Mecklenburg board votes to phase out erroneous retiree benefit. How much will it cost?
Update: Mecklenburg County commissioners voted Sept. 17 to phase out the erroneous benefit over 5 years.
Mecklenburg County commissioners will phase a contested retiree benefit that’s cost the county millions.
County commissioners voted 6-3 Tuesday, Sept. 17, to reduce the erroneous benefit — a subsidy for retirees’ dependents’ health insurance — by 20% every year for 5 years. It will affect employees who retired from Jan. 1, 2017 to Oct. 1, 2024.
Commissioners Arthur Griffin, Mark Jerrell and Laura Meier voted against the measure.
The board on Sept. 4 directed county staff to provide a recommendation that would “minimize the financial impact on those persons choosing to use county health insurance.”
“At some point, we’ve got to get the train back on the track,” Board Chairman George Dunlap said Sept. 4.
Since 2017, the county has provided a subsidy for retirees’ dependents’ health insurance “that was more than what was intended” under county policy and “more than what was done in prior years,” according to an outside audit presented to the board Sept. 4.
The formula “broke in 2017,” said Felicia Gardner of Moore & Van Allen, the law firm that conducted the review. The “break” was the result of “a county calculation error,” Gardner told commissioners.
The error went undetected until 2023 — to the tune of $2 million a year, county staff said at an October meeting. A total of 369 retirees benefited from the subsidy when the county sent letters in April 2023 announcing it would no longer contribute to dependents’ premiums.
Those letters sparked pushback from the affected retirees, who called on the benefit to be extended.
County leaders ordered a “comprehensive review” of the county’s benefit policy and current practices in November. At the same meeting, commissioners voted to extend the benefit for 289 retirees through the 2024 calendar year.
The outside review included going over board materials — minutes, agendas, supporting documentation, and audio and video footage — as well as human resources policy and procedure manuals, internal memos, emails, contribution rate calculations, financial reports, participant communications and rate-setting materials.
Moore & Van Allen also interviewed current and former county employees “who assisted with the administration of the benefit” and retirees who got the benefit.
The audit found “no evidence” county commissioners ever approved a change in policy and recommended the county end the subsidy.
On Tuesday, a majority of commissioners agreed to phase out the subsidy. That process will cost the county $1,147,190 in 2025, $860,393 in 2026, $573,595 in 2027 and $286,798 in 2028, according to a presentation by city staff.
Jerrell worried about the financial hit for the affected retirees under that plan.
“That payment shock is something that is hard for me, personally, to digest,” he said.
The county will send out notifications to those affected and hold virtual and in-person information sessions ahead of the open enrollment period for 2025 insurance.
This story was originally published September 4, 2024 at 9:02 PM.
