Labor & Employment Law

Governor Paterson?s Special Session Proposal to increase the cost of health insurance for retirees and their dependents

Governor Paterson?s Special Session Proposal to increase the cost of health insurance for retirees and their dependents

Source: Press release from the Division of the Budget

A press release issued by the Division of the Budget states that among the proposals that the Governor wishes the State Legislature to consider in a Special Session are provisions that would amend the Civil Service Law to reduce the reimbursement to State workers and retirees for their Medicare premium charges (Part E set out below) and an amendment to the Civil Service Law with respect to the contributions for health insurance coverage that would be required from new retired state employees (Part F set out below).

Part E -Medicare Part B Premium Sharing

If enacted, this provision would discontinue the full reimbursement of the Medicare premium currently being provided to employees and retirees for their Medicare Part B coverage. Such persons would be required to pay a portion of their Medicare premiums -- 10 percent for individual coverage and 25 percent for dependent coverage. Currently the State pays 100 percent of their Medicare premiums.

The reason why the State currently pays the full cost of Medicare premiums is that the State Employees Health Insurance Plan has elected to exclude benefits available to Medicare eligible retirees and their Medicare eligible dependents for medical and related costs that are covered by Medicare as authorized by Section 167-a of the Civil Service Law. Accordingly, such individuals must enroll in Medicare while continuing to pay the full premium of their State Health Insurance in order to receive ?full benefits.? In other words, the State has shifted to cost of certain benefits, in whole or in part, to Medicare that it would have otherwise been required to provide to its Medicare-eligible employees and retirees and their respective Medicare-eligible dependents.

Were it not for these individuals being reimbursed for their Medicare premiums, such individuals would be required to pay the full cost of their State Health Insurance premium and the full cost of their Medicare premiums notwithstanding the fact that they would only be provided with the same level of health insurance benefits that they would have receive under the State Plan had the State not elected to exclude benefits provided by ?Medicare coverage.? To avoid this result, Section 167-a provides that the State is to reimburse such individuals for the Medicare premiums that they are required to pay.

Section 167-a of the Civil Service Law currently provides as follows:

§167-a. Reimbursement for Medicare premium charges. Upon exclusion from the coverage of the health insurance plan of supplementary medical insurance benefits for which an active or retired employee or a dependent covered by the health insurance plan is or would be eligible under the federal old-age, survivors and disability insurance program, an amount equal to the premium charge for such supplementary medical insurance benefits for such active or retired employee and his dependents, if any, shall be paid monthly or at other intervals to such active or retired employee from the health insurance fund. Where appropriate, such amount may be deducted from contributions payable by the employee or retired employee; or where appropriate in the case of a retired employee receiving a retirement allowance, such amount may be included with payments of his retirement allowance. Employer contributions to the health insurance fund shall be adjusted as necessary to provide for such payments [emphasis supplied].

Part F -Establish a Sliding Scale for Health Insurance

If adopted, this bill would, effective January 1, 2009, provide that the share of health insurance premiums paid by new retirees would be based on years of service. The State would pay a minimum premium share of 50 percent for individual coverage and 35 percent for dependent coverage for. employees who retire with 10 years of service. The State's contribution would increase by 2 percent of the premium for each additional year of service up to a maximum contribution of 90 percent for individual coverage and 75 percent for dependent coverage for employees who retire with 30 or more years of service.

The relevant documents concerning this may be found on the Internet at:

http://publications.budget.state.ny.us/budgetFP/SpecialSessionProposals/proposal_BillCopy.html

Full post as published by New York Public Personnel Law on November 17, 2008 (boomark / email).