Miscalculation increases Paterson’s insurance cost for retirees by $560,000 | Paterson Times

Miscalculation increases Paterson’s insurance cost for retirees by $560,000


The city has to pay $563,042 more for Medicare advantage plan insurance for retirees over 65 years of age due to a miscalculation, according to municipal government officials.

Business administrator Nellie Pou explained spouses of retirees were not included in the insurance cost estimate. As a result of the miscalculation the city has to pay Aetna Life Insurance Company $2.68 million, up from $2.12 million, for coverage period Jul. 1 through Jun. 30, 2018, according to municipal records.

Pou needed the city council to appropriate the additional $563,042. A resolution presented by the administration stated “the city inadvertently failed to include the retiree’s spouses in the cost estimate.”

“Who got fired for that?” asked Kenneth Morris, councilman at-large.

“No one,” replied Pou.

Pou said the city has enough funds to cover the unexpected expense through budget transfers.

Morris uncovered the cost estimate for next year listed a $2.23 million figure, suggesting the cost estimate for next year does not include the spouses of retirees as well. He sought an explanation.

Pou said finance director Marge Cherone had the answer. Cherone had left early and was not available to answer Morris’ question.

Cherone did not respond to a call for comment on Wednesday afternoon.

The council pulled them item from its agenda.

The city entered into a five-year contract with Aetna. It paid $5.78 million for the first three years. It optionally renewed for the fourth year that covers the current fiscal year. The city has the option to renew for a fifth year which would cover the fiscal year that starts on Jul. 1, 2018 and ends on Jun. 30, 2019.

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