What Cuts to Retiree Health Plans Could Mean for You

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If you’re a recent retiree or even if you have long-since left the workforce, the lingering economic malaise just got a little bit more hazardous to your health. As it turns out, many states and municipalities searching for places to trim their budgets are setting their sights on the relatively sizeable expenses of providing health care benefits to millions of retired state and local workers.

According to The New York Times,  “As they contend with growing budget deficits and higher pension costs, some mayors are complaining that their outlays for retiree health benefits are rising by 20 percent a year — a result of the wave of retirements of baby boomers and longer life expectancies on top of the double-digit rate of health care inflation. The nation’s governors face a daunting $555 billion in unfunded liabilities to finance retiree health coverage. The Pew Center on the States calculated those long-term obligations last year, saying New Jersey had the largest amount, $68.9 billion, with California second, at $62.5 billion. ‘Up to now, the action taken to deal with this problem has been gradual, but it’s begun to explode,’ said John Thomasian, director of the National Governors Association Center for Best Practices. ‘In 14 states, the state pays 100 percent of the health benefits for retirees. That’s very generous.’”

Generous or not, in many locales these post-retirement health benefits are coming under increased scrutiny. As a result, many states are pushing retirees to take more responsibility for these growing health care costs. Specifically, states like North Carolina have begun requiring state employees to work 20 years (up from five years) to qualify for full retiree health benefits. In other places, states have simply stopped financing health insurance for future retirees altogether.

“Over all, the Center for State and Local Government Excellence found that 68 percent of city and county officials surveyed said they were pushing to have retirees assume more of their health costs, while 39 percent said they had eliminated or planned to eliminate retiree health benefits for new hires.”

These cuts often come with no negotiation with, nor very little warning for, recent retirees, with lawsuits citing breach of contract against the states and municipalities resulting in varied outcomes. Now, those who retired early, relying on state and local benefits that are no longer there who are still too young to file for Medicare are finding themselves in a sickening situation.

This recent wave of health care withdrawals, brings us to another point: with medical debt becoming the most common reason for personal bankruptcy filings, these changes in coverage could mean major costs for the “formerly-covered.”

As the recent national squabbles over health care have made clear, millions are uninsured through no fault of their own—unemployment, pre-existing conditions, and now states axing health care for retirees—and an unexpected accident, injury or illness, even with minimal impact on health, can have major consequences for their budgets.

As such, if you are suffering from illness, injury and out of control debt, and considering filing a medical-related bankruptcy, it is important to remember that as unsecured debt, medical bills can be discharged entirely under Chapter 7 or Chapter 13 bankruptcy. Indeed, bankruptcy may be just what you need to help you get back on your financial feet again.

The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation for those needing a budgetary resuscitation. Just call toll free to 1-800-899-1414, or  you can make your appointment online right now at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button and let the experts help your overall financial health.

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