Jan 11, 2013

Other (than pension) Post-Employment Benefits" Commission—or OPEB

On January 11, the "Other (than pension) Post-Employment Benefits" Commission—or OPEB—submitted a report to a special legislative committee outlining recommendations for so-called reforms to state and municpal employees' retiree healthcare. Gov. Patrick filed a bill (House Bill 59) based on this report. A summary of the changes proposed are below (note that "Future public employee retirees" refers to current employees who have not yet retired):

Years of Service w/Age Requirement
Future public employee retirees shall be required to complete 20 years of service and have reached the age of 60 (Group 1), 55 (Group 2), and 50 (Group 4).

PRO-RATING CONTRIBUTIONS
Future public employee retirees shall receive a health plan employer contribution based on a pro-rated scale based on completed years of service upon retirement as follows:
 
Years of Service Employer's Share of Premium Contribution
20 50% of Premium
23-26 50% plus 1/3 of the difference between 50% and MAB*
27-29 50% plus 2/3 of the difference between 50% and MAB*
30-plus 100% of Maximum Available Benefit
 

*MAB—Maximum Available Benefit

EXAMPLE
Assume a current state employee is paying 20% of their premium, and the Commonwealth is paying 80% of the premium. (The MAB in this case would be 80%.)
 
Years of Service Employer's Share of Premium Contribution
20 50% of Premium (Retiree pays 50%)
23-26 60% of Premium (Retiree pays 40%)
27-29 70% of Premium (Retiree pays 30%)
30-plus 80% of Premium (Retiree pays 20%)
 

Exempted Employees and Retirees
The following current employees (and all currently retired employees) shall be exempt:
  • Any current retired public employee.
  • Any employee within 5 years of retirement age, by pension group who has completed 20 years of service.
    Group 1-50 or older with 20 years of service
    Group 2-45 or older with 20 years of service
    Group 4-40 or older with 20 years of service
  • Any employee who is within 5 years of the current Medicare Eligible age (60) and within twelve months of vesting.
  • All Accidental Disabilities

Partially Exempted Employees
The following employees would be partially exempt:
  • Any current employee who is age 50 and has completed 15 years of service shall be eligible to receive a 50% premium contribution.
  • Any current employee who is age 55 and has completed 10 years of service shall be eligible to receive a 50% premium contribution.

In the event these employees work beyond 20 years of service, pro-rating would prevail upon retirement.

Read a (printable) summary of the OPEB Commission report

Read the full OPEB Commission report

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