Benefit changes would cost retirees hundreds a month

The director of the Public Employee Benefits Program told lawmakers Tuesday the governor's proposed changes would cost retirees hundreds of dollars a month.

Leslie Johnstone said she doesn't have rates for the coming biennium yet but that, using this year's rates as an example, a retiree also insuring a spouse would pay about $303 more each month to maintain state benefits. That would raise the total premium for those retirees to nearly $888 a month.

Johnstone told the combined membership of the Senate Finance and Assembly Ways and Means Committees that a retiree insuring only him or herself would end up paying $344 a month " up $164 from current rates.

Medicare-covered retirees would see their subsidy eliminated altogether.

For non-Medicare retirees who leave state service after July 1, she said, the premiums will range from a low of $546 a month to a high of $1,280 a month for a couple.

"We now have people getting a PERS (Public Employees' Retirement System) check that doesn't cover their health benefits," said Jim Richardson, representing the Nevada Faculty Alliance. "There are elderly school teachers who retired making $16,000. How are they going to deal with this?"

The cost increase comes from the governor's plan to eliminate or drastically reduce subsidies to retired state employees.

Assembly Speaker Barbara Buckley, D-Las Vegas, said she thinks cutting benefits retirees currently are receiving would open the state to a lawsuit.

"When I saw the proposal, I thought there's not a snowball's chance in hell this would pass a court's review," she said.

Assemblyman Pete Goicoechea, R-Eureka, said he agrees with Buckley.

"That's a benefit they are enjoying in place and I don't know how you can take that away legally," he said.

Senate Finance Chairman Bernice Mathews, D-Sparks, said the changes will force a lot of retirees to get supplemental coverage in the marketplace, possibly at a very high cost.

The governor proposed the subsidy cuts and other changes in the plan at the recommendation of his Spending and Government Efficiency commission. The plan saves a total of $158 million over the biennium by shifting costs dramatically to the employees and retirees.

Eliminating or cutting back subsidies for retirees, Johnstone said, would save about $39.7 million over the biennium.

Cutting back the overall premium subsidy for active state workers from 90 percent to 75 percent, she said, would save $50.6 million. But she said it would cost even active workers about $112 more a month, a pay cut of nearly 6 percent for classified workers at the lowest pay scales.

And those cuts are on top of the $50 million in reductions Nevada Public Employees' Benefits Program already approved.

Lawmakers are expected to take up the PEBP budget in detail when the 2009 Legislature opens next week.

- Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.