Friday, February 27, 2015

State shifts pension, health care costs to workers

Delaware says it will save $500 million, by 2016, by charging state workers more for pensions and health insurance

State shifts pension, health care costs to workers

Delaware Gov. Jack Markell yesterday signed HB 81, which will make it tougher for state workers to collect retirement pensions, and force workers to pay more for both pensions and health insurance. Markell, a Democrat, says he acted with bipartisan support to stop worker benefits from consuming an increasing chunk of the state's $3.5 billion yearly budget. Cuts include:

Pensions - Starting Jan. 1, newly-hired workers will pay 5% of their income (after the first $6,000) to help fund pensions. That's up from 3% at present.

Also, workers will need at least 10 years service to qualify for pensions, up from the current 5 years. Overtime won't be counted, when calculating pension checks from workers' pay. And Delaware will make it harder to retire early and still collect a full pension.

Health insurance - Workers will have to pay $21 (or $53 for a family) for the state-s limited-coverage "First State Basic" health plan. Premiums for Aetna and Blue Cross will go up by one-third for single workers (to $27-35/month for HMOs, or $78 for PPO), less for families.

Delaware says the cuts will save a total of $131 million over the next five years, and nearly $500 million over 15 years. Half the total savings will come from the higher pension deductions from state workers' paychecks.

Joseph N. DiStefano
About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at or 215 854 5194.

Joseph N. DiStefano
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