More than 2,500 state retirees will soon get a letter telling them the Public Employee Benefit Program cards they received in the mail recently were mailed out by mistake.
Jim Wells, executive director of PEBP, said the original error was caused by employees and retirees who didn't respond to letters, phone calls and emails asking them to decide which plan they wanted to be in and which dependents they wanted to cover.
"Choices had to be made because they couldn't stay in the old plan option because it didn't exist any more," he said.
Altogether, almost 1,200 members failed to respond, so Wells said PEBP put a hold on sending out their cards. He said it didn't make sense to send cards to members who hadn't yet chosen which plan they wanted to be covered under.
Decisions were eventually made by all but 299 of those people.
But Catalyst, which manages and distributes those cards to eligible employees and retirees, had a glitch. The cards were never sent out.
When calls started coming from people asking where their cards were, Wells said, PEBP realized what had happened and told the vendor to send the cards. That, he said, is when the final error occurred.
Instead of sending out the cards to just those 1,200 eligible plan members, the vendor sent out some 3,700 cards - to those people and also to more than 2,500 Medicare-eligible retirees and others no longer eligible to be covered by PEBP.
"They produced cards for an extended list of people who shouldn't have received them," Wells said.
The 2011 Legislature approved the transition of those eligible for Medicare out of the PEBP plan to save money. PEBP created a Medicare exchange program to get those people signed up with a private insurer who will provide them coverage suited to their needs.
One of those was Janice Ayres, head of the Retired Senior Volunteer Program, who said she was completely surprised to receive a new PEBP benefits card in the mail. Being more familiar with Medicare and the PEBP program than most, she called the program to ask whether she was once again eligible for benefits. She was told no.
"If I hadn't called, I wouldn't have known," she said. "What if I had dropped other coverage?"
Both she and Wells said the biggest concern is that people who aren't eligible or covered may assume they are and drop their other insurance plan.
"Now we need to send correspondence to people who got cards by mistake," said Wells.
He said the vendor is taking responsibility for that task as soon as PEBP compiles a final list. He said that is being done at no cost to PEBP.
He said any individual who tried to use the card at a pharmacy would be told immediately that he or she isn't covered by PEBP. In the case of billed services by a doctor, he said, the claim would be denied.
He said the remaining piece of the puzzle will be handled by the PEBP board next week. The board must decide what to do with the 299 individuals who failed to make any choices during open enrollment despite receiving two letters, a phone call and an email message. Those individuals' family members are currently without coverage.
He said the board can't allow them to just rejoin the plan mid-year because that would disqualify Nevada's plan under federal law and wind up with all 25,000 employees in the state plan being charged income tax on their premium as well as the state subsidy paid on their behalf.
If the board does nothing, he said, the dependents would be without coverage for the rest of this plan year.
He said possibly the best option would be to require those dependents to go into the private market and buy coverage on a short-term basis. When those policies expire, he said, PEBP could take them back into the plan without tax implications.
"But they actually have to go out and purchase coverage," he said.
The PEBP board's special meeting is set for Wednesday.