CHICAGO –Chicago plans to begin scaling back on retiree healthcare premium subsidies in its 2014 budget, even though a legal challenge to its plan to phase out the subsidies for most retirees faces a legal challenge.

Mayor Rahm Emanuel announced that the city has begun informing retirees of the changes effective Jan. 1. Under federal law, the city must notify plan participants of benefit provisions by Oct. 15. The city changes which will save about $24 million next year are the beginning of a plan to phase out subsidies for most who retired after Aug. 23, 1989, over the next few years. Prior retirees will continue to receive an subsidy of as much as 55% in the city’s healthcare plan.

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