Starting Jan. 1, new county employees will be subject to a
revised retiree heath insurance vesting scheduled.
HOLLISTER
Starting Jan. 1, new county employees will be subject to a revised retiree heath insurance vesting scheduled.
The new schedule requires longer service for eligibility and offers lower initial benefit levels, while it is expected to reduce the county’s long-term costs for retiree health care.
Under the new schedule, incoming employees will need 10 years of state service credit to receive a 50 percent employer retiree contribution. Under the old plan, the county’s 2010 retiree contributions will be 85 percent of the amount that it contributes for active employees, and that can start with as little as six months of county service. The old plan contributions increase 5 percent per year until they reach 100 percent.
Current employees will not be affected by the revised vesting plan – nor will they be offered the opportunity to transfer into it because the new plan starts later in the career cycle. Allowing employees with seniority to join the new plan would result in higher retiree benefits and a large cost increase to the county.
In 2010, the annual cost for the county’s retiree health insurance premiums is estimated at $690,000. The total long-term, post-employment benefits liability for the county’s 451 employees is $11 million. Under the best scenario, the new plan has the potential savings up to $1.26 million, 11 percent of current estimates. The amount of savings will depend on the amount of credited Public Employees’ Retirement System service of newly hired employees.
Five of the minimum 10 years of qualifying service must be performed at one agency. After the initial 10 years of credited service, the employer contribution increases by 5 percent per year until 20 years total. Then the employee is eligible for 100 percent of the employer contribution.
The two exemptions to these requirements are employees who retire in disability or employees who perform 20 years of credited service solely at one agency.
The amount the county currently contributes to heath insurance for retirees is set by the board of supervisors.
