Delaware House passes bill that takes Medicare Advantage off the table for state retirees

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Legislative Hall in Dover.
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The Delaware House on Tuesday passed two bills aimed at increasing transparency in the process of selecting retirement health plans for state workers.

B 281 and HB 282, both sponsored by Rep. Paul Baumbach, D-Newark, would prohibit the state from considering Medicare Advantage plans for state retirees and make several changes to the State Employee Benefits Committee (SEBC), the group responsible for managing State employees and retiree benefit coverage.

Many state retirees strongly opposed plans to switch to the Advantage plan.

“These bills are a meaningful first step toward restoring trust with our state retirees, who have served our state government for many years under the assumption that these benefits would be available for them when they retired,” said Baumbach.

HB 281, also known as The Delaware Medicare Supplement Selection Act, would repeal the option of providing health care insurance to state pensioners under Medicare Advantage Plans.

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In 2022, officials attempted to transition state retirees from a publicly managed special Medicare Supplement plan to a privately managed Medicare Advantage plan to address underfunding of retiree health insurance. Health care costs now account for about a third of the state budget.

Delaware’s underfunding is at least partly due to law enforcement personnel who retire early and still receive health care benefits. Medciare Advantage critics said health care funding for employees on Medicare is not a problem in terms of funding.

A legal challenge from retirees resulted in a temporary halt to the implementation of the new plan, which remains in place.

HB 281 would address the concerns of retirees by requiring that the State select only Medicare Supplement plans as the healthcare plan for Medicare-eligible Delaware state retirees, rather than a Medicare Advantage plan, which requires retirees to relinquish the Traditional Medicare benefits they earned during their careers.

Under the bill, state retirees could still choose any plan on the free market, including Medicare Advantage. 

A House amendment passed with the bill would allow the state to offer Medicare Advantage to eligible pensioners hired on or after January 1, 2025. However, this would only be under specific conditions, one of which is that the retiree must be able to choose whether to enroll in a Medicare Advantage Plan.

“The final report issued by the Retiree Healthcare Benefits Advisory Subcommittee included recommendations for reforms the Delaware General Assembly should make to assure our retirees’ strong health benefits remain in place and give them a seat at the table for future discussions around retiree health care policy,” he said. State Sen. Brian Townsend, D-Greater Newark, said, “I am grateful to my colleagues in the House for moving these bills forward.”

The other measure, HB 282, would revise the benefits council’s membership, structure, and procedures to increase transparency and accountability.

The bill aims to increase transparency by requiring more decisions to be made publicly, requiring the chair or vice chair to attend meetings in person, requiring committee votes for Request for Proposals (RFPs) selecting health care insurance plans, and requiring more information from the committee to be available publicly.

HB 282 would also increase retiree representation in the SEBC by requiring the Speaker of the House and the Senate Pro Tempore to appoint State retirees to the committee.

A House amendment to HB 282 would make these changes effective on January 1, 2025.

HB 281 and HB 282 will now go to the Senate for consideration.

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