Mayor Andre Sayegh’s administration received the approval of the City Council on Tuesday night to move municipal employees to the state health insurance program that will produce a projected $20 million in savings per year for the cash-strapped municipality.
Council members voted 8-1 to approve three measures to shift 2,344 employees and retirees to the state plan by Jan. 1, 2019, resisting protest from a hundred current and retired employees led by the firemen unions.
Chuck Onorato, president of the union that represents fire supervisors, sought more time to hire an expert to compare the prescription costs for his members and retirees. He said he is concerned about the prescription cost increase for retirees.
“We’re not here to hurt the city. We’re very understanding. We’re just looking for a little time,” added Kyle Hughes, president of the firefighters’ union. “Our main concern is to protect these guys that retired.”
Councilman Luis Velez suggested moving the vote on the three resolutions to a special meeting on Oct. 2. His colleagues did not accept his recommendation. He cited this to vote against the three measures.
Onorato passed out documents that showed prescription cost for retirees will significantly increase. Adam Ginnotti, a retired police officer, explained retail generic copayment will go up from $5 to $10. Retail preferred brand copayments will go up from $15 to $22 based on the NJ Direct 10 plan for him.
“When we were originally presented this program, we were presented the benefit being identical to current employees and retirees. That isn’t the case,” said Onorato. He said the city is going back on its promise to retirees.
Retail generic copayment is $3 for active employees, $10 for retirees. Retail preferred brand copayment is $10 for active employees, $22 for retirees.
996 retirees will be affected by the change, said municipal officials.
“Those benefits are guaranteed for life. The city needs to keep their word on this,” said Onorato citing a “vested benefits” clause in an old contract that guaranteed retirees will “be vested with their existing medical and health benefits as they enjoyed prior to July 1, 1998 and those benefits for those retirees shall not be subject to change by the city.”
“We’re not cutting benefits. They may have to contribute a little more to get it,” said business administrator Vaughn McKoy.
Onorato suggested the city curve out the retirees from the move to the state plan. He also alleged the city failed to notify union members 60 days ahead of making the change. He urged council members to table the three resolutions.
Business administrator Vaughn McKoy met with the city’s labor unions in early September to tell them about the plan to move. He said the switch is still four months away. He said he has a robust plan to inform municipal employees about the 18 plans offered through the state program.
“We’re rushing into this,” said Onorato. He said the retirees may take legal action against the city and seek an injunction via the courts.
Al Abdelaziz, 6th Ward councilman, read a clause in one of the resolutions that states, the city is “not free” from the “obligation to pay for post-retirement medical benefits of retirees.”
“We have that clause in there to protect people that are retired,” said Al Abdelaziz.
The council could not postpone action on the resolution. Ruby Cotton, 4th Ward councilwoman, said the urgency to switch picked up steam after the city took on more than $4 million debt to pay for over utilization of the health insurance program.
“The city needed to borrow money to pay for retirees’ medical,” said Cotton.
The move to the state plan has been talked about for the past three years.
“Our city is in dire straits. We have to do what’s right,” said Michael Jackson, 1st Ward councilman. Health insurance cost has increased by millions of dollars over the past years, forcing tax increases on homeowners.
The switch from the city’s self-insured program to the state plan will save $206.5 million over seven years, from fiscal year 2019 through 2025. During that period the city’s self-insurance program cost increases from $62.3 to $96.1 million while the state plan cost gradually moves from $41.9 to $56.1 million.
McKoy said the savings this fiscal year will be $1.3 million. The switch doesn’t take effect until half of the fiscal year is over, he said.
Municipal officials said employees will see savings as well. Employees will save hundreds of dollars a year, according to figures presented to the council.
Council president Maritza Davila tried to reassure retirees.
“You will be taken care of. You paid your dues,” Davila told them.