July 7, 2011

How Does New Medicare-eligible retiree Reform Affect Your Community?

Marc Comtois

WPRO's Bob Plain piqued my interest with his story on how the new law (PDF, pg. 145 of file) allowing cities and towns to shift municipal retirees’ from private health care plans to Medicare will save Providence about $11.5 million.

I haven't heard what sort of savings this could mean for my hometown of Warwick's budget numbers, though a look at the 2012 Warwick City Budget (pg.85 of file) shows that there are approximately $6.88 million earmarked for retiree health care for municipal, police and fire retirees (Warwick schools don't pay for retiree health care). Now, this doesn't mean that all of that money can vanish from the books. There are plenty of contingencies built into the new law:

Every municipality, participating or nonparticipating in the municipal employees' retirement system, may require its retirees, as a condition of receiving or continuing to receive retirement payments and health benefits, to enroll in Medicare as soon as he or she is eligible, notwithstanding the provisions of any other statute, ordinance, interest arbitration award, or collective bargaining agreement to the contrary. Municipalities that require said enrollment shall have the right to negotiate any Medicare supplement or gap coverage for Medicare-eligible retirees, but shall not be required to provide any other healthcare benefits to any Medicare-eligible retiree or his or her spouse who has reached sixty-five (65) years of age, notwithstanding the provisions of any other statute, ordinance, interest arbitration award, or collective bargaining agreement to the contrary. Municipality provided benefits that are provided to Medicare-eligible individuals shall be secondary to Medicare benefits. Nothing contained herein shall impair collectively bargained Medicare Supplement Insurance. {emphasis added}
So cities and towns (ie; mayors and city councils) don't have to do this and current collective bargaining agreements may prohibit them from doing so, anyway. It'll be interesting to see who takes advantage of the new law, who ignores it or who makes excuses.

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Marc, you will be happy to know Warwick has followed this practice for years. (See section 30.2(d) of the Municipal Employees Contract on the City of Warwick website) When a Warwick retiree reaches age 65 the retiree has to enroll in Medicare. The city provides supplemental coverage, commonly referred to as "Part D". The cost to the city is less then $100 per retiree per month. The belief that retirees receive lifetime Healthmate coverage is completely false. Most of budgeted 6.8 million for retiree health benefits is to pay claims. The city is self-insured and does not purchase health insurance through Blue Cross.

Posted by: Happy at July 13, 2011 7:46 PM
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