City: Plan eases cuts for retirees

Unions express concerns about health care proposal

City officials presented a proposal Wednesday that they said would restore some of the health care subsidies for retirees that were slashed two years ago in an attempt to salvage a wilting pension fund.

Representatives of city employee unions, however, were dismissive of the proposal Wednesday afternoon. Some said they weren’t provided with enough hard information to form an opinion while others said it did little to offset the damage from the original cuts.

“It wasn’t specific, for one thing. It was in generalities. It was very confusing. I just don’t think it was a good presentation overall. I’ll just say it bluntly,” said Francis Bradley from the Association of City Retired Employees.

This situation began in 2014, when the city decided it could no longer pay the 70 percent monthly subsidy for health care premiums for its retirees. Although the decision was made to augment the city’s pension fund, it was hugely unpopular among the thousands of retired city employees, so much so that it may have cost Mayor AC Wharton his re-election bid.

But now, Mayor Jim Strickland’s proposal would allow retired city employees to enroll in a new plan through a private health care exchange. This plan would shift many of the financial burdens from the city’s current insurance to the new plan, Human Resources Director Alex Smith said Wednesday.

Through that switch, Smith said, the $12 million the city spends on retiree health care insurance — including those who were grandfathered in despite the cuts — would cover renewed subsidies to the retirees. Those subsidies, Smith said Wednesday, would be between $1,000 and $5,000 annually for the retirees.

“We see it as a win-win,” Smith said. “It’s an opportunity for them to not only have options but to have a subsidy. … And it helps us have financial stability for the (pension) fund. We think it’s an absolute win-win for everyone.”

Representatives of the employee unions disagreed.

“We never saw the plan itself. We had nothing to judge anything on. The plan that they put out, they discuss some figures, but nobody knew what those figures were paying for,” said Tommy Malone, president of the Memphis Fire

Association. “They wanted us to take it to our members. I said, ‘What can I take to them?’ I can’t tell them what the co-pays are, what the deductibles are, the guts of the plan. I can’t tell them anything.”

Mike Williams, head of the Memphis Police Association, took particular exception to the proposal to move to the new plan those who are grandfathered in. That means they would lose the 70 percent subsidy in place now; the new subsidy may not cover as much. City officials said spouses of those lost in the line of duty will be able to remain with the city plan and keep that subsidy.

“They bring this proposal to the table, but they cannot tell us how much it’s going to cost those individuals,” Williams said. “The other issue is how are you expecting to recruit and retain officers when they know if they come here and get killed in the line of duty their surviving dependents will not be taken care of.”

Responded Smith: “As to pre-65 retirees, it is possible the subsidy is less. However, it is possible the total cost of health care is lower. If we do not move to the private exchange, we know our pre-65 nongrandfathered will not reFighters ceive any subsidy.”

When asked if at least some financial help from the city would be welcomed, Williams argued again for the return of the original subsidy.

“You should’ve never taken those people out of the insurance that they have worked so hard and diligently for,” he said. “You take everything away and you give me a little bit of something back, and you want me to be grateful. No, it’s not better.”

Based on the city’s figures, a typical pre-65 retiree paid $836 a month in 2016 city premiums. With the previous 70 percent subsidy, the out-of-pocket costs would have been around $250 per month.

Under the new proposal, that same retiree could choose from plans that would range from about $660 to $1,100.

That retiree, the city said, would likely receive an annual subsidy from the city of around $3,500 under this new proposal. That would give them about $291 a month to put toward the premium. That means that, under the city’s proposal, the direct monthly premium cost, with the subsidy, would be $369 to $809.

In other words, cheaper than it is now but not as cheap as when the city was paying 70 percent of the premiums.

Smith said Strickland could approve the proposal as early as next week, and if that happens, it could be in place by March for many of the retirees and July for the remainder.