Executive Director of Finance Paul Wesch told councilors during a Finance Committee meeting Tuesday that the decision to make changes to the healthcare cost-share and cut Medicare–eligible retirees from the city’s self-funded plan came after a review of how peer cities handled similar situations.
Stimpson’s proposed 2015 budget cuts those retirees eligible for Medicare out of the city’s plan, but would help them find a supplemental plan for Medicare, and would pay $175 per month toward a supplemental plan for the first four years.
Wesch said the idea was loosely modeled after one in Birmingham, which cuts those employees from the city plan also, but gives a subsidy of anywhere between $42 and $122 a month to help pay for supplemental insurance. Huntsville doesn’t allow employees eligible for Medicare to remain on its plan and Montgomery has a cost-share for retirees, which ranges from $486 to $905, Wesch said.
Current employees would pay 20 percent of the total costs of coverage, with the city footing the bill for 80 percent. New employees, as of January, would pay 40 percent of the total costs. Retirees under the age of 65 would also pay 40 percent. Employees and retirees were paying about 16 percent of the costs, which was a result of the city eating cost increases over the last 10 years, Wesch said.
Under the proposed plan the city would pay the difference in premiums for one year for employees making $40,000 or less.
Keeping Medicare-eligible employees on the city’s plan would’ve cost the city $3.9 million, Wesch said. The cost associated with providing the subsidy was much less, at just over $1 million.
Councilors asked Wesch about concerns they’d heard from retirees whose spouse was under 65, the age required for Medicate enrollment. Wesch said those spouses could purchase a plan with the city.
“Mobile will still be behind peer cities in cost sharing,” Wesch said. “We’ll still be far behind, but it’s a step to getting healthcare costs under control.”
Several former employees and residents spoke out against the cuts to their health benefits.
Resident Henry Williams asked if the income of the employees from other cities had been compared to those employees in Mobile before the budget was proposed.
“I have a feeling the income of those employees was higher than here,” he said. “The people who have retired can’t afford this.”
Greg Foster, a retired Mobile Firefighter and vice-president of the Association of Retired Firefighters, said that if those 65 and older are taken out of a cost-share scenario than the burden is put back on current employees.
“That 40 percent will grow,” he told councilors.
The City Council will take up the budget again next Tuesday at a public hearing at 5:30 p.m. The council meeting has been moved to 4 p.m. that day.