have accrued and which remain unused under this Part 16.

E. Except as provided in Section 3.28.1950.F. below, new employees shall not be eligible for benefits under this Section 3.28.1950.

F. Tier 2 members and employees in Unit 99 who participate in the City of San José defined contribution plan under Chapter 3.49 are not eligible for benefits under this Section 3.28.1950. Instead, insurance coverage to a Tier 2 member on and after September 27, 2013, or to an employee who is a participant in the City of San José defined contribution plan for employees in Unit 99 under Chapter 3.49 shall be determined only as provided under Section 3.28.1955. Notwithstanding Section 3.28.1950.E, a new employee hired before October 1, 2013 who is represented by the Operating Engineers, Local 3 or the Association of Building, Mechanical and Electrical Inspectors shall be eligible for benefits under this Section 3.28.1950 if he or she meets the requirements of subsection 3.28.1950.A.

(Ords. 21763, 22245, 24347, 29184, 29283, 29904, 30044.)

A. Effective September 27, 2013, new employees and their respective survivors shall not be entitled to medical insurance coverage under this Section 3.28.1955, except to the extent specifically provided under subsection 3.28.1955.B. below. If insurance coverage under Part 16 for any Tier 2 member is terminated by the City Manager prior to the establishment of benefits under Chapter 3.58, affected Tier 2 members shall not be entitled to any benefits or make any additional contributions under this Part 16 once participation is terminated and affected Tier 2 members shall not be entitled to any retiree medical benefits nor make medical benefit contributions during the gap period between termination of benefits under Part 16 and establishment of the VEBA under Chapter 3.58.

B. Tier 2 Members Hired On or After September 27, 2013. Other than those Tier 2 members that meet the requirements described in Section 3.28.381.B. or Section 3.28.381.C.1., Tier 2 members hired on or after September 27, 2013, and their survivors, shall not be entitled to medical insurance coverage under this Part 16. Such members may be eligible for medical insurance coverage under Chapter 3.58. In order for a Tier 2 member described in Section 3.28.381.B. or Section 3.28.381.C.1. or such Tier 2 member's eligible survivor to receive medical insurance coverage under this Part 16, such Tier 2 member and such Tier 2 member's eligible survivor must meet the requirements specified in Section 3.28.1970.

C. Defined Contribution Plan Participants and Their Survivors. Employees who are participants in the City of San José defined contribution plan for employees in Unit 99 under Chapter 3.49, and their survivors shall not be entitled to medical insurance coverage under this Part 16.

(Ords. 29283, 29904, 30017.)

Subject to the provisions of this Chapter, if a surviving spouse, surviving domestic partner, child and/or children, as those terms are defined in Sections 3.28.1460, 3.28.1560, and 3.28.1750 of this Chapter, whichever is applicable, is receiving a monthly survivorship allowance pursuant to Part 11, Part 12 or Part 14 of this Chapter or is receiving an optional settlement allowance pursuant to Part 13 of this Chapter because of the death of a member, then said surviving spouse, surviving domestic partner, child and/or children may be entitled to medical insurance coverage in an eligible medical plan as specified in Section 3.28.1970 if the following conditions are satisfied:

A. The member either died before receiving retirement pay or was retired either for service or disability; and

B. At the time of the member's death, the member:

1. Was entitled to credit for fifteen (15) or more years of service; or

2. Was receiving an allowance equal to at least thirty-seven and one-half percent (37.5%) of such member's final compensation; or

3. Would have been receiving an allowance equal to at least thirty-seven and one-half percent (37.5%) of such member's final compensation if the workers' compensation offset set forth in Section 3.28.1010 did not apply; or

4. Was retired for service between May 14, 1993, and June 19, 1993, inclusive, and was entitled to credit for twelve (12) or more years of service; or

5. Had voluntarily resigned from City service with an effective resignation date between May 14, 1993, and June 19, 1993, inclusive, had elected to remain a member of this System by allowing his or her accumulated contributions to remain in the retirement fund, and at the time of such resignation was entitled to credit for twelve (12) or more years of service.

C. Notwithstanding any other provision of this Part, new employees, other than employees represented by the Operating Engineers, Local 3 and the Association of Building, Mechanical and Electrical Inspectors who were hired or rehired before September 27, 2013, and participants in the City of San José defined contribution plan for employees in Unit 99 under Chapter 3.49 and their survivors are not eligible for the benefits provided by this Section 3.28.1960. Instead, any medical insurance coverage that may be provided to these new employees or to employees who participate in the City of San José defined contribution plan for employees in Unit 99 under Chapter 3.49 who are not eligible for benefits under this Section 3.28.1960, and their respective survivors, shall be determined only as provided under Section 3.28.1955.

