County retiree health care plan change to begin
By KELSIE THOMPSON
Journal Staff Writer
MARQUETTE — Effective Jan. 1, new Marquette County retirees who are eligible for some form of retiree health insurance will be required to pay a percentage of what regular employees pay toward that benefit.
Retirees under the age of 65 with a retirement date after Jan. 1 will be required to pay 75 percent of what working employees pay toward their health care, said County Administrator Scott Erbisch.
Upon reaching age 65, or new retirees over 65, will also have to pay a co-share toward their Medicare Advantage policy.
Prior to Jan. 1, health care for retirees under 65 was 100 percent funded by the county, as well as supplemental policies for those over 65.
Current retirees under the age of 65 will not be affected — only those who retire after Jan. 1, Erbisch. Retirees over 65 will continue to receive a supplemental policy in addition to Medicare.
Six out of the county’s eight bargaining units agreed to the switch during negotiations in 2015.
The cost-saving measure was made to combat budgetary concerns related to rising health care costs and the county’s unfunded medical liability, said Marquette County Board Chairman Gerald Corkin.
“We’re up to about $4 million for our health care coverage, and that’s out of a $26 million budget,” Corkin said. “We’re talking about a big item on the budget.”
During one three-year period in the last five years, Corkin said the county’s health insurance costs increased by more than 70 percent.
In 2016, Erbisch said county employees paid approximately 13 percent toward medical, vision and dental insurance. Going into 2017, the county has opted to utilize the hard cap under Public Act 152.
The maximum exposure to the county for a single-person plan will be $6,344.80; $13,268.93 for a two-person plan and $17,268.93 for a family plan.
According to 2017 budget memo prepared by Erbisch and Finance Manager Sue Vercoe, the 2017 fiscal year budget includes $2.4 million for retiree health insurance — a 10 percent increase over the projected expense for 2016.
“Health care for retirees was put into contracts back in the ’70s when no one was really concerned with costs,” Corkin said. “The ball game has changed. You get these astronomical increases in the last 10 years and it makes it difficult to meet your contractual commitments.”
With the changes, Erbisch said the number of employees who sought retirement in 2016 was clearly higher than previous years.
“The total number of retirees in 2016 was 24,” Erbisch said. “Of those 24, one is not eligible for retiree health insurance and five have opted out of health care.”
A resource management position which also provided support to the Michigan State University extension, as well as one position in the district court, were eliminated through attrition. Another position in the planning department will only be filled on a temporary basis until the county can work through some of its budgetary challenges, said Erbisch.
“Change is difficult,” Erbisch said. “It’s not an easy thing to go through, but we have to be adjusting to these realities that we are facing today.”
The county’s unfunded health care liability, according to the most recent actuarial report dated Dec. 31, 2015, was reported to be just under $55 million, a large decrease from 2006 when it was at nearly $75 million.
“We’ve reduced the unfunded liability significantly in the last 10 years, so it’s coming down,” Corkin said. “Short term, you have to maneuver your way wisely, but looking long term, the county is in a very sound position because of the actions the boards have taken.”
This change, along with the county’s recent decision to switch health care providers from 44North to the Western Michigan Health Insurance Pool, are expected to reduce costs to the county, although Corkin said it’s difficult to determine the exact amount.
Erbisch also noted that not all county employees are eligible for retiree health insurance, which is dependent on several factors including hire date, years in service and is tied to bargaining contracts or personnel policies.
In recent years, retiree health insurance was eliminated for all new hires, including non represented employees, those in bargaining units and elected officials. Under the Retirement Health Savings Plan, new hires receive an annual financial stipend into a tax deferred account in lieu of health insurance.
“It’s been modified over the years to start limiting exposure and long-term liability expenses, and ultimately, the elimination of the program,” Erbisch said.
Kelsie Thompson can be reached at 906-228-2500, ext. 206. Her email address is kthompson@ miningjournal.net.