Md. retirees receive notice of prescription drug benefit change despite years-long battle, lawsuit

Late last month, thousands of retired state workers received a letter from Maryland’s Department of Budget and Management alerting them that major changes are coming to their prescription drug plans.

“Based on State of Maryland law passed in 2019, your current prescription drug coverage will end December 31, 2024….We realize this is a big change, and you probably have many questions and concerns,” read the letters, dated Jan. 15, 2024 and signed by Christina Kuminski, director of the Employee Benefits Division for the department.

The department manages benefits for all current and retired state workers. The change in prescription drug benefits will apply to all retirees when they qualify for Medicare.

“As soon as we have more details to share, our team at the Department of Budget and Management will answer all your questions and address your concerns,” the letter says.

Many retirees are not happy.

At issue is a change to benefits for former employees of Maryland government who are receiving partially state-funded prescription drug coverage during retirement. Those benefits are set to shift from the current state retiree health care program to coverage through the federal Medicare Part D plan at the end of the year.

A years-long controversy and an eventual legal challenge have roots in Maryland’s 2011 pension reform legislation, particularly the part which aimed to end the state’s prescription drug coverage for Medicare-qualified state employees and move them to Medicare part D, the federal prescription drug plan for retirees.

Those who are retired but do not qualify for Medicare will remain on the state’s prescription drug plan, until they qualify for Medicare.

Some former state employees who were hired before the change want to stay with the state plan that they agreed to when they were hired. They fear that the Medicaid Part D coverage may not adequately cover their prescription drug costs.

Peta Richkus was among those who received a letter from the Department of Budget and Management, letting her know that by January 2025, her prescription drugs would be covered by Medicare instead of the state.

“The state does not want to live up to its commitment. And it’s really disappointing and frustrating,” she told Maryland Matters.

Richkus served as Maryland’s secretary of General Services from 1999 to 2003 and served as a commissioner on the Maryland Port Administration from 2008 to 2014.

She’s been advocating against the prescription drug plan changes since 2018, because she feels that the change to her prescription drug coverage does not align with the benefit package she agreed on when she became a state employee.

History of the benefit change

The 2011 pension reform bill initially scheduled the change to take place in 2019 for all retirees who qualified for Medicare Part D coverage, regardless of the day they were hired or the terms of their benefits package agreed upon then.

A cohort of retirees sued the state, arguing that the law breaks the contract by revoking benefits that they signed up for when they choose a state job.

In the federal court case Fitch v. State of Maryland, U.S. District Court Judge Peter J. Messitte granted a temporary injunction in October 2018, and retirees were able to maintain their original state prescription drug coverage as the litigation continued. The state appealed the ruling.

In February 2023 the federal Fourth Circuit Court of Appeals ruled against the temporary injunction, allowing the state to move forward with plans to end the state prescription drug coverage and move retirees to Medicare Part D.

The change to Medicare Part D coverage would mean that retirees would have to pay out-of-pocket and seek reimbursement for purchasing drugs that they need.

In addition, Medicare Part D may not cover the same prescriptions that the state plan does, some state retirees fear.

James Roberts, a Towson University political science professor emeritus, says that moving to a Medicare Part D plan could work for some retirees, while others may find it less affordable than the state plan.

“Every retiree is different,” Roberts said. “If someone takes almost no drugs whatsoever, then they might make out better with a Part D plan.”

“But the fact is we’re talking about a population that is not only taking a lot of drugs but will, as they get older, be taking more drugs. It’s just the nature of aging,” said Roberts, who is affected by the benefits change.

Legislative fix unlikely in 2024

There have been legislative attempts to restore the state prescription drug plans to retirees who were hired before changes were made to the law in 2011, but so far such efforts have been unsuccessful.

In the 2024 legislative session, Sen. Mike McKay (R-Allegany) is sponsoring SB 349, and Del. Robin L. Grammer Jr. (R-Baltimore County) is sponsoring a similar measure, HB 670, along with seven Republican co-sponsors.

So far, the two bills do not have Democratic co-sponsors, although previous legislative attempts had bipartisan support. The Senate bill has been scheduled for a hearing in the Budget and Taxation Committee on Feb. 28. A hearing on the House bill has yet to be set.

“And that is not how you make serious progress in a state like Maryland where all branches of government are in control of Democrats,” Richkus said.

Senate President Bill Ferguson (D-Baltimore City) says it’s unlikely that the bill will move in the Senate, citing the budget constraints facing Maryland lawmakers.

“I don’t foresee us moving forward on that front,” he said last week.

“In about a single year, it’s about a $50- to $60 million shift if we were to not move over to Medicare Part D. And then it’s about a billion-dollar liability on our other personnel unemployment benefits…for the out years,” Ferguson added. “And that has a huge impact on our financial stability.”

Ferguson said that the issue is complex and has spanned three different gubernatorial administrations. He said the Department of Budget and Management is being urged to “over staff” workers and counselors on call lines who will assist state retirees through the process of selecting a Medicare Part D plan that best suits their prescription drug needs.

Richkus agrees that the situation is complex.

“I really feel for the members of the General Assembly,” she said. “This is a really difficult subject, and the history goes back to 2004. The law was passed in 2011. Many people were not here [in the legislature], but even those who were didn’t really understand the complexities at the time.”

Roberts suggested that there might be new interest from retired state employees to get involved with the issue now that notifications have gone out.

“We have an uphill road,” he said. “On the other hand, there are 53,000 retirees who just got letters, many of them, probably a majority of them, did not know this was happening. And they’re going to be angry. And they’re going to be contacting their members and they’re going to be trying to make clear that this is not an acceptable outcome.”

“Is that enough to get us up the hill? I don’t know,” he said. “I refuse not to be optimistic.”

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