NH Retiree Health Subsidy Subject of Cost-cutting Measures

April 21, 2008 (PLANSPONSOR.com) - The New Hampshire state Senate has approved a measure permitting some teachers to put off retirement for a year and still qualify for a health insurance subsidy on retirement.

An Associated Press news report said teachers and a small number of municipal workers must be eligible to retire and collect the medical subsidy as of July 1 to qualify under the bill. The measure has already passed the House and now heads to the governor, the news report said.

Meanwhile, according to the Manchester Union Leader, state officials are separately considering ending an annual 8% cost hike to the local government-funded subsidy. Public worker unions say many public employees would no longer be able to afford retiree medical care without the subsidy, but the New Hampshire Municipal Association charges that if the contribution hike is not eliminated, property taxes across the state will rise by tens of millions of dollars.

At issue is the bill’s provision to freeze medical subsidy payments and transfer $250 million from a separate medical subsidy fund into the main retirement system fund. The proposed change was aired at a public hearing last Wednesday before the Senate Executive Departments and Administration Committee. House Bill 1645 passed the House without debate and is now undergoing Senate scrutiny.

The subsidy, which has about 10,000 beneficiaries – roughly half of the total number of retirees in the system– was listed as the top priority for lawmakers in recommendations issued last year in a comprehensive report by a 20-member commission to study the long-term viability of the system, the Union Leader said.