A hearing has been scheduled for Oct. 31 on;a;retiree;health;insurance;bill;filed;by Governor Deval Patrick in January in
response;to;a;report;filed;by;the;Special;Commission
to;Study;Retiree;Healthcare;and;Other;Non-Pension
Benefits.
The;commission;was;created;by;the;Legislature
last;year;to;study;unfunded;municipal;and;state
retiree health care costs.
During the past decade, there have been rising
concerns about the unfunded liabilities created by the
current;system.;The;governor’s;bill,;House;59,;would
reduce;health;insurance;benefits;for;some;future
public-sector;retirees;to;reduce;those;liabilities.;How
it;would;affect;an;employee;depends;on;a;number;of
factors, including age and years of service.
The;commission;was;co-chaired;by;former;MTA
President Anne Wass and included representatives of
the;Massachusetts;AFL-CIO;and;the;Retired;State,
County;and;Municipal;Employees;Association;of
Massachusetts.;The;commission’s;recommendations
were;supported;by;labor;and;retiree;representatives.
The;stated;goal;of;the;commission;was;to
protect;current;retiree;benefits,;ensure;that;current
employees;close;to;retirement;get;their;benefits;and
ensure;that;long-term;public;employees;receive
retiree health insurance.
On;Jan.;25,;the;MTA;Board;of;Directors;voted
to;support;the;commission’s;recommendations,
adopting;the;following;motion:
That the MTA Board of Directors affirms
support of the recommendations of the Special
Commission to Study Retiree Healthcare and
Other Non-Pension Benefits as set forth in the
Special Commission’s January 11, 2013, report.
MTA will support legislation that mirrors or
improves the recommendations contained in the
report. If legislation is proposed which departs
significantly from the recommendations contained
in the report, and to the detriment of MTA
members, the leadership will consult again with
the Board of Directors.
In;order;to;maintain;sustainable;health;care
benefits;for;current;and;future;state;and;municipal
retirees,;the;MTA;supports;making;modifications;to
the;benefit;structure;to;reduce;future;costs.;However,
the;MTA;is;seeking;changes;to;the;governor’s;bill;to
better;protect;certain;groups;of;long-term;employees
who;would;be;adversely;affected;by;it.
“As people live longer and the cost of health
insurance has skyrocketed, the unfunded liability for
retiree;health;insurance;is;a;serious;problem;that;we
have;to;deal;with,”;said;MTA;President;Paul;Toner.
“Employee;retirement;benefits;are;already;putting;a
big strain on cities and states across the country, and
Massachusetts;is;no;exception.;If;the;costs;become
too;great,;we;may;see;layoffs;and;pay;cuts;for;active
employees;in;the;future;while;risking;continued
health;care;benefits;for;our;current;retirees;and;active
members.
“That;said,”;Toner;said,;“we;will;continue
working;with;the;governor;and;the;Legislature;to
improve;House;59.”
The;MTA;will;be;alerting;members;when;the;bill
is;under;active;consideration;on;Beacon;Hill;in;order
to advocate for changes to it.
A response to liabilities
The;impetus;for;House;59;was;data;showing
that;the;state;and;local;governments;have;unfunded
liabilities;for;“Other;Post-Employment;Benefits”;—
mainly;retiree;health;insurance;—;of;more;than;$46
billion:;$16.7;billion;for;the;state;and;$30;billion;for
municipalities.;That;total;is;even;greater;than;the
state’s;unfunded;pension;liability.
Unlike;in;the;pension;system,;employees;do;not
contribute;to;their;retiree;health;insurance;benefits,
and;the;state;and;municipalities;have;contributed
very;little,;largely;treating;it;as;a;pay-as-you-go
system.;Pay-as-you-go;worked;when;the;costs;were
low,;but;now;health;insurance;is;so;expensive;that
accounting rules are forcing public entities to set
aside;more;money;and;bring;down;costs.
“The;goal;of;House;59;is;to;ensure;the;long-
term;sustainability;of;public;employee;retiree
health;insurance;while;maintaining;a;robust;system
that;will;continue;to;attract;and;retain;high-quality
state;and;municipal;career;employees,”;said;Toner.
