H59 Marks Largest Issue of 2013

AUGUST 7, 2013: The Joint Committee on Public Service has announced that on October 31, 2013 it will hold the long awaited public hearing on H59, Governor Deval Patrick’s proposal to reform retiree healthcare benefits.

As members know, H59 largely reflects the findings of the 2012 Special Commission on Retiree Healthcare, on which our Association held a seat. Legislative Liaison Shawn Duhamel represented public retirees on the Commission.

While H59 exempts all current retirees and survivors from the proposed changes in retiree healthcare benefits and eligibility, it may impact some active employees. Who among active workers might be impacted if and when the proposal becomes law remains an open question.

“There is no question that H59 protects current retirees and survivors. It is the scope of impact on active employees that is the great unknown,” says Association Legislative Liaison Shawn Duhamel. “The current bill, as written, does exempt most active employees who are close to retirement age. But, as we discovered after the bill was filed, there are some workers who fall through the cracks and would be unjustly harmed.

“Legislative leaders have expressed their concern that changes must be done fairly and without harming people close to retirement. What we don’t know is how far these grandfather measures will go and when certain provisions might go into effect. We’ll certainly know more after the hearing on October 31.”

The following is a brief summary of the key provisions of H59, as it currently stands:

What is H59?

H59 is legislation filed in February 2013 by Governor Deval Patrick. The bill, which reflects the report of the 2012 Special Commission on Retiree Healthcare Reform, would make significant changes to the healthcare benefits offered to future public retirees at both the state and local levels. Like the Commission’s report, H59 grandfathers existing retirees and survivors under the current law, as well as grants additional protections. Active employees, who are close to retirement age, are largely held harmless from the reforms.

What is the bill’s status?

H59 is now before the Joint Committee on Public Service. The Committee has scheduled a public hearing on the bill for Thursday, October 31, 2013. A public hearing will mark the first step in the legislative process for the 2013-2014 session, which runs until January 2015.

How does H59 protect current retirees and survivors?

•    Grandfathers existing retirees under current law in terms of insurance eligibility.
•    Current retirees and survivors NOT subject to prorating of contribution rate.
•    Creates new law that protects retirees from increases in their insurance contribution rate percentage. This mirrors the state policy of only increasing the percentage rates of future retirees.
•    Requires all cities and towns to cover at least 50% of surviving spouse insurance premium. Currently some 60 communities require survivors to contribute 100% of the premium.

What changes are being considered for future retirees?

•    Future retirees required to have 20 years of creditable service in order to qualify for retiree insurance benefits.
•    50% contribution at 20 years of service.
•    Prorated contribution for those with 20-30 years of service.
•    Maximum available contribution paid for those with 30+ years of service (for future state retirees, this represents an 80/20 contribution at 30+ years of creditable service.
•    Place a time limit on the application of benefits for deferred retirees.

Who is exempt from the current proposal under H59?

•    Current retirees and survivors.
•    Employees with 20 years of service AND are within 5 years of the retirement age for their group (ie. 50 for groups 1&2 and 40 for group 4).
•    Employees age 60+, who have at least 9 years of service.