Lawmakers Approve Premium Increases for State Retirees Under Age 65

Nov 3, 2015

After punting a final decision multiple times in recent months, lawmakers signed off Tuesday on changes to state retiree health benefits.
Credit Casey McDermott, NHPR

Retired state workers under age 65 will have to pay 5 percent more in monthly premiums beginning in January, under changes approved by lawmakers Tuesday morning.

Under the changes, retirees below age 65 will pay 17.5 percent in premium costs beginning in 2016 — that’s up from the 12.5 percent they’re currently paying. According to projections from the Legislative Budget Assistant, that increase amounts to a difference of about $42 per month.

This is a larger jump than the 2.5 percent increase that was originally proposed, but lawmakers backing the changes said that an increase in this area helps to offset the need for additional increases in other areas of the retirees’ health plans at this time.

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Facing a nearly $11 million hole in the state retiree health plan, lawmakers have been grappling with how to rein in medical costs for retirees for several months. Unable to arrive at a compromise with each other and with the governor’s office, legislators pushed back a final decision on the issue three times since September.

At a meeting two weeks ago, lawmakers took a partial step to address the shortfall by voting to increase the amount that retirees must pay for prescription drugs. Unlike the premium increases approved at this week’s meeting, those earlier changes affect all retired state workers regardless of age.

Supporters of the increase in premium costs said it is not meant as a long-term fix but that it would avoid more sweeping increases in the retiree health care plan.

“Everything before us today simply puts a Band Aid over the problem to get us through the biennium to solve the issue of the increase in pharmacy costs that we did not anticipate during the budget cycle,” said Sen. Jerry Little, who put forward the changes at Tuesday’s meeting. “What we’re trying to do is to find a way to address the pharmacy-related costs in a manner that is as least-painful as possible.”

The fiscal committee’s 6-4 vote on the issue was not divided neatly along party lines. Only Republican members supported the measure, but Republican Sen. Andy Sanborn sided with three Democrats in opposition.

While Sanborn echoed colleagues’ frustration about the inability to come up with a compromise, he others against the changes said they were worried about the potential impact particularly on low-income retirees.

The changes are expected to go into effect starting in January.