How Connecticut Towns are Saving on Retiree Healthcare
Cities face huge employee benefit liabilities, so some Connecticut towns are changing retiree healthcare benefits.
The Yankee Institute for Public Policy recently shared some Connecticut towns' strategies for facing their other postemployment benefits (OPEB) costs, particularly retiree healthcare benefits.
Aside from pensions, OPEB benefits also present cities with long-term financial challenges that have been waiting to be addressed. A 2016 report on OPEB benefits by the Center for Retirement Research at Boston College found that these liabilities total $862 billion nationwide.
Two-thirds of that liability is being held by municipal governments.
Connecticut alone has $9.9 billion in net OPEB obligations. According to the institute, new research yet to be released found that New Haven, Waterbury, Bridgeport and Hartford together face a combined $2.7 billion liability.
Some cities are facing retiree healthcare costs with the following strategies:
Westport faced a $106 million liability for healthcare retirement plans.
The town switched their new hires into a high deductible health savings accounts and eliminated pension plans for non-union employees
South Windsor no longer provides health benefits for retirees.
The town moved to a high deductible health plan for employees and merged health plans with the town’s board of education, which resulted in savings of $2 million per year. Retirees can purchase a health plan through the town.
Norwalk switched employees to a high-deductible health savings plan and eliminated retiree healthcare benefits for new employees.
The city provides a yearly $600 healthcare voucher for retirees and then a $300 voucher when they reach the age of 65 and can enroll in Medicare.
Danbury also stopped offering retiree healthcare benefits for new hires, except police and firefighters.