(Ords. 21763, 22245, 23736, 24347, 27521, 29184, 29283, 29904.)

A. Effective June 16, 2017, members and their surviving spouses, surviving domestic partners, and/or children who are eligible for medical insurance coverage under Section 3.28.1950 or 3.28.1960 may instead of receiving such coverage choose to receive a credit for an amount equal to twenty-five percent (25%) of the monthly premium of the lowest cost medical plan as defined under Section 3.28.1980 and the lowest cost dental plan under the coverage provided under Part 17. Such credited amounts must be applied toward the cost of such person's healthcare premiums actually incurred in future years under Part 16 and Part 17 of this Plan.

B. Each year during the annual open enrollment period during which qualifying individuals covered under this Part 16 and Part 17 are provided the opportunity to elect healthcare coverage under this Part 16, or upon the occurrence of another event identified by the medical plans as providing qualifying individuals with the opportunity to elect coverage under this Part 16, such individuals may again elect such coverage and pay the full cost of the member portion of the coverage or instead elect to have the credit described in Section 3.28.1950.D again credited to be used only for application toward the cost of such person's healthcare premiums actually incurred in future years under Part 16 and Part 17 of this Plan.

C. Individuals receiving credits in lieu of premiums for greater than the cost of single coverage must annually submit substantiation that they continue to be eligible for coverage at greater than the cost of single coverage.

1. Eligible retirees who receive retiree healthcare coverage as a dependent of another City employee or retiree are not eligible for the family in lieu premium credit. He or she may elect the single in lieu premium credit.

D. To the extent a member and/or the member's eligible dependents selects to receive the credits under this Section 3.28.1965.A or 3.28.1965.B and the member and his or her surviving dependents do not use the accumulated credits while eligible for healthcare coverage under this Part 16, any remaining credits will be forfeited. In no event can a member, surviving spouse, surviving domestic partner, and/or eligible dependent receive the credits in lieu of coverage under this Part 16 as cash and such credits may only be applied to the cost of future premiums for coverage provided under this Part 16 and Part 17.

E. Any member who retires for service or disability pursuant to the provisions of this Chapter waives coverage, he or she will not be required to enroll in Medicare Parts A or B. However, if such member or former member later joins a City plan, he or she will be required to enroll in Medicare Parts A and B and any charges or penalties imposed by Medicare associated with enrollment outside the "initial enrollment period" shall be borne by such member or former member.

(Ord. 29904.)

A. A member who, as specified in Section 3.28.1950 or 3.28.1955.B.1. above, is eligible to participate in a medical insurance plan sponsored by the City, provided the member (or Tier 2 member, as applicable) must satisfy the following requirements:

1. The member retires for service or disability pursuant to the provisions of this Chapter; and

2. The member applies for medical insurance coverage at the time of his or her retirement in accordance with the provisions of the medical insurance plan, and agrees to pay any applicable premiums; and

3. The member retires for service or disability pursuant to the provisions of this Chapter and executes a waiver of coverage in the form and manner prescribed by the City indicating that he or she has medical coverage at the time of retirement other than coverage under the City's medical insurance coverage and later applies for medical insurance coverage upon the occurrence of an event identified by the medical plans as providing such individuals with an opportunity to elect to be covered under the City's medical coverage, or if there is no qualifying event, applies for medical insurance coverage during the annual open enrollment period, and agrees to pay any applicable premiums within thirty (30) days of the termination of the prior coverage or the commencement of coverage following open enrollment as applicable.

B. A survivor who, as specified in Section 3.28.1960 above, or to the extent the survivor of a member (including a Tier 2 member) specified in Section 3.28.1955 above, is eligible to participate in a medical insurance plan sponsored by the City, such survivor must satisfy the following conditions:

1. The survivor is receiving a monthly survivorship allowance because of the death of a member who either died during his or her employment with the City or died after he or she terminated City employment and was retired pursuant to the provisions of this Chapter; and

2. At the time of the member's death, the member and the survivor were enrolled in one (1) of the medical insurance plans sponsored by the City; and

3. The survivor applies to continue medical insurance coverage at the time of the member's death, and agrees to pay any applicable premiums. Notwithstanding the foregoing, if at the time of member's or former member's death, the survivor was not enrolled in a medical insurance plan sponsored by the City, but the survivor would have been eligible to have been enrolled at the time of the member or former member's death, and the survivor applies to continue medical insurance coverage within sixty (60) days of the death of the member or former member and the survivor agrees to pay any applicable premiums, such survivor shall be treated as if the survivor had been enrolled in a medical insurance plan sponsored by the City at the time of the member or former member's death for purposes of continued coverage under the City's medical insurance coverage.

