Mobile’s City Council voted unanimously to shift supplemental health coverage for roughly 775 retirees onto a new plan administered by Humana Inc., ending years of the city holding out against a trend of municipalities cutting retiree health benefits.
The change applies to retirees age 65 and older who currently receive coverage through the city’s health plan. Officials said the move accomplishes two goals: providing retirees with supplemental coverage similar to what they have had, while saving the city an estimated $1.5 million in the coming fiscal year.
Council President Gina Gregory called it the strongest option available to the city, while Councilwoman Bess Rich described the previous arrangement as financially unsustainable. The savings stem largely from removing Medicare-eligible retirees from the city’s own health plan and shifting them to a private Medicare supplemental option.
Mayor Sandy Stimpson had pushed for a private alternative to reduce the city’s health care costs since taking office, though a similar effort was blocked by the council the previous year. City officials noted that Mobile’s retiree benefits have remained more generous than many other Alabama cities. Tuscaloosa and Huntsville, for example, provide no health coverage at all for Medicare-eligible retirees, while Birmingham retirees over 65 can pay as much as $1,000 a month for coverage.
Under the new arrangement, the city will share costs with retirees who purchase the Humana Medicare supplemental plan. Retirees will pay $72 per month for single coverage or $188 for family coverage, with the new benefits set to take effect at the start of the following year.
City finance officials outlined several differences between the old and new plans. The Humana plan carries no annual deductible, compared to a $250 deductible under the previous city plan. Emergency room copays drop from $125 to $50, and ambulance rides carry no additional charge under the new coverage. The city’s finance director said the Humana plan also caps total out-of-pocket costs for retirees at $3,000 annually, a protection the previous plan lacked entirely for copays and deductibles tied to doctor and hospital visits.
Not every retiree welcomed the switch. Some have raised concerns that the new Humana plan does not include dental or vision coverage, benefits some retirees had grown accustomed to under the city’s prior arrangement. City officials acknowledged the gap but maintained that the overall financial and coverage trade-offs made the switch worthwhile for both retirees and taxpayers.
City finance leaders said the savings generated by the switch would help address broader budget pressures facing Mobile, while still preserving a benefit structure they described as more generous than what many peer cities currently offer their own retired employees.