Counties Move To Address Retiree Health Care Costs
Orange County officials have proposed reducing $1.4 billion in unfunded liability by requiring retirees to purchase their own health insurance, a move retirees say would result in a lawsuit, the Orange County Register reports. The changes would reduce the deficit by one-third.
Under the proposal, more than 5,000 retired county workers would be offered Medicare gap insurance instead of full health insurance at age 65. Medical grants offered to retirees would be tiered with incentives given to retirees who worked beyond age 60. Retirees also would receive lower cost-of-living increases each year.
The changes could increase retirees' health costs by 40%, according to an actuarial study.
Fred Branca, president of the county's retired employees association, said that if the county goes "forward with this, which it appears they will, it will end up in court."
However, county and union officials say the changes are necessary. County officials also note that retiree medical benefits were never vested since the program began in 1993.
John Moorlach, treasurer and tax collector for the county, said if the unfunded liability is not addressed soon, "it could choke a lot of us out of important public services or even the retiree medical program itself" (Santana, Orange County Register, 9/8).
The San Diego County Retirement Board on Thursday voted to earmark $41 million for county retirees' health care and cost-of-living increases after the pension fund earned $156 million more than expected last fiscal year, the San Diego Union-Tribune reports.
The board will transfer $31.4 million into the retiree health fund, which is used to pay the non-guaranteed benefit. Almost $115 million of the excess earnings will be used to pay down the pension fund's debt.
Board member Doug Rose, the county deputy district attorney, voted against the transfer of funds, saying, "If the county wants and the county believes that its employees should have medical benefits when they retire, then give us the money to fund it, and stop taking our pension money."
Supervisor Dianne Jacob said the county might not have the funds to provide retiree health care.
However, county officials are discussing the possibility of creating a trust fund for future retiree health benefits. A plan could be presented to the retirement board early next year, according to retirement association CEO Brian White.
The pension fund has assets of $7.4 billion. Last year, the fund reported a $1.4 billion deficit and was considered 80% funded (Wolf Branscomb, San Diego Union-Tribune, 9/8).