C. A member may secure medical insurance coverage for a spouse only if the spouse and member were married at the time of said member's retirement for service or disability.

D. A member may secure medical insurance coverage for a domestic partner only if the domestic partner and member had established a registered domestic partnership pursuant to Division 2.5 of the California Family Code or had formed a legal union other than a marriage that is recognized as a domestic partnership pursuant to California Family Code Section 299.2 at the time of said member's retirement for service or disability.

E. A surviving spouse or surviving domestic partner shall be eligible for single coverage only, except as follows:

1. A surviving spouse or surviving domestic partner shall be eligible for family coverage if at least one (1) surviving child as defined in Section 3.28.1460.D., or at least one (1) child of the surviving spouse or surviving domestic partner who is unmarried, not a member of a registered domestic partnership and under the age of eighteen (18) years, or an eligible surviving child for purposes of receiving a school allowance as defined in Section 3.28.1750, is surviving the death of a member; in such case, if such child was enrolled in a medical insurance plan sponsored by the City at the time of the member's death. Notwithstanding the foregoing, if at the time of the death of the member, such surviving child of the member was not enrolled in a medical insurance plan sponsored by the City, but such surviving child would have been eligible to have been enrolled at the time of the member's death, and such surviving child applies to continue medical insurance coverage within sixty (60) days of the death of the member and the surviving child (or the surviving spouse or domestic partner on behalf of the surviving child) agrees to pay any applicable premiums, such surviving child shall be treated as if the surviving child had been enrolled in a medical insurance plan sponsored by the City at the time of the member's death for purposes of continued coverage under the City's medical insurance coverage.

2. A surviving spouse or surviving domestic partner shall be eligible for family coverage if the surviving spouse or surviving domestic partner is the court-appointed guardian of the person of a minor child or children and such minor child or children are eligible for coverage under the terms of the eligible medical plan. A surviving spouse or surviving domestic partner may continue family coverage after such child reaches the age of majority in any case where, if such child had been a surviving child of the member, such child would be an eligible surviving child for purposes of receiving a school allowance pursuant to Part 14 of this Chapter.

F. As used in this Section, "medical insurance plan sponsored by the City" means an eligible medical plan as described in Section 3.28.1990, below.

G. Notwithstanding the provisions of Sections 3.28.1970.A.1., 2., and 3., and 3.28.1970.B.1., 2., and 3., members or their survivors who would otherwise qualify for participation in a medical insurance plan pursuant to the provisions of this Part, but who, at the time of retirement or death, could not enroll because the benefits provided in this Part were not available at the time of the member's retirement for service or disability or death of the member, may enroll in an eligible insurance plan as provided for in this Part on or before October 31, 1984. If a member or survivor does not enroll on or before October 31, 1984, then said members or their survivors must otherwise comply with the coverage limitations provided in Section 3.28.1970 and with all other provisions of this Part.

H. A surviving spouse who would otherwise qualify for family coverage because the surviving spouse is the court-appointed guardian of the person of a minor child or children but who could not enroll because the family coverage provided in subsection E. above was not available to the surviving spouse at the time of the member's death, may enroll in family coverage in an eligible insurance plan as provided for in this Part until December 30, 2002, only. Said surviving spouse must otherwise comply with the coverage limitations set forth in this Section 3.28.1970 and with all other provisions of this Part.

