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March 31, 2005 • Volume 13 Number 14

Retiree Medical Plan Change Announced

By Jack Dunn
Director of Public Affairs

Boston College announced this week that it is changing its contribution policy for retiree medical insurance, in an effort to preserve a benefit that has been curtailed by many employers nationally in recent years.

In a letter to all full-time employees, Vice President for Human Resources Leo Sullivan stated that beginning Jan. 1, 2006, the University will contribute 50 percent of the monthly premium cost of post-65 retiree medical coverage for both the retiree and the retiree's spouse. Since 1996, Boston College had paid 100 percent of the premium cost for retirees and 50 percent for their spouses.

The changes will not affect current retirees, whose benefits will remain the same.

Post-retirement medical coverage is available to BC employees who retire at age 62 or older and who have completed at least 15 years of full-time, benefits-eligible service at the time of retirement. Retirees between 62 and 65 remain in the regular PPO or HMO plan at the normal employee rate. At age 65 and older, retirees enroll in one of the University-sponsored plans that supplement Medicare.

For most current employees, a "grandfathering" formula has been established to help determine the amount they will be required to contribute at retirement, based on a sliding scale. The scale will range from a 10 percent contribution to a 45 percent contribution based on the number of "points" a person has as of Jan. 1, 2006. The points are determined by adding a person's applicable years of service to his/her age: For example, 25 years of service and 62 years of age equals 87 points.

Along with Sullivan's letter, a memo from Benefits Director Jack Burke offered each employee a personal statement of his or her accumulated points and the corresponding post-retirement contribution percentage that will apply.

Sullivan stressed that the changes in the University's contribution policy were "absolutely necessary" to reduce costs if BC is to continue providing a medical benefit to future retirees.

He noted that since 1996, the cost of providing post-retirement medical benefits has risen dramatically, due largely to escalating medical claim costs and rising costs for prescription drugs. As a result, in recent years, many employers who maintained retiree medical plans have chosen to curtail coverage or terminate their plans.

"For Boston College, the costs of post-retirement medical benefits have become so prohibitive that, if we are to continue to offer this important benefit to future retirees, we must do so on a more cost-effective basis," said Sullivan. "After extensive review, we have decided to adopt these changes."

Despite the changes, Sullivan reiterated that BC's retiree medical benefits will remain very competitive in the marketplace. A review of other institutions showed that post-retirement benefits have been curtailed at many universities, with some local schools offering no supplementary benefits for their retirees.

"While I cannot guarantee that additional changes won't be necessary in the future, I can say that it is the University's intention to maintain a benefit for these valued members of our community," said Sullivan.

More information on the University's retirement plan is available through the Benefits Office in More Hall.

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