Compromise OK’d for retirees health program

Thursday, May 12, 2005 | 9:40 a.m.

CARSON CITY -- A legislative budget committee voted Wednesday to accept a compromise plan regarding an increase in state health insurance rates for state retirees who are also covered by Medicare.

The state Public Employees Benefit Program had initially proposed raising rates by 100 percent or more for those on state retirement who are also covered by Medicare.

After loud objections from retirees and from legislators, a compromise was reached for a smaller percentage increase.

In addition, the committee decided to give a rebate to state employees who may have overpaid their premiums in the last two years. But the size of the rebate is yet to be decided.

A state retiree with a spouse was paying $78 a month to the state for continued health care coverage and $156 to Medicare for a total of $234 a month, according to figures from the benefits program.

Program officials had initially proposed raising the monthly total to $510 a month. But under the compromise it will go to $388, about a 40 percent increase for the retirees with 15 years' service and a $500 deductible policy.

To pay for the proposed reduction in premiums for state retirees on Medicare, the committee decided to dip into the state insurance system's $65.7 million reserve. The compromise will take $6.2 million from the reserve to cover the reduction in premiums.

In addition, the committee decided to take another $17.5 million from the reserve, some of it to give rebates to state workers and the other part to return to the state's general fund.

That will leave the system with a $43.3 million reserve on June 30, 2007, officials said.

Marty Bibb, executive director of the Retired Employees of Nevada, said the action by the committee was "not a complete return." The retirees with Medicare, he said "will experience some increase but it is less of a hit than was proposed."

He called it a "step in the right direction" but that it needs to be part of a "program to bring long term stability" to the system.

The system was near insolvency twice in the last seven years before the state bailed it out. And without changes, it would have had a $65.7 million surplus at the end of this fiscal year.

Under the present plan, a single state worker is paying $4 a month out of his pocket for the benefits with a $500 deductible policy. That will go to $20 in July, under the proposed rate changes. A state worker who covers his spouse pays $120 a month now. That will go to $177 under the new rate plan.