Agawam has joined most of the surrounding cities and towns that have adopted a section of state law forcing Medicare eligible retirees to switch to that program.
03.09.11 | Photo by Julian Feller-Cohen – Agawam Town Hall.AGAWAM – The City Council has adopted a section of state law expected to eventually save hundreds of thousands of dollars a year on health insurance costs covering the city’s retirees.
The council adopted section 18a of Chapter 32b of Massachusetts General Laws last week. The law allows for the city to force retirees 65 and older who are Medicare eligible to switch from a city insurance plan to the federal government program.
If the law had been adopted earlier and affected all the retirees 65 and older and Medicare eligible, the city would have been able to save about $350,000 a year, according to City Treasurer-Collector Laurel A. Placzek. Savings should increase gradually as more people enter the pool of eligible retirees as there is a grandfather clause.
The law took effect when it was adopted by the council and will apply to every employee who retires as of that date.
Mayor Richard E. Cohen proposed the change as a cost-saving move.
Many of the surrounding cities and towns, such as Chicopee and West Springfield, have already adopted this section of Massachusetts General Laws.
City Councilor Robert A. Magovern, who was among the councilors approving the measure, said Monday it will save the city “a substantial amount of money.” It will also probably be a state requirement in a few years, Magovern said.
As of January 2008, the city had 493 retirees, consisting of 87 retired police officers and firefighters, 225 teachers and 187 other employees. Of those, a total of 170 at that time were younger than 65 and therefore ineligible to take part in Medicare. Another 164 were also ineligible because they did not contribute to Medicare prior to April 1, 1986.
In fiscal 2011, which ended June 30, the city paid out approximately $2,331,000 in health insurance benefits for its retirees. Despite expected cost savings, that figure is projected to grow to $2,709,000 this year.
