Peta Richkus: Update on Retirees’ Prescription Drug Plan
Tens of thousands of retired State employees from every county in Maryland and from seven other states, along with thousands of retirement-eligible current state employees have been, if not in limbo, in an undeserved state of anxiety about their health and financial futures.
The state government’s long-term plan cutting off the prescription benefit for those over 65 will greatly diminish their retirement savings and the retirement life they planned for themselves. That plan was announced to retirees last spring in a letter from the Maryland Department of Budget and Management (DBM). Mind you, this is the prescription drug benefit state retirees earned during their years of service with the state.
The resulting outcry got attention: a bill introduced in the 2019 General Assembly session responded to retirees’ outrage and concern and would have restored the prescription drug benefit. That bill, cross-filled in both chambers, garnered widespread support: 57 sponsors in the House of Delegates and 47 sponsors in the Senate.
But that initial legislation was not even given a hearing. Instead, the General Assembly cobbled together an incomplete and inadequate response (with no implementation plan and no cost estimate) in the form of Senate Bill 946, “State Prescription Drug Benefits – Retiree Benefits.” It was passed by the General Assembly in April and became law on May 25.
What happened the first week of September?
First, DBM sent out a certified letter, dated Sept. 1, to state retirees and retirement-eligible current state employees that raised more questions than it purported – and failed – to answer. (For those who have not received it, the letter can be viewed at https://dbm.maryland.gov/benefits/Documents/SB%20946%20Mailing2.pdf)
Second, Federal District Court Judge Peter J. Messitte, who in October 2018 halted the state’s attempt to terminate the current retirees’ plan via preliminary injunction, had a teleconference with the lawyers in the case, Fitch, et al v. State of Maryland, et al, on Sept. 4. The resulting ruling sends both sides back to square one to respond to the passage of SB 946.
The State has yet to adequately explain the SB 946 deadline to current employees.
To be covered under SB 946 – even though its implementation must await the outcome of the Fitch v. Maryland legal case – the statute states that an employee must be “retired on or before December 31, 2019.” However, DBM’s certified letter about the new prescription drug “reimbursement” programs includes confusing language and does not explain what a current state employee must do, or by when, in order to be considered eligible for the new plan. In fact, by its wording, the letter seems to convey misinformation.
The resulting confusion appears to also be of concern to Judge Messitte: He has required Deborah Holloway Hill, attorney for the plaintiffs, and the state’s attorneys to inform him about the process for current employees who want to retire before the Dec. 31 deadline so they can be eligible for the coverage offered by SB 946.
In its letter, DBM states that to be eligible for the SB 946 drug plans, the “retiree must have retired on or before December 31, 2019 (last day worked is on or before 12/31/19).” Thus, DBM implies that having “retired on or before December 31, 2019” is synonymous with “last day worked is on or before 12/31/19.”
At best, this is extremely misleading. If an employee’s last day worked is Dec. 31, 2019, he or she is not retired on that day. In such a case, the first day of that employee’s retirement would actually be Jan. 1, 2020 and the employee/retiree would not have met the eligibility requirement for SB 946.
DBM has recently attempted to correct this error online but has placed the new information three layers below the DBM and Health Benefits main web pages, making it more difficult to find. Nor does the update provide any clearer guidance. Under a “Retirement Related Questions” link, DBM advises that “You must be off the payroll prior to your effective date of retirement which must be no later than Nov. 30, 2019 in order to participate in the Maryland State Retiree Prescription Drug Coverage Program.” (https://dbm.maryland.gov/benefits/Pages/BenefitRetirementQuestions.aspx) Thus, according to the DBM website, the last day worked must be in November, which hardly agrees with the Dec. 31 date stated in its Sept. 1 letter.
To its credit, the Maryland State Retirement Agency (SRA) has added a prominent alert at the top of its home page. (https://sra.maryland.gov/) Clicking on the “Learn more” link provides the following advice that addresses the contradictory information provided by DBM:
- You should make an appointment to see, or talk to a specialist, visit the Agency’s website at sra.maryland.gov, or call 410-625-5555 or 1-800-492-5909.
