Governor Files Retiree Healthcare Reform

Mirrors Special Commission Report

MAY 2013 VOICE: True to his word, Governor Deval Patrick has filed a bill (H59) to reform retiree healthcare benefits that mirrors the recommendations made by the Special Commission on Retiree Healthcare. See March Voice for Commission details, including retiree/survivor protectons.

Like the Commission’s report, Patrick holds current retirees and survivors harmless from the proposed changes in eligibility and the proration of benefits. Active employees with twenty or more years of service and within five years of retirement age (by group) are also exempt.

However, the governor did include hard-fought provisions that seek to make changes in retiree contribution rates prospective for new retirees only, retaining existing retirees under their current rates. Patrick also strongly backs a provision requiring all cities and towns to contribute at least 50% toward survivor’s insurance premiums.
Younger active employees, along with all new hires, will be required to work at least twenty years in public service in order to be eligible for retiree health insurance. At twenty years of service, a future state or local retiree would be eligible for a minimum 50% premium contribution.

Premium contribution rates are then prorated for service between twenty and thirty years. At thirty years of service, the future retiree would be eligible for the maximum available benefit (MAB) provided by the entity from which they retired. For example, the current MAB for state retirees is 80%. Locally the average remains at approximately 75%.

H59 is now before the Joint Committee on Public Service, where it will receive a public hearing sometime this spring, before being acted upon by the Committee. The bill will likely then be discharged to the House or Senate Committee on Ways and Means.

One area of concern for many active employees who are within retirement age but lack twenty years of service, is that they may fall just outside of the grandfathered population of employees and not qualify for insurance benefits upon retirement.

“The first thing everyone needs to keep in mind is that there is no reason for anyone to panic. Public Service and the other committees are going to undertake a very careful review of provisions within H59,” said Association Legislative Liaison Shawn Duhamel, who served as the retiree representative on the Special Commission. “While there is a general agreement that reform of retiree healthcare is necessary, most everyone is in agreement that it must be done in a fair and reasonable manner.

“I don’t see much interest in the Legislature in pulling the rug out from under those employees close to retirement age. At the same time, there seems to be a feeling  that current retirees must be held harmless and protected from rising contribution rates. It is the right thing to do.”

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