Yesterday's Detroit News carried an interesting news article about a decision to forgo a plan to make public school employees wait until age 60 to collect retirement health insurance benefits. Governor Rick Snyder and Republican legislative leaders together decided to abandon such a plan:
Setting a specific age for retired school employees to get health care coverage has been one of the most controversial aspects of a massive legislative overhaul of the Michigan Public School Employees Retirement System.
At public hearings held by a Senate committee last month, teachers in their late 40s and 50s said the requirement unfairly disrupted their retirement plans.
"In the interest of fairness and in response to inquiries from public school employees who have expressed concerns about making plans for their retirement, we have decided to remove the 60-year age provision under this legislation and to eliminate retroactively imposing graded health care premiums on retirees," Senate Majority Leader Randy Richardville, R-Monroe, said in a statement.
Snyder, Richardville and House Speaker Jase Bolger, R-Marshall, announced the changes late Friday. The governor and his fellow Republicans are trying to trim long-term costs to the retirement system to address a looming $45 billion unfunded liability for pensions and health care.
"The school employee retirement system, as it exists today, is simply unsustainable," Snyder said in a statement. "We have to act and act soon."
MPSERS provides full health insurance to retirees until age 65 when they are eligible for Medicare and their state insurance becomes secondary coverage.
Lawmakers also are dropping a graded health insurance subsidy for all school, community college and university employees in the system. The bill called for employees to get 30 percent of retirement health insurance coverage after 10 years of service and an additional 3 percent for every additional year.
The bill will keep in place a flat coverage of 80 percent of health insurance costs, requiring all retirees to cover the rest out of pocket, according to Richardville's office.
Other legislation has been introduced to require about 220 retired state legislators and 50 current representatives and senators grandfathered into a closed retirement health insurance plan to increase their premiums from 10 percent to 20 percent. Teacher unions have decried the perceived inequity.
"They made a good point in comparing any proposal to recently adopted state employee retirement reform," Bolger said in a statement.