The city’s move from a self-insurance program to the state health plan is being challenged by both the fire and police unions.
At the core of the challenge, expected to be heard by an arbitrator in March, is the cost increase for retirees.
“It’s still in arbitration. I don’t want to speak too much on it. What I can tell you is an unilateral change across the board for our retirees is a problem because of the vested rights clause in the contract,” said Mason Maher, III, president of the union that represents ranking police employees, on Thursday. “Basically, when a retiree leaves, he leaves with the benefits that he had at the time of retirement so it’s a direct violation of the vested rights clause.”
Both active and retired members of police and fire protested the switch in September. Municipal officials ignored their pleas and switched 2,344 employees and retirees to the state plan anyway.
Cost doubles for retirees in some instances. Adam Ginnotti, a retired police officer, who protested the move in September, explained retail generic co-payment will go up from $5 to $10. Retail preferred brand co-payments will go up from $15 to $22 based on the NJ Direct 10 plan for him.
Municipal officials at the time estimated 996 retirees would be affected by the change.
“When you retire, they can’t change your level of coverage that you retired with. That’s the debate we are having right now,” said Chuck Onorato, president of the union that represents fire supervisors.
Both Onorato and Maher said Newark gave the same treatment to retirees. An arbitrator ruled in favor of labor in that case, both said. Both men are optimistic an arbitrator will rule in favor of the police and fire unions.
Onorato suggested municipal officials create a curve out for retirees, but his request was ignored.
The other issue in the joint grievance is that the state insurance plan is inferior to what members had prior to the switch. Insurance has to be “equal to or better” for active employees, said Onorato.
“Based on our healthcare expert, the coverage isn’t the same as the coverage we are contractually entitled to,” said Onorato.
The city added a clause in all labor contracts that allowed the municipality to switch to state plan, according to municipal officials.
Mayor Andre Sayegh declined to comment on the dispute on Thursday.
Sayegh administration officials few months ago said the switch will save the city approximately $20 million per year. That amount could be substantially reduced if the unions win their case.
Council members voted 8-1 to approve the switch based on savings.
Sayegh is dealing with a $6 million budget shortfall after getting a $33 million state aid package promise. State guaranteed $29 and wants the administration to fully switch to the state insurance plan and increase sewer fees for $4 million.
After unsuccessfully trying enlist all employees to give up two weeks of pay over a 6-month period to reduce the shortfall, his administration floated a plan to layoff 89 firefighters and 112 police officers to balance the budget. Part of the plan also includes 19 demotions for police, said Maher. It also includes layoffs in other departments and furloughing civilian employees.
Maher said he could not speculate whether there’s a correlation between the unions’ challenging the city’s health insurance switch and the plan to layoff police and fire employees.
Some council members publicly denounced the mayor’s plan, arguing it will lead to a severe reduction in services for residents and is certain to lead to delayed emergency response time and spike in crime.