I. Effective September 30, 2012 for Tier 2 members and effective January 4, 2013 for non-Tier 2 members, a member and/or dependent and/or survivor who is eligible for retiree healthcare benefits in the Federated City Employees' Retirement System and who is eligible for Medicare coverage, including any Tier 2 member and/or dependents and/or survivors of such Tier 2 member to the extent they may be eligible for retiree healthcare benefits under Section 3.28.1955, shall be required to enroll in Medicare Part A and B during the individual's "initial enrollment period" under the applicable federal rules. The initial enrollment period shall begin three (3) months before the plan member and/or survivor's sixty-fifth (65th) birthday (or other event providing eligibility for enrollment in Medicare) and concludes four (4) months after the plan member and/or dependent and/or survivor's sixty-fifth (65th) birthday (or other event providing eligibility for enrollment in Medicare). Additionally, the plan member and/or dependent and/or survivor who is eligible for Medicare coverage shall be required to enroll in a Medicare Plan provided by the Federated City Employees' Retirement System and assign Medicare Part A and B benefits to the Medicare Plan if required by the healthcare provider. Any member who retires for service or disability pursuant to the provisions of this Chapter or is a former member receiving a monthly allowance pursuant to Section 3.36.1640 waives coverage, he or she will not be required to enroll in Medicare Parts A or B. However, if such member or former member later joins a City plan, he or she will be required to enroll in Medicare Parts A and B and any charges or penalties associated with enrollment outside the "initial enrollment period" shall be borne by such member or former member.

If a Plan member was hired before March 1986 and is not eligible for Medicare Part A at no cost or a Plan member for any reason is not eligible for Medicare, the Plan member shall be required to provide such verification from the U.S. Social Security Administration to the Department of Retirement Services. Unless such verification is provided, Plan members shall be required to enroll in a Medicare Plan provided by the Federated City Employees' Retirement System within six (6) months of the "initial enrollment period." This provision shall not apply to those who waive coverage.

If a Plan member fails to meet the requirements set forth above within six (6) months from the date of the member's (or dependent or survivor's) "initial enrollment period," the Plan shall cease to provide retiree healthcare benefits until the Plan member completes such requirements. This means that the member and any qualifying dependents shall not receive retiree healthcare benefits. The Plan member and qualifying dependents shall be re-enrolled in retiree healthcare benefits beginning the first day of the following month after such requirements have been completed.

If the Plan member dies during the period which the Plan member failed to complete the requirements set forth above, the eligible spouse or domestic partner and any qualifying child(ren) shall be re-enrolled in a health insurance plan. When the spouse or domestic partner is age sixty-five (65), the requirements described above regarding enrollment in Medicare Parts A and B and enrollment in a Medicare Plan provided for City retirees and dependents, and assignment of Medicare Parts A and B benefits to the Medicare Plan must be fulfilled, unless verification is provided that the spouse or domestic partner is not eligible for Medicare coverage as described in this Section. If such requirements are not met, retiree healthcare coverage will cease until such requirements are completed, in the same manner set forth above with respect to members.

J. Subject to the provisions of this Chapter, effective June 16, 2017 and upon IRS approval of the VEBA, a member of the VEBA who meets the requirements of Section 3.58.300 may be entitled to receive benefits similar to those established under Parts 16 and 17 of Chapter 3.28 as such benefits are described in Chapter 3.58. These provisions entitle a VEBA member to a benefit equal to the amount of the premium for single coverage under the lowest cost medical insurance coverage available under the City's retiree medical program. VEBA members with at least five years of service with the City may be eligible to purchase medical benefits under the City's healthcare plans, however, such medical plan purchases will be at a retiree only rate that is not a rate blended with active City employees eligible for any benefits under the City's retiree medical program. VEBA members with less than five years of service with the City are not eligible for the benefits described herein. Such benefit shall cease at the time that such member is eligible for coverage under Medicare and subject to the provisions of Section 3.58.320. The catastrophic disability healthcare benefit provided under Chapter 3.58 shall be paid from the Federated Healthcare Trust Fund, as applicable.

(Ords. 21763, 22807, 26642, 27521, 29120, 29174, 29283, 29904, 30017.)

A. The costs of premiums for medical insurance coverage in an eligible medical plan shall be paid from the medical benefits account established by Section 3.28.380 or from the trust fund established by Chapter 3.52 and by deductions from monthly allowances paid by the Plan in accordance with this Section 3.28.1980. Unless otherwise determined by the trustees, payment shall be made out of the medical benefits account until the account is exhausted and thereafter out of the trust fund established by Chapter 3.52.

B. Except as provided in subsections C. and D.:

1. The portion of the premium to be paid from the medical benefits account, or trust fund established by Chapter 3.52, shall be the portion that represents an amount equivalent to the lowest of the premiums for single or family medical insurance coverage, for which the member or survivor is eligible and in which the member or survivor enrolls under the provisions of this Part, which is available to an employee of the City at such time as said premium is due and owing.

