MTA Today - Summer 2013

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.