August 5, 2016
Dear Andover Resident,
Last Sunday, the state legislature voted to override Governor Baker's veto of a harmful state budget amendment intended to derail Andover's plan to reform retiree health insurance (a.k.a. "OPEB"). This action by Senator Barbara L'Italien and her colleagues on Beacon Hill would cost Andover taxpayers millions of dollars.
Representatives Jim Lyons (R) and Frank Moran (D), both stood up for Andover residents and voted in bi-partisan fashion against the override.
Selectmen/Town Manager respond
In response to the state legislature's action, Andover's Board of Selectmen met in Executive Session last night and approved the release of the following public statement:
Andover Board of Selectmen
August 4, 2016
"After consultation with counsel, we have concluded that the moratorium on changing retiree premiums in G.L. c. 32B,
sec 22(e), which the Legislature has again just extended to July 1, 2018, does not apply to the Town. The Town completed all actions under sec. 22 and sec. 9E while the moratorium date in effect was July 1, 2016. In addition, the moratorium has always applied only to "the first time" that the Town implements plan design changes under the Municipal Health Reform Law in sec. 21-23. The Town went in "the first time" in 2012 and the moratorium (which at the time was July 1, 2014) applied. The Town came out of secs. 21-23 in 2015 and now has gone back in. This, therefore, is "the second time" and not the "first time" that the Town has implemented plan design changes under the law. We believe that a court should apply the plain English used in the statute."
OPEB Reform Plan remains in effect
Andover's OPEB Reform plan will move forward. Here again is a summary of this common sense plan that protects elderly and low income retirees while achieving significant OPEB reform that will save Andover taxpayers millions of dollars.
1. The plan protects all retirees over the age of 65 — Medicare-eligible retirees will be consolidated into a single Medicare plan and retiree premium contribution amounts will be capped at 35%.
- 432 retirees already enrolled in "Medex" will see no change in plan or premium costs.
- 325 retirees enrolled in "Managed Blue for Seniors" will be moved to the Medex plan next January. (Their annual premiums will increase from $521 to $1,358 but co-pays will be lower.)
2. 4-Year Phase In Period — Under the Town Manager's plan, the town's premium contribution for the 212 non-Medicare retirees (< age 65) will decrease to 50.01% over a 4-year period:
- Year 1 (FY 2017) - 65%
- Year 2 (FY 2018) - 60%
- Year 3 (FY 2019) - 55%
- Year 4 (FY 2020) - 50.01%
3. Financial impact still significant — The plan will result in approximately $900,000 in annual savings after full implementation, all of which will be used to amortize the $188 million unfunded OPEB liability in approximately 40 years. (Without reform, that liability will grow to $650 million.)
Click here to read the entire plan: "OPEB: A Pathway Forward"
Visit TownofAndover.com for more information on OPEB.
Thank you for your support.