2. Members or survivors shall be required to pay that portion of the premium which represents the difference between the cost of the premium for the medical plan selected by the member or the survivors and the portion paid from the medical benefits account. Such premium as is required to be paid by a member or survivor shall be deducted from the allowance payable to such member or survivor under this Chapter.

C. A surviving spouse or surviving domestic partner who is otherwise eligible only for single coverage, but who elects family coverage pursuant to Section 3.28.1970.D., shall be required to pay that portion of the medical premium which exceeds the sum of the amount payable by the surviving spouse or surviving domestic partner and the amount payable from the medical benefits account or the trust fund established by Chapter 3.52 for single coverage as provided in subsection B. above. The portion of the premium required to be paid by the surviving spouse or surviving domestic partner shall be deducted from the monthly allowances otherwise payable to the surviving spouse or surviving domestic partner.

D. To the extent that any member (including Tier 2 members), or their survivors, are eligible for medical insurance coverage as provided under Section 3.28.1955, the benefit provided from the medical benefits account, or trust fund established by Chapter 3.52, shall be the benefit that is specified under Section 3.28.1955. In the same manner as other members and eligible survivors under subsection C. above, to the extent members (including Tier 2 members) or their eligible survivors are eligible for benefits under Part 16 as specified under Section 3.28.1955, they shall be required to pay that portion of the premium which represents the difference between the cost of the premium payable for the medical plan selected by the member (including Tier 2 members) and the portion paid from the medical benefits account or the trust fund established by Chapter 3.52. Any such premium required to be paid by a Tier 2 member or City of San José defined contribution plan participant, or their survivors, shall be deducted from the retirement or survivor allowance payable under this Chapter.

E. For the purposes of this Section, "lowest of the premiums" means that medical plan (single or family coverage as applicable to the coverage selected by the member, former member or survivor):

1. Which is an eligible medical plan as defined in Section 3.28.1990(A); and

2. Which has the lowest monthly premium of all eligible medical plans as defined in Section 3.28.1990(A) then in effect, determined as of the time the premium is due and owing. The lowest of the premiums for any current or future retiree in the defined benefit retirement healthcare plan shall be permanently set such that it would qualify for "silver level" as specified by the Affordable Healthcare Act (ACA) in effect in July 2015. This specifically includes the provision that the healthcare plan must be estimated to provide at least seventy percent (70%) (the "floor") but no more than seventy-nine percent (79%) (the "ceiling") of healthcare expenses (actuarial valuation) per the current ACA "silver" definition.

(Ords. 21763, 26642, 27521, 27838, 28914, 29283, 29904, 30087.)

For purposes of this Part 16, members or their survivors (including Tier 2 members and their survivors to the extent eligible for contributions under Section 3.28.1955) may secure medical insurance coverage only from:

A. Medical Plans Offered to Active City Employees - an eligible medical plan which is a plan in which the City has entered into a contract for the provision of hospital, medical, surgical and related benefits as part of the City's benefits to City employees; or

B. Medicare Medical Plans - an eligible medical plan which is a plan in which the City has entered into a contract for a Medicare coverage medical plan for the provision of hospital, medical, surgical and related benefits for Medicare recipients; or

C. Medical Plans Not Offered to Active City Employees - an eligible medical plan which is a plan in which the City has entered into a contract for medical plans for the provision of hospital, medical, surgical and related benefits which are not part of the City's benefits to City employees.

(Ords. 21763, 29283, 30087.)

A. It is intended that the funding provided to the retirement fund for medical benefits provided by this system meet the requirements of Internal Revenue Code Section 401(h). Subject to the requirements of the Meyers-Milias-Brown Act (California Government Code Section 3500 et seq.), the city reserves the right to amend this part to limit the funding provided to the retirement fund for the medical benefits as necessary to satisfy the requirements of said Section 401(h).

B. In the event the contributions required to be paid into the retirement fund to fund the benefits provided by this Part 16 and the dental benefits provided by Part 17, as determined by the board's actuary, would exceed the contribution limit permitted by Internal Revenue Code Section 401(h) and the applicable regulations, the allocation of costs set forth in Section 3.28.1980 shall be adjusted as needed so that the contributions made to fund the portion paid from the medical benefits account comply with Section 401(h). The board, in consultation with its actuary, shall determine the adjustment to be implemented until this part is amended pursuant to Subsection A. above.

(Ords. 27838, 28914, 29283.)