Delaware lawmakers consider recommendations to protect state retirees’ healthcare

DOVER, Del. – The Delaware Retirees Healthcare Benefits Advisory Subcommittee presented its recommendations to lawmakers in a joint session this week on how to best protect health care for retired state workers.

The Delaware General Assembly created the subcommittee last year in response to concerns about retiree health care benefits. The goal was to come up with ways to address a growing unfunded liability when it comes to their health care and the health care of future retirees in the First State.

Lt. Governor Bethany Hall-Long, who chairs the committee, presented the findings to lawmakers Monday in a joint House and Senate Health Committee hearing. She tells us the recommendations, if implemented, would also protect Delaware’s future state retirees.

“We laid out a roadmap, a really clear roadmap, that’s going to protect and be sustainable for our current retirees, and yea, take into consideration the current employees and our future hires,” Lt. Governor Hall-Long explained.

The subcommittee met 20 times over the course of nine months and collected 10 hours of public testimony. Members reviewed other states’ Medicare supplemental coverage, individual marketplace, and Medicare plans, funding options, and actuarial and financial data.

The group’s report, published in December 2023, addressed several aspects of retiree healthcare, including strategies to address the Other Post-Employment Benefits (OPEB) Fund liability and recommended changes to the process by which the state selects state retiree healthcare plans.

The estimated liability for retiree health care benefits is currently $8.9 billion, of which $8.4 billion is unfunded. The net unfunded liability is expected to grow to $20.7 billion by 2042.

• The state should neither request nor consider a Medicare Advantage plan going forward.
• Continue contributing 1% of general fund from the prior year to the OPEB fund.
• Increase OPEB pre-funding from 0.36% of payroll to 0.5%, then increase by an additional 0.25% of payroll each fiscal year until it reaches 10%.
• Ensure that current Medicare-eligible and pre-Medicare state retirees and state employees who retire prior to January 1, 2025 will be entitled to Special Medicfill/Rx benefits with no changes to the state share percentage of payments when they are Medicare eligible.
• Limit changes to plan design, eligibility requirements, or contribution share/percentage to workers hired on or after January 1, 2025.
• Solicit public comment before the SEBC holds a public vote to adopt the final request for proposal (RFP) for retiree healthcare plans.
• Research and measure the cost of state-sponsored healthcare benefits for three subgroups: current workers, eligible pensioners who are ineligible for Medicare, and eligible pensioners who are eligible for Medicare.
• Address the issue of healthcare pricing in Delaware, including statutory, regulatory, and administrative changes in 2024 to bring more transparency, consistency, affordability, and sustainability to healthcare prices and price growth.

The subcommittee also recommended modifying the state’s calculation for the portion of the state share for healthcare that the state pays for retirees. The percentage is based on the number of years of service for each retiree.

The subcommittee will continue to meet this year to further discuss the issue of retiree healthcare benefits and explore solutions.