- To participate in the Maryland State Retiree Prescription Drug Coverage Program, you must retire with an effective date of retirement of December 1, 2019 or earlier.
- In order to be retired by December 1, 2019 you must be off payroll prior to your effective date of retirement which must be no later than November 30, 2019 in order to participate in the Maryland State Retiree Prescription Drug Coverage Program.
- The Maryland State Retirement Agency must receive your completed application to retire on or before December 31, 2019 in order to retire with an effective date of retirement of December 1, 2019. This provision is applicable to both active and inactive members eligible to retire.
- For members of the Judges’ Retirement System, you must also retire no later than December 31, 2019, be off payroll prior to your effective date of retirement, and the Maryland State Retirement Agency must receive your application to retire by December 31, 2019 in order to participate in the Maryland State Retiree Prescription Drug Coverage Program.
And yet, nowhere online – and certainly not in the DBM letter – does the State explain what a current state employee must do, and by when, in order to be considered “retired on or before December 31, 2019” and thus eligible for the new law. As a result, there has been considerable uncertainty about when the necessary paperwork needs to filed and what the last eligible retirement date is.
Some state employees say they have worked out that they need to have all their retirement paperwork processed before the end of November. Thanksgiving, Nov. 28, is a holiday but Nov. 29 (the end of workdays in November) is not. So can retiring employees expect that the Employee Benefits Division (EBD) will be processing retirement applications on the Friday after Thanksgiving?
Also, according to Office of Personnel Benefits Pre-Retirement Seminar guidance, a retiring employee’s Retiree Health Benefits Enrollment Form must be submitted to EBD within 60 days of retirement. This is interpreted to mean 60 days prior to retirement, or by the end of this month (September 2019). Given the state’s processing procedures, even this guidance is not entirely clear. Does it mean Sept. 27, the end of the last full work week, or Monday, Sept. 30, the actual end of the month?
These deliberations may seem ridiculously bureaucratic. That may be. But we are talking about additional prescription drug costs that could be many thousands of dollars more annually, over-and-above the prescription drug benefit costs already paid by retirees and over-and-above the premium and co-pay costs of the Part D plan (of the 25 Plan D policies currently available to Maryland residents) chosen by the retiree.
At minimum, what is needed is a very well publicized timetable with correct information to enable retirement-eligible employees to make informed decisions about their future.
Current status of Fitch, et al v. State of Maryland, et al.
As to the outcome of Judge Messitte’s Sept. 4 conference call with the attorneys: the judge’s ruling will refocus the court case on the new law, SB 946; the preliminary injunction remains in effect; and, meanwhile, state retirees will continue to receive their “current prescription drug coverage under the existing State plan while the Fitch v. State of Maryland lawsuit is being adjudicated.”
In addition to requiring a written description of the process for current employees who want to retire before the Dec. 31 deadline, Judge Messitte’s order provides that:
The plaintiffs shall file an amended complaint challenging the new law, SB 946, within 90 days, and
All motions submitted to date are moot. This includes the plaintiffs’ request for class certification as well as a separate motion to intervene to oppose certain aspects of the request for certification as submitted by the plaintiffs.
The state’s retirees and current employees hope justice will ultimately prevail and the prescription drug benefits that were promised as part of their compensation will be reinstated. Thanks to Judge Messitte’s insight and his preliminary injunction, these benefits will continue for the time being. And, of course, thanks also to Mr. Fitch and his fellow plaintiffs and Ms. Hill and her former associate, Mr. Breon Johnson, who brought the suit in the first place.
As to the dilemma facing retirement-eligible state employees – most but not all of the approximately 7,000 state employees who retire this year can expect to be affected by SB 946. They should contact the State Retirement Agency and expect to learn how each of the three provisions of the new law will impact them and how to meet the eligibility requirements for SB 946 so that they can make the best decision for themselves and their families. And so they can properly evaluate the pros and cons of retiring before the end of 2019.
— PETA N. RICHKUS
The writer was secretary of the Maryland Department of General Services (1999-2003) and port commissioner of the Maryland Port Administration (2008-2014).