SEPT 2007 - Lexington stands out as the first municipality that will be transferring its Retiree Drug Subsidy (RDS) into its trust fund for future retiree healthcare costs. Ed Note: RDS is the subsidy, paid by the federal  government, to communities that provide their retirees with prescription drug coverage that is equal to or better than Medicare Part D. “We applaud Lexington for its progressive approach on this issue,” comments Association Insurance Coordinator Cheryl Stillman.

“For some time, our Association has been pushing the state, as well as cities and towns, to use their RDS  money toward pre-funding retiree healthcare costs. While it’s commendable that some communities have  deposited the subsidy into their insurance reserves, Lexington becomes the first, to our knowledge, that  earmarked RDS for retiree healthcare.”

Our readers may recall that this is not the first time we have given special recognition to Lexington. It was the second town, with Framingham being the first, to adopt coalition bargaining for health insurance, shortly after the law was enacted. And, well before GASB (Governmental Accounting Standards Board) finalized its standards for pre-funding retiree healthcare and became a household name within retirement circles, Lexington was moving in that direction.

In fact, some five years ago, the town was successful in having special legislation passed, allowing it to establish the Post Retirement Insurance Liability Fund (Chapter 317, Acts of 2002). “Chapter 317 designates the retirement board as the fund’s custodian,” according to Firefighter Bob Cunha, who is the Board’s chairman. “We’re authorized to invest the money in the same manner as the pension fund.” Lexington has received approximately $250,000 in retiree drug subsidies. This money has been set aside in the General Fund until the town meeting authorizes its transfer into the Post Retirement Insurance Liability Fund. “We don’t anticipate any problem with the transfer being completed,” continued Cuhna. “Everyone agrees that this is the best use of the subsidy.”