The Associated Press

Mass. To Revamp Retiree Health Care

BOSTON — Gov. Deval Patrick plans to propose legislation calling for sweeping changes in future retiree health care benefits for state and municipal employees that officials estimate will save up to $20 billion over the next 30 years.

The changes would include raising the number of years an employee needs to be vested in the retiree health care system, cut the state’s contribution to health care premiums for many workers, and raise the eligibility age for health benefits from 55 to 60 for most employees, according to an administration official knowledgeable about the report. The official spoke on condition of anonymity because the report had not yet been made public.

The recommendations are to be included in a report due for release Friday by a special commission studying what many in government view as unsustainable costs for retiree health care.

The proposed changes would not affect any of the current 75,000 retired state employees, spouses or survivors who receive health care benefits, or about twice that number of retired municipal workers.

But current state and municipal employees would be affected with some exceptions, such as a worker who currently has completed at least 20 years of service and is within five years of retirement.

According to the commission, Massachusetts faces an unfunded liability for retiree health care and other non-pension benefits totaling more than $46 billion – approximately $16.7 billion for the state and $30 billion for cities and towns. The liability exceeds the state’s unfunded pension obligations, and according to the report the state and most cities and towns have not set aside adequate resources to cover health care liabilities.

Among the key recommendations that will be included in the legislation, according to the administration official, is raising the minimum years of service an employee must have before being vested in the retiree health care system from the current 10 years to 20 years.

The state currently contributes 80 percent of the health care premium for all vested retirees, but that too would change for many workers in the future. Retirees with 20 years of service would be eligible for a 50 percent premium contribution from the state, rising on a prorated basis for each year of service up to 30 years, when a retiree would become eligible for the full state contribution.

The same proposed changes would apply for municipalities, though some currently pay a lower share of the premiums for retirees.

The minimum age for eligibility to receive retiree health care benefits would also rise from 55 to 60, though it would be lower for some workers, such as police and firefighters, who can retire at younger ages.

According to data from the Boston College Center for Retirement Research cited in the report, Massachusetts has among the highest retiree health care costs of the 50 states. The changes are projected to save between $15 billion and $20 billion over the next 30 years, including $9 to $12 billion for municipalities. Most of the savings, however, would likely not kick in for about 10 years.

The 12-member commission that adopted the report included lawmakers, state and municipal officials, and representatives of the Massachusetts AFL-CIO and a group that represents retired public employees. The administration is banking on union support for the bill to head off any contentious debate over it in the Legislature.

The effort is the latest by the Democratic governor to control employee costs. The Democratic-controlled Legislature approved a measure in the last session aimed at saving $5 billion over the next 30 years by overhauling the state’s pension system.

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  • mental health

    The state currently contributes 80 percent of the health care premium
    for all vested retirees, but that too would change for many workers in
    the future.

  • william manning

    State workers should also not be allowed to accumulate unused sick days until retirement and then get paid for them. Those payouts can be enormous.

    • Kathy

      Government workers accumulate sick time because they don’t have short term disability.

  • Tough Love

    The minimum age for ANY retiree healthcare subsidy should be 60 for EVERYONE, INCLUDING police and firemen.

  • noslack2327

    As the comments below attest, we taxpayers are reassessing the entire retirement package for municipal and state employees. The period of free lunch is long since over,and probably never should have begun.

  • tracy

    State workers work for much less than the private sector. we pick benefits over salary. Keep that in mind. There are people who have been state workers for 30+ years and only get 45k. Let’s not go here.

    • mumtothree

      Unfortunately, the new economy’s private sector jobs frequently come with neither a good salary nor benefits. Lots of people are working as 1099 “contractors” and must buy their own insurance, 100% of it, and it gets a little tired to hear state and municipal employees and retirees complain about having to pay AS MUCH AS 20%. Some cities and towns have retirees who pay only 1%. We have to stop treating this as sacrosanct.

    • Dan

      Bunker Hill Day, Patriots Day, MLK day, Evacuation Day (St. Patrick’s Day), Columbus Day…….. C’mon… State workers are on the teat….

  • Acnestes

    Don’t confuse the bloated packages that legislators and political appointees get with what regular grunt civil service employees get.

  • wareinparis

    I am a retired municipal employee, so basically, my retirement benefits parallel those of state retirees. Patrick has, in my opinion, struck a proper note here. Ten years of service is not a realistic number to merit either a retirement allowance or health insurance subsidy in most cases. Twenty years is more realistic, and moving the minimum age for normal retirement to 60, makes common sense as well.
    Personally, I would be inclined to go a little further and make that 80% of the three year high for 30 years service unavailable until age 66 for normal retirement. Just as it makes sense to consider means testing, which we don’t yet do, for upper income Social Secutiry beneficiaries, we should be looking at this for the high end state and municipal retirees.
    A laborer who works for 30 years and has his pension based on his top salary of probably $45 or 50K needs that 80% a whole lot more than the executive who worked for 30 years and has his pension based on $150 or 200K salary. Yes, the exec should get a greater allowance, but the currently awarded difference is not reconcilable to good sense or fairness.

  • Dan

    Make the trough smaller. Tons of waste and ‘golden parachute’ deals out there especially police and fire… scam… a step forward in at least recognizing the fleecing of the taxpayer.

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