“We;support;the;bill;in;principle,;though;we
have;concerns;about;the;impact;on;some;of;our
Under;current;law,;most;state;and;municipal
employee;retirees;are;eligible;for;health;insurance
benefits;after;they;retire;if;they;have;completed;10
years;of;creditable;service.;The;employer;pays;a
portion;of;the;premium;—;at;least;50;percent;and
often;more;—;which;is;termed;the;maximum;benefit.
Under;House;59,;future;employees;and;many
current;employees;would;need;at;least;20;years;of
creditable service to be eligible for health insurance
benefits;when;they;retire.;The;employer’s;share;of
the;retiree’s;health;insurance;premium;would;be
prorated;for;those;with;more;than;20;years;but;fewer
than;30;years.
The;following;is;a;summary;of;key;provisions
of;the;bill.;More;details;are;available;on;the;MTA
website;by;searching;for;“OPEB.”;The;bill;itself;is
available;on;the;Legislature’s;website.
Under;House;59:
n Current;retirees;would;retain;all;benefits.
n There;would;be;no;change;for;those;eligible
for;accidental;disability;benefits.
n Some;long-term;employees;nearing;retirement
would;be;“grandfathered;in”;—;meaning;they;would
continue;to;be;eligible;for;the;maximum;benefit;if
they;met;certain;criteria.
n For;new;employees;and;current;employees
who;are;not;grandfathered;in,;health;benefits;would
only;be;available;to;retirees;who;have;at;least;20
years of creditable service.
n Employers;would;pay;50;percent;of;the
premium;for;retirees;who;have;20;years;of;service.
n The;employer’s;contribution;for;those;who
have;more;than;20;years;of;creditable;service;would
be;prorated;until;the;maximum;benefit;level;was
reached;for;those;with;30;years.
n Municipalities;would;be;forbidden;from
reducing;benefits;for;retirees;once;they;qualified;for
a;given;level;of;benefits.
The;retiree;health;insurance;issue;was;discussed
at;length;at;this;year’s;MTA;Annual;Meeting;of
Delegates.;A;majority;present;adopted;New;Business
Item;#2,;requiring;the;MTA;to;seek;changes;to;House
59.
On;May;29,;the;MTA;sent;a;letter;to;all
legislators;in;accordance;with;this;NBI,;notified;local
presidents;of;the;directive;and;posted;information
about;it;on;the;MTA;website.
The;wording;of;the;NBI;is:
Be it resolved that MTA shall work to modify
legislation that would adversely affect MTA
members’ health care coverage upon retirement,
including changes to the minimum eligibility
age, years of service required, and/or percentage
of premiums to be paid. The MTA shall fight to
improve the legislation filed by Governor Patrick
entitled “An Act Providing Retiree Healthcare
Benefits Reform.”
The MTA Annual Meeting of Delegates hereby
instructs the leadership to:
n Publish this resolution on the website and in
MTA Today accompanied by a clear explanation
of the legislation’s specific provisions.
n Notify every local president of this resolution
and encourage them to organize their members
to contact legislators to improve the current
legislation.
n Communicate the MTA’s intent to improve the
current proposed legislation via a letter to every
state legislator.
n Direct the MTA Government Relations
Division to work to improve the current proposed
legislation.
Certain categories of members
Of;particular;concern;to;the;MTA;is;the;impact
of;House;59;on;the;following;members:
n Higher;education;faculty,;many;of;whom;are
in graduate school for so long they are unlikely to
reach;the;longer;employment;thresholds.
n Vocational;school;teachers,;many;of;whom
work;in;their;trades;for;decades;before;becoming
teachers;and;need;this;experience;to;be;able;to;train
students;in;these;high-skill;areas.
n Education;support;professionals;who;are;only
given;10;months;of;creditable;service;per;year;and
who;therefore;have;to;work;20;percent;more;years
to;be;eligible;for;the;same;level;of;benefits;as;other
education;employees;credited;with;12;months;of
service per year.
The;hearing;in;October;on;House;59;will;be
before;the;Legislature’s;Joint;Committee;on;Public
Service.