A subcommittee tasked with reviewing healthcare plans for retired state employees recently recommended keeping the Medicfill plan for current retirees, and making other changes for state employees hired after Jan. 1, 2025.

“We created a process to make sure retirees’ voices were heard,” said Lt. Gov. Bethany Hall-Long, who chairs the Retiree Healthcare Benefits Advisory Subcommittee, speaking during a joint House and Senate session Feb. 19 at Legislative Hall.

The issue of retiree healthcare benefits arose in 2022 after a group of state retirees expressed outrage over plans to switch retiree healthcare benefits to Medicare Advantage. Retirees formed an opposition group, RISE Delaware, and challenged the state’s decision in court. The case ended up in Delaware Supreme Court, which upheld traditional benefits for retirees.

Hall-Long assured retirees that the state will not request nor consider Medicare Advantage moving forward.

“Our retirees do not want Medicare Advantage, and I concur,” she said.

Still, funding retiree benefits is an ongoing and ever-increasing expense the subcommittee is seeking to remedy through its 25-page report of recommendations to the General Assembly, which will have to legislate changes.

Any changes, however, are recommended for state employees hired on or after Jan. 1, 2025. Retiree benefits would be grandfathered in for current state employees, Hall-Long said.

“The last thing we want is a mass exodus,” Hall-Long said about employees potentially retiring early to take advantage of current benefits. “We do not want employees leaving.”

For employees hired after the January 2025 date, the report proposes two retiree plans – a Medicare Supplement Plan similar to the Medigap G plan available in 2023 with a retiree/state premium split for a 25-plus-year retiree of 5%/95% and a Medicare Supplement Plan similar to the Medigap L plan available in 2023 with a retiree/state premium split for a 25-plus-year retiree of 5%/95%.

For eligible pensioners hired after the 2025 cutoff, the report proposes the state pay no benefits for anyone with fewer than 15 years of service, 50% of benefits for 15 to 20 years, 75% for 20 to 25 years, and 100% for 25 years or more. 

To help pay for ongoing costs, the report proposes setting aside at least 1% of the previous state budget to put money in the Other Post-Employment Benefits Fund with additional one-time contributions to the OPEB fund when one-time revenues or surpluses permit. Payroll deductions could also be increased to 0.50% of payroll with additional 0.25% increases each fiscal year, under the proposal.

Several RISE members thanked the subcommittee for its work and supported the proposal. 

Speaking during public comment, resident Steven LePage said healthcare prices in Delaware are inflated because of the lack of competition among healthcare facilities. He noted a Delaware process that requires a certificate of need before a healthcare provider can provide services – a process that effectively allows hospitals and healthcare systems to have a monopoly.

“The pricing of healthcare in Delaware is too high,” he said. “This concerns certificate of need law. Twelve states have done away with their certificate of need, and I think Delaware needs to do the same to allow more competition to come to Delaware. Once the healthcare pricing for all of Delaware gets addressed, that will lower the pressure on state retiree healthcare as well.”