New York City must pay for the cost of any plan it offers to its retired employees, the state's appeals court ruled, complicating its path to implementing a Medicare Advantage plan.
The city has pushed for an Aetna-administered Medicare Advantage contract to manage healthcare benefits for its 250,000 retirees since 2023, and has been working to implement a Medicare Advantage plan in some form since 2021.
In a Dec. 17 decision, the state's Court of Appeals ruled that the city must pay the full cost of any health plan it offers. If the city continues to offer enrollees a choice between Medigap and Medicare Advantage, it must cover the cost of both options.
Retired city employees have challenged the implementation of the contract in court. Retirees have cited concerns over narrow networks and increased use of prior authorization in Medicare Advantage plans.
A judge previously ruled the city cannot offer Medicare Advantage as the only option for retired employees. A spokesperson for New York City Mayor Eric Adams told The Chief the city will continue to pursue the MA plan, pending the court's decision.
"While we are disappointed in the court's decision today, we will continue to pursue the Medicare Advantage plan — which would improve upon retirees' current health plan and save hundreds of millions of dollars annually — and await the court's next decision in the coming year," the spokesperson said.
City officials have said the Medicare Advantage plan could save the city $600 million annually.
If implemented, the $15 billion contract would be one of the largest in Aetna's history.