Retiree Medical Questions

I said I would address the issue of most importance to many sitting on the fence trying to decide between retiring to preserve medical benefits or staying and rolling the dice in hopes things change, before your DROP period is up. Well, I have got to tell you, I have more questions than I have answers. I spent the better part of this evening reading the brief prepared by Jeffrey Sloan, for the City. Keeping in mind the brief was answering the question posed by the City; is retiree medical a vested benefit? I have relied on another brief written by Sloan related to DROP, where he opined he believed case law indicated DROP was a vested benefit. So if I am to follow suit and rely on an attorney hired by the City to provide them a legal opinion, I do not think I can pick and choose which brief I believe or rely upon to talk about this issue.

I have had discussions with various attorneys whose practice centers around collective bargaining and employee benefits. Without exception, the reply was the same when asked if Retiree Medical is a vested benefit; "as a general rule, no." I added the fact employees hired prior to 1986 gave up; at the City's request, Social Security with the promise of 100% retiree medical. The answer shifted to what could only be described as a "wobbler." Most said there is little case law to support medical insurance as being a vested benefit, even with the knowledge of not participating in Social Security.

During discussions related to Retiree Medical, I kept coming back to a belief I had when the change was made and we opted out of Social Security; the City would pay 100% of the premium for my medical insurance when I retired. The SDCERS Retirement Handbook explains the medical insurance and what employees are entitled to receive upon retirement. The Handbook states in part; "You may participate in a City-sponsored health insurance plan, a union-sponsored plan, or any other insurance plan of your choice. The Retirement System will pay or reimburse the applicable Medicare-eligible or non-Medicare eligible retiree-only premium up to but not to exceed the cost of the retiree-only premiums for the highest cost HMO plan sponsored by the City that is made available to Health Eligible Retirees. If you chose to select a private health insurance plan, the City will reimburse the actual premium cost incurred up to the maximums stated above, provided that you meet the criteria established by the Board." There was little if any thought given to this NOT being a vested benefit as it was part and parcel to our vested Retirement Plan.

It is now apparent the City has been plotting since at least 2003, to reduce or eliminate Retiree Medical for employees. In 2005, the SDPOA attempted to enter agreement with the City to begin a "Medical Trust" for "New Hires" to provide for a means to fund Retiree Medical Insurance; knowing the changes caused by the Governmental Accounting Standards Board (GASB) Rule 45, would create a political issue for the City. GASB 45, requires municipalities to show on their financials, the "future" debt related to retiree medical payments. The City of San Diego is a "pay as you go" plan sponsor and has never put money aside for "future" benefit payments. The SDPOA, trying to look ahead at what could happen, began to negotiate a way to protect our members from a City who was not well known for future planning or paying its bills.

Now the discussion turned to those employees participating in DROP. The mayor makes unilateral changes to DROP and Retiree Medical. Those of us who signed up for DROP were ALL told our benefits were frozen. We each had to initial twenty-four (24) items on the election to participate in DROP and agreement to terminate employment agreement. On page one of four, the following statement appears; "The Retirement System and your employer will rely on the following facts. Each is important because it demonstrates you have carefully considered your election to participate in DROP." Then on page two of four, there is the following admonition; "I understand that if benefits are improved or otherwise changed after I enter DROP, through meet and confer or any other process, I will not be eligible for any of these benefit improvements or changes."

I'm no attorney but it appears to me, once I enter DROP, my benefits are frozen. I cannot derive any increase to my benefits, nor can I lose any; or so I thought. The Retirement System views me as a "Retired Member" and thus my benefits frozen. The City views me as a "active employee" and subject to any and all changes in contract and working conditions. The attorneys I have discussed this with, cannot answer the question; can the City change, alter, or eliminate my Retiree Medical once I enter DROP? I am not sure we are going to get a straight answer to this question until we put it before a judge. This will not be done anytime soon. So, those of us who are on the fence and cannot decide if the change made by the mayor to this promised benefit; will have to make our decisions without the help of a definitive answer.

I want to believe a judge would side with those of us who are participating in the DROP and find we entered into a contract that secured our benefits and the mayor's unilateral changes are illegal. Will this happen? Not in time to be a deciding factor in making a life changing decision, forced upon us by a system that lacks credibility. I wish there were more to provide, but I do not have any answers.

The SDPOA met today (5/21/2009) with the City and there has been no word of what occurred or what was discussed. I will not speculate and neither should you. Contact one of the Directors and see if there was movement on this issue, for the positive. If not, make your decision based on what is best for you, your family and the circumstance most likely to present itself in the future. Do not gamble with your future.