July 2010 Retiree Notes

Chapter wins in campaign to stop health insurance hikes

 

In the face of this spring’s vigorous grassroots lobbying campaign by Chapter 31, the Quinn administration backed off plans to unilaterally impose drastically higher health-insurance premiums on state and university retirees. The administration acknowledged that the union contract created a legal barrier to making the changes — and that any changes to retiree contributions would have to be negotiated with AFSCME.

 

No sooner had the governor’s office made this announcement than a group of Democratic legislators held a press conference to advance their own package of budget amendments — which included a significant increase in retiree premiums. The amendment was spearheaded by state Rep. Karen May, who told reporters that retirees “must feel the pain.”

Apparently few of her colleagues agreed. After an overnight call-in blitz by retirees, members of the House Executive Committee overwhelmingly rejected May’s amendment, with only two “yes” votes—Republicans Ed Sullivan of Mundelein and Michael Tryon of Crystal Lake.

 

Then another decisive blow was struck in favor of protecting the economic security of retirees later the same day. AFSCME had been lobbying for weeks against passage of a Quinn-backed bill known as the Emergency Budget Act, which gave the governor extraordinary authority to make changes in a variety of laws and regulations.

 

The administration had initially said that it would use that power to increase retiree health-care costs. So even though Quinn had backed away from that statement, Rep. Raymond Poe, R-Springfield, made sure that, during the floor debate on the bill, language was inserted in the official “legislative history” clearly stating that nothing in its provisions could be construed as allowing the governor to unilaterally increase retiree health-care costs.

 

“In Springfield, no fight is ever really over,” Council 31 retiree coordinator Maria Britton said. “But this is probably as close as it gets. We can say with near absolute certainty that Quinn’s plan to drastically increase health-care costs for state and university retirees is off the table — for now —  thanks to the unified and vigorous fight waged by our chapter members all across Illinois, backed up by the on-site lobbying in Springfield of the Council 31 legislative team. However, given the state’s gargantuan budget deficit gap and the steady drumbeat from the business community demanding huge premium increases, we can expect to face a repeat of this battle in future legislative sessions.”

 

Arbitration Win Continues to Benefit Retirees

 

A new report provided to SERS from third-party actuaries illustrates the continuing value of a 2008 AFSCME arbitration victory to state retirees with less than 20 years of service who retired on or after Jan. 1, 1998.

“The report illustrates that whatever state retirees are going to be paying effective July 1 for health insurance, they would be paying 17.3 percent more for the Quality Care Health Plan and 15.4 percent more under an HMO were it not for the AFSCME victory,” according to Council 31 employee benefits director Hank Sheff.

 

The grievance arose when Council 31 discovered that the state was overcharging those retirees who pay a portion of their health-insurance premiums because they retired with fewer than 20 years’ service. The state had been receiving modest “rebates” from name-brand pharmaceutical manufacturers for many years. In 2006, the state began to receive, in addition to these rebates, very significant “subsidies” from Medicare, subsidies that the state earns by continuing to provide Medicare-eligible retirees with prescription drug coverage as good as or better than the Medicare prescription drug program.

 

“When we reviewed the state’s premium calculations, the union discovered that the state was not adding these rebates and subsidies into their calculation of retiree health-insurance rates,” Scheff said. “The state was collecting these rebates and subsidies and refusing to pass the savings along to retirees.” 

 

AFSCME argued that the contract required the state to use “actual costs” in calculating the insurance premiums, and that the rebates and subsidies were in effect discounts. The state was therefore required to apply them in calculating the premium rates. The independent arbitrator agreed and ruled that the state had to give retirees credit for these subsidies and rebates by reducing premiums, starting July 1, 2008, and continuing into the future.

 

Closing donut hole among pluses from health-care reform

 

Among early impacts of the new health-care legislation, the Patient Protection and Affordable Care Act of 2010, will be help for retirees who hit the Medicare Part D coverage gap also known as the donut hole. Many IMRF retirees fall into the donut hole, as they usually receive no health-care coverage from their employers when they retiree and rely fully on Medicare.

 

According to the Department of Health and Human Services, the 80,000 seniors who first hit the donut hole were sent a $250 check on June 10. Checks will go out monthly as more seniors fall into the gap, with an estimated 4 million seniors eventually receiving the rebate this year.

The gap occurs when participants use up all of their initial coverage under Part D. Once they go over the annual limit, Medicare beneficiaries are responsible for the entire cost of prescriptions until they reach the catastrophic coverage threshold.

 

Seniors now enrolled in a Part D plan pay 25 percent of their prescription costs up to a total of $2,830. Then they pay full costs until their out-of-pocket spending reaches $4,550. After that point, catastrophic coverage kicks in and enrollees pay 5 percent of drug costs.

 

In 2011 the rebate will be replaced by a 50-percent discount on drugs for those who fall into the hole and will gradually phase up to a 75-percent discount in 2020, essentially eliminating the coverage gap.

 

Longtime union activist, Don Fitch, passes

 

Don Fitch, president of Joliet Sub-chapter 73, executive board member of Chapter 31 and long-time member of both AFSCME and Chapter 31 passed away May 3. 

 

Fitch retired as a lieutenant from the Stateville Correctional Center after 30 years service. Ralph Portwood, president of the Local 1866, said Fitch was an essential asset in Will County to his retirees, the local and the community.

 

“He was a breath of fresh air, who continued helping our local long after his retirement,” Portwood said. “I cannot communicate how much his presence will be missed.”

 

Fitch helped organize Sub-chapter 73 and was the first and only president until his death. He also served for seven years on the Chapter 31 executive board.

 

“Don was the force that kept the sub-chapter motivated and active over the years,” chapter board member Shirley Byrd said. “He will be truly missed by those who had the opportunity to know him up close and personal.”

 

“Don was usually involved in any big action done by the chapter, but one specific incident comes to mind that really describes the loyalty and focus that he brought with him into the union,” said Joanna Webb-Gauvin, former Chapter 31 Retiree Director. “In 2005, Don was very active in the Americans United to Protect Social Security, an organization centered on preventing President Bush’s goal of privatizing Social Security.  On the morning of an event Don organized to convince U.S. Rep. Jerry Weller to stand with the seniors in opposing privatization, I received a call asking what AFSCME Retirees were doing in Joliet because the FBI was alerted to possible trouble from the group. Don was so delighted that a few retired people could raise such alarm bells. He said that the political will of retirees should always be given such notice. That was just like Don.”