Health-Care Settlement Saves Wayne County $20M Annually

Wayne County Executive Warren Evans said Wednesday the county will save about $20 million a year under a settlement of a lawsuit filed by retirees after their health-care benefits were slashed in a deficit reduction measure in 2009.

The settlement, which ends a five-year court battle, is the first-term county executive’s latest effort to whittle away at a $52 operating budget deficit. It provides for monthly stipends of $130 for individuals who retired before 2007, and $130 for their spouses, according to a news release.

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The settlement affects about 5,000 retirees. About 80 percent of them are eligible for coverage under Medicare. The remaining 20 percent will also receive stipends based on their income levels.

The stipend can be used to purchase health insurance on the national exchange available under the Affordable Care Act. Many of the retirees also qualify for federal tax credits in the purchase of health insurance because of their income levels, Evans said.

The retirees were represented by 14 labor unions, including AFSCME, NUPO, GAA and the GBA. In their lawsuit, the retirees claimed the cuts were prohibited in their collective bargaining agreements, but the county said it had the right to reduce and even eliminate all their health care benefits.

Without the resolution this lawsuit would likely have continued for many more years, Evans said. The settlement agreement reduces the annual health-care cost for these retirees from approximately $30 million a year to about $10 million.

“It was difficult to ask this large group of retirees to agree to reduce their health care benefits this drastically,” Evans said. “Unfortunately, given the County’s financial condition there was no choice. It’s gratifying, however, to see the spirit of shared sacrifice reflected by this resolution, which we believe is a fair compromise in settlement of long-standing litigation.”

Evans said he hopes others in the financially strapped county will take note of the retirees’ sacrifices.

“Achieving the necessary savings through voluntary shared sacrifice is clearly the preferable course,” he said. “Much remains to be done. Past practices and claimed entitlements must all be reconsidered if we are to build and grow Wayne County as a stronger and more stable place for its residents, businesses and employees.”

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Photo illustration by 401(K) 2012 via Flickr