MERCED — The Merced County Board of Supervisors recently approved changes to health care plans of retirees over age 65, a move they say will save the county $1 million each year.
The changes, which go into effect Jan. 1, 2014, include switching from a group plan where everyone had the same benefits to individual plans. Retirees will now be presented with a menu of options for both medical and prescription coverage through United Healthcare.
Jim Brown, Merced County executive officer, said the changes are prompted by several factors: increasing costs of health insurance, a significant long-term unfunded liability and a $5 million shortfall in the county's 2013-14 budget.
The decision to approve the changes came during the supervisors' last meeting in June.
"Our current plan is unsustainable, and we had to do something to try to reduce costs," Brown said. "With the increase in cost of health insurance, we are looking for ways to work with all of our retired employees to reduce costs. This was the first step in achieving that."
The county currently contributes $321 toward the over-65 retirees' $550 monthly premium. The new plan would cap the county's contribution at $100 to $150, according to county documents. It would be capped at $100 for future over-65 retirees.
Brown said about 85 percent to 90 percent of retirees will see lower monthly premiums. "This was one area we were able to achieve savings in a win-win situation for retirees," Brown noted.
Spouses of retirees over age 65 will also see a savings, Brown said, because they're 100 percent funded by the retiree.
The proposed changes have been in the works for more than a year, Brown said, and should reduce the county's long-term unfunded liability by $70 million over the next 25 years.
However, some retirees might see a slight increase in out-of-pocket costs for prescription drugs under the new plan.
"If you have more than two medications, you will have an increased cost in prescription costs," said Chairwoman and District 4 Supervisor Deidre Kelsey. "But it's based on encouraging people to stay well as long as they can. We're just trying to be progressive and being able to provide quality health care to our retirees."
There are no changes to health care plans of retirees under age 65, but the county will cap its contribution at $300 to $400, based on years of service.
In the current plan, the county contributes $286 to $376 toward a monthly premium of $754.
"Although we won't see any short-term savings right now, there will be long-term savings because of the cap," Brown said.
Dental plans for all retirees will also be capped, according to county documents. The county currently pays the entire premium of $41 per month, but it will be capped at $35 beginning Jan. 1, 2014.
Brown said he worked closely with Merced County's retirement groups in structuring the new plan, and the feedback from retirees has been positive.
Lincoln Clendenin, a member of the Merced County Employees' Retirement Association board, said the current plan is expensive both for the county and the retirees.
"Each year, the county was having to put more and more money into the program," Clendenin said. "It's just a move the county is wanting to make to save some money, and trying to do it without drastically reducing benefits to the retirees."
Clendenin, 71, worked in the county's public works department for 40 years, and now serves as chairman of the retirement association's health committee.
"We all have to work together to keep the county from spending too much money on some of these benefits," he said.
Informational sessions will be held soon to discuss the changes in detail, answer retirees' questions and help with enrollment, Brown said.
Reporter Ramona Giwargis can be reached at (209) 385-2477 or firstname.lastname@example.org.