A new compromise plan could maintain heath care for county government’s retirees, one committee member said.
“Obviously people would prefer no change, but that’s not a possibility, so this is a good compromise,” said Liz Bennett, Rutherford County Retired Teacher Association representative on the retiree health benefit subcommittee.
Current and retired county employees have been outraged since the county announced plans to overhaul its retiree health plan, brought about by recent changes to accounting policies requiring governments to project retiree health benefit costs and record the liability on a yearly basis. This new requirement is forcing many governments to reevaluate retiree health coverage.
Rutherford County Insurance Director Lois Miller explained the subcommittee worked hard to compromise what the county needs with what its retired employees need.
“We tried very diligently to be fair to all employees because we want to continue this program,” Miller said, adding there will be no change to the benefits retirees currently have.
The subcommittee came up with a plan that reduces the insurance cost to the county, while at the same time preserving the benefits of current retirees and giving current workers the time to adjust to changes before retirement, she added.
The first proposal affects employees hired by the county after March 1. The new employees will be eligible for retiree health care after 20 years with the county after age 60 or any age after 30 years of service.
“Some counties have said: No insurance for new hires,” Miller said. “And we were concerned about having recruitment problems with that.”
Under this proposal, the county will contribute $300 per month per employee to retirement health care or the actual cost of coverage whichever is less. But the employee would be responsible for prescription drug coverage under Medicare Part D.
The second proposal covers current employees ages 60-64 that are not grandfathered in under the third proposal.
Miller called this the “Phase in” plan because it requires a gradual increase in the employee portion of health coverage until employee is paying 50 percent of cost.
The county should pay this currently, but contribution level hasn’t been adjusted with increased cost of health care. The county is currently paying 80 percent with employee paying 20 percent, roughly.
The third proposal covers current over age 65 retirees who have 30 years of service as of March 1 and active employees with 30 years of service as of March 1.
Employee will pay 25 percent and the county will pay 75 percent of health care coverage with a 50/50 split on spouses and dependents.
“Radical changes would have a big impact on these folks,” Miller explained, adding that’s why this proposal is only slightly different than what the county currently offers.
Other groups of employees will be addressed at a later date.
These changes are the result of an accounting policy mandated in 2004 by the Governmental Accounting Standards Board, which sets accounting policies for state and local governments.
The new policy requires governments to record the future cost of “other postemployment benefits” such as health care. For Rutherford County, the change goes into effect July 1, 2009.
Before now, the county funded retiree health care on a pay-as-you-go basis at a cost of $2 million per year. But now they must pay for current and future retirees on an annual basis, much like how the county funds its pension plan.
In order to fund retiree health benefits at the current level and save for future retirees, the county would have to save $389,430,501 over the next 30 years, or more than $26.5 million per year.
To raise that much cash the county’s property tax rate would need an additional 54 cents, bringing the rate to $3.10 per $100 of assessed value.
The county proposed drastic changes last summer to retiree health care. The changes were met with a denial from Rutherford County’s Insurance Committee, which sent the proposal back to a subcommittee.
The previous proposal would have required recent and future county employees to work longer to qualify with the county providing little or no supplement to the cost. It also would have required all retirees to enroll in Medicare Part D for prescription drug coverage for individuals over 65 years old.
Michelle Willard can be contacted at 615-869-0816 or mwillard@murfreesboropost.com. |
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