Committee OKs proposal requiring state retirees to pay health premiums
SPRINGFIELD -- State government retirees – many of whom don’t pay premiums for health insurance – would have to pick up roughly half the cost under a bill approved by the Senate Executive Committee Sunday.
The prospects for the bill, Senate Bill 175, are uncertain, however. Two senators on the committee said they voted for it only in order to give the full Senate a chance to consider the measure. They did not pledge to vote for it when it is debated by the full chamber.
The bill would affect thousands of retired state employees, most of whom pay no premiums for their state health insurance, according to a consultant hired by the state. Mercer Health and Benefits said that is a rarity both among state governments and large private employers.
Illinois reduces health insurance premiums by 5 percent for each year a retiree worked for the state, so a retiree with 20 years on the job pays nothing in premiums.
Sen. Jeff Schoenberg, D-Evanston, sponsor of the bill, said the state’s unfunded liability for retiree health care is estimated to be $30 billion. If retirees begin paying health insurance premiums, the debt would be cut by at least $10 billion, Schoenberg said.
“If we don’t do this, we’ll see increases in co-payments and reductions in the caliber of benefits,” Schoenberg said.
Schoenberg said he particularly wants to target workers who held upper income jobs in state government and retired before age 65, when they would be eligible for Medicare.
Premiums would be based on a person’s pension income, length of time with the state and age at retirement. Those with higher pension incomes would pay more. People who work longer for the state before retiring get a break under the theory they are closer to qualifying for Medicare.
For people on Medicare, the state health plan is a supplemental policy, and the state’s cost to insure Medicare-eligible people is dramatically lower -- $300 a month versus $800 for someone in the fee-for-service plan.
Someone with a pension of $15,000 to $30,000 a year could pay as much as $4,400 a year or as little as $777, depending on other factors like length of service and age at retirement.
If the bill becomes law, non-union retirees would begin paying premiums Jan. 1. Union retirees would not begin paying until July 1, after current contracts expire. The bill also does not apply to retired teachers.
John Cameron, political director for the American Federation of State, County and Municipal Employees, said retiree health insurance issue is a matter of “grave concern” for the union.
“This is essentially deferred compensation earned by our members,” Cameron said. “They were promised this, and now it is being snatched from them. This is an attempt to circumvent collective bargaining.”
AFSCME also said thousands of people were lured into early retirement by the state to save money, and many of them based that decision on health insurace.
Sen. John Jones, R-Mount Vernon, opposed the bill. He told of a retired state worker who visited him. The man is undergoing cancer treatment and broke down and cried about the possible insurance charges, Jones said.
“He sure as heck didn’t need this issue right now,” Jones said.
Sen. Maggie Crotty, D-Oak Forest, said she thinks low-income pensioners should be exempt from premium payments.
It’s unclear if significant changes can be made with the scheduled end of the session only two days away. Schoenberg said he is studying his options.
Doug Finke can be reached at (217) 788-1527.