Proposed cuts to Hopewell retirees’ spousal health care hit snag

May 16--HOPEWELL -- Despite apparent resolution earlier in the budget process, Hopewell City Council is continuing to debate whether it will pay health insurance premiums for the spouses of city employees who retired before Jan. 1, 2004.

The proposal put forward by City Manager Mark Haley in early April would allow the spouses of pre-2004 retirees to stay on the city health plan but would eliminate city payments of their monthly health insurance premiums.

The savings to the city of such a move is estimated to be $100,000, a figure that would offset much of the 3.8 percent increase in the city's health insurance rates for fiscal year 2018. Council approved those rates at their April 11 meeting.

On April 4, the city's health care consultant, OneDigital, presented City Council with the results of a study of 18 local governments and school divisions that showed that only three made premium contributions toward spouses until they became eligible for Medicare. Hopewell alone offered reimbursement for health plans obtained outside of the city-provided option.

Haley previously proposed the elimination of premium payments for pre-2004 retirees in 2015, and letters were issued to retirees notifying them of the anticipated change.

Now, as then, the roughly 30 affected retirees reacted strongly against the move.

"Where are (retirees) going to come up with the extra money on fixed incomes to pay for health insurance?" retired police officer Carl Kindervater asked Council at their May 9 meeting. "All I ask is that you look into your heart and ask yourself, one, why this really is being done? Two, do I vote for this proposal that's going to hurt 32 old retirees' lives, and is it worth breaking our promise to these retirees? And if we do, how can we promise anything else to our employees, citizens, or future retirees?"

Ward 2 Councilor Arlene Holloway responded later in the meeting with concern, declaring that "these are people who worked for the city for years and years and put the time in and were dedicated" and asking city administration "to go back to the drawing board."

Haley, however, argued that the elimination of spousal premium payments by the city is a matter of "equity."

Currently, he said, the city pays a "typical cost" of $871.76 per month for a pre-2004 retiree and spouse and $871 per month in reimbursement for a pre-2004 retiree and spouse who opt for a different plan.

Those figures are in contrast to the $123 per month the city pays for a post-Jan. 1, 2004 retiree with 15 to 19 years of service and the $185 per month it pays for such a retiree with 20 or more years of service. According to Haley, the city has not covered spouses of retirees "for quite awhile now."

The city payments for pre-2004 retirees and their spouses are higher even than its payments for active employees and spouses, who cost Hopewell $842.38 per month.

"So you contribute $185 to the retiree who retired last month and the retiree who retires next month versus $871.76. I find that inequitable," Haley told Council. Furthermore, he pointed out, if the city were to eliminate the spousal payments for pre-2004 retirees, the city contribution to those retirees' insurance would still be $684 per month, triple the payment for later retirees.

"Nobody made a forever promise in the world of local government, state government, or federal government," Haley said. "Someone will say, well, we're breaking promises. Well, I was promised that I would never have to pay for my state retirement. I now pay 5 percent, as do all employees. We've seen our health care go up, up, up, and we always have to pay more. No one looks at that. Your tax rates -- did you set a tax rate 20 years ago and say it would never change? Of course not. It changes. It has to change with time. It has to change to meet the demands and the fiscal realities of health insurance, and everyone knows health insurance is a wild and wacky world these days. So I'm just saying to phase this program out still leaves these retirees getting three times more money than retirees who are walking out the door tomorrow. That's not even close to equity, but it's a step in the right direction."

In a concession, Haley proposed that Council phase in the elimination by cutting its payments for pre-2004 retirees' spousal insurance by 50 percent this year before eliminating it entirely in fiscal year 2019, a change that would allow several spouses to become eligible for Medicare before losing the city premium payment.

City Council made no decision May 9 on the matter.

--Sarah Vogelsong may be reached at [email protected] or 804-722-5154.

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