June 4, 2010

              As you are aware, the members of the Retired Public Employees Association (RPEA) are adamantly opposed to, inclusion in the proposed State Budget, an amendment to Section 167-a of the Civil Service Law. For the first time since 1966, it requires a diminution of the reimbursement of Medicare premium paid by State Medicare eligible retirees and would thereby saddle State Medicare eligible retirees with an additional and inappropriate cost for their coverage in the New York State Health Insurance Plan (NYSHIP).  Despite the small expected monetary savings to the State in fiscal year 2010-2011, and the small addition to a State Medicare eligible retirees’ cost for the NYSHIP coverage, RPEA believes the proposed amendment is inconsistent with, and frustrates, the underlying reasons why Section 167-a was initially adopted. It ignores the intent of the Legislature that both State active employee and State retirees and their respective dependents be charged the same amount as employee contributions for health insurance as reflected in Section 167 of the Civil Service Law.

              An analysis of the Governor’s proposed amendment (Part U of A.9706/S.6606) as well as the Assembly amendment contained in A.9706-B reveals many adverse consequences to State Medicare eligible retirees participating in NYSHIP.  Attached is a thorough legal analysis of the issue RPEA received from Harvey Randall, Esq., a leading legal expert on the State’s Civil Service Law.

              In his letter, Mr. Randall states that the authority to be given to the administrators of the NYSHIP plan would make “all insurance contributions and premiums associated with health insurance coverage…a moving target, subject to change at any time….”  He then reviews the legislative history and purpose of Section 167-a which was to avoid discrimination against Medicare enrollees in NYSHIP whose acceptance of Medicare as their primary coverage was effectively   mandated by the State in order to provide the State and participating employers with a significant reduction of NYSHIP employer contributions and how this proposal would, in essence, impair the full reimbursement of Medicare premiums to Medicare eligible retirees thus violating the legislative intent that all plan participants pay the same amount in premiums for equivalent benefits and require Medicare eligible retirees to pay a greater amount for participating in NYSHIP than paid by active State officers and employees for their NYSHIP participation.

              Finally, Mr. Randall makes it clear that the Assembly amendment to Section 167-a would permit Civil Service Department administrators to chargeback other types of Medicare premium costs to State Medicare eligible retirees enrolled in NYSHIP.  With passage of federal health care reform and with it, the need to find resources to provide health insurance for more citizens, it may well be that the Medicare Part B premiums or premiums under other parts of the Medicare program such as Part D would increase.  At some point, the federal subsidy to NYSHIP for providing drug coverage to Medicare eligible retirees and employees may be reduced or even end and it is within the realm of possibility that Medicare eligible participants would be forced to accept Medicare Part D coverage at substantial increase in their Medicare premium costs.  Mr. Randall clearly points out that the current amendment to Section 167-a would not distinguish “Medicare premium charges” under other provisions of the federal law.

              Mr. Randall formerly served as Principal Attorney and Acting Counsel with the New York State Department of Civil Service.  In addition, he publishes a blog on New York Public Personnel Law which comments on current court and administrative decisions and legislation concerning public personnel law, including those involving employee benefits.  To visit the blog, please go to http://publicpersonnellaw.blogspot.com/.

              His legal opinion should carry great weight and it is hoped that for the relatively minor amount of budget savings, the Legislature will not allow this proposal to undermine the original legislative principle and the intent of the drafters of Section 167-a of charging State Medicare eligible retirees equal amounts for comparable health insurance benefits made available to State active officers and employees.  At the very least, the power to change this principle should not rest with the administrators of NYSHIP and should be subject to legislative oversight.

              We would be pleased to meet with you or any of your staff to prevent an imminent adverse precedent with respect to  State Medicare eligible retirees insofar as their costs for participating in NYSHIP is concerned.

                                                                                                  Sincerely yours,

                                                                                                  Stanley Winter

                                                                                                  President