Health care is a privilege too few can afford and one benefit of working for the government is affordable and available insurance after retirement.

However, new changes to governmental accounting policies are forcing a change in post-retirement health care insurance offered by many governments, including Rutherford County, and past and present Rutherford County employees are concerned about the proposed changes.

“This is an insult not only to retirees but to those who have worked for Rutherford County’s various departments for many years, often at very low pay. One thing we have had to compensate is good benefits,” said Steve Cates, a retired Rutherford County high school teacher.

“This move will bring an end to much of that and I hope that all those affected, as well as all Rutherford County citizens, will rise up and tell Mayor Burgess and the County Commission that we will not stand for it,” Cates continued.

The changes are the result of new accounting policies mandated by the Governmental Accounting Standards Board, which sets accounting policies for state and local governments.

In 2004, GASB issued statement No. 45 that requires governments to record the future cost of “other postemployment benefits” such as healthcare. For Rutherford County the change goes into effect July 1, 2009.

“The Board concluded that the change would benefit user of financial reports by ensuring the transparent financial reporting of potentially significant (other postemployment benefits) costs and commitments that otherwise could easily be overlooked because of the form in which the employers’ contribution is made,” GASB Project Manager Karl Johnson said.

While it may make government accounting more transparent, it has the unintended consequence of producing another bill for the county to pay.

“The county is not setting aside any money for future retirees who are expecting this benefit,” County Finance Director Lisa Nolen explained.

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 in Annual Required Contribution (ARC).

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.

But an insurance subcommittee, including Nolan, worked to change what the county currently offers to bring the figure down to $3.5 million per year.

“We’re really trying to take care of our current long-term employees and the current retirees, although everyone sustains a little hurt,” Nolen said.

Currently, county employees are eligible for a 50-percent contribution for health coverage with five years in the health plan and after age 55 with 15 years of working, age 62 after 10 years of working or any age after 30 years.

“In order to get the ARC reduced to a level that the county can fund, a full spectrum of changes is required,” Nolan said.

The most sweeping change is the requirement for retirees to enroll in Medicare Part D, which provides prescription drug coverage for individuals over 65 years old, with some carriers offering vision and dental insurance at an increased price.

The proposed changes were divided into four groups depending on date of hire or retirement.

Group 1 is new employees hired on or after Jan. 1, 2009. They will be vested for retiree health care after 15 years in the county health plan and with 20 years of work at age 60 or 30 years at any age.

Group 2 is current employees with less than 10 years working for the county as of Jan. 1, 2009. These employees become eligible after age 60 with 20 years in the county or at any age with 30 years and 10 years in the health plan.

For groups 1 and 2, the employee will have access to the county's health plan, but will be responsible for 100 percent of the cost between retirement and age 65. After 65, they would be required to enroll in Medicare Part D with no contribution from the county.

Group 3 contains long-term county employees with 10 or more years working for the county as of Jan. 1, 2009. These employees are eligible at age 62 with 10 years of service, age 60 with 15 years of service or any age with 30 years of service and five years in the health plan.

As for contribution levels, retirees with 10-14 years with the county will pay 75 percent. Those with 15-19 years will pay two-thirds of the cost. Those with 20 or more years will pay 50 percent.

After age 65, prescription drug and other benefits will move to Medicare Part D.  The county will contribute $78 per individual or $145 per couple for Medicare supplemental, which is 50 percent of today’s Medicare cost.

“This lowers the liability because we’re not saying we’ll pay 50 percent forever and ever,” Nolan said, adding the fixed rate can be adjusted later as health costs rise.

Group 4 consists of about 400 or so current retirees as of Jan. 1, 2009. There is no change to this group, except for those over 65 years old.

These former employees will continue to see the 50-percent contribution for health coverage, but they will be required to enroll in Medicare Part D for pharmacy coverage.

“These actions will encourage long-term service from our current employees, and allow Rutherford County to continue offering health benefits to our retirees,” Nolan said.

Michelle Willard can be contacted at 615-869-0816 or mwillard@murfreesboropost.com.