By Don Eriksson
AYER — One of the items Town Meeting voters will be asked to approve Oct. 22 is a shift in the cost of town retiree insurance to the federal medical system under Chapter 32B.
Selectmen discussed the ramifications with town accountant Dennis Callahan last week. Callahan said the result will be savings to retirees and the town after the first year.
About 24 retirees are involved, and because of the low number, Callahan is attempting to speak with each one on one to explain the change.
Asked by Selectman Frank Maxant if there’s a “catch,” Callahan said, “There is some kind of perception that with Medicare you get poorer coverage, but there is no downside.”
Health benefits won’t change, Callahan and town administrator Shaun Suhoski said, and retirees can use their same doctors and receive the same services.
The change, said Suhoski, was recommended by the Massachusetts Department of Revenue during its annual review of the town.
The overall insurance cost for the town will drop to about $500 per month, said Callahan, as opposed to the current $687 for a single person.
Penalties imposed on those over age 65 who opted not to go into Medicare and stayed with the town insurance plan could nullify savings the first year, however. For example, Callahan said later, the current insurance premium is about $95 per month. A 10 percent annual penalty for a non-Medicare subscriber will amount to $9.50.
Using an example of a 67-year-old — someone joining Medicare two years late — the 10 percent penalty effectively doubles to 20 percent. Ten percent — $9.50 — times 24 months totals $228 — or just about the same as the estimated first year savings.
“I anticipate at least a break-even event the first year,” said Callahan. “The big savings are on family plans (retiree plus spouse) totaling about $185 per month (for the retiree) and about $375 for the town.”
Actual savings are grayed somewhat because some spouses or retirees might not be eligible for Medicare and, therefore, the shift is ineffective.
Selectmen Chairman Gary Luca confirmed with Callahan that the warrant article concerns Medicare-eligible retirees, not those aged 55 or older.
“People say Medicare meetings are confusing,” said Callahan. “We’d like to talk one on one with everyone because of the low number involved to assure them coverage won’t be lost.”
Selectman Carolyn McCreary commended Callahan for his outreach and said it’s important to consider the $50,000 to $75,000 annual savings to the town.
Selectman Frank Maxant, admittedly “suspicious” of anything related to bureaucracy, said he’s been with the veterans administration for three years and “couldn’t be happier.”
Selectman Pauline Conley admitted to personal confusion, but said she doesn’t want the town or retirees to be forced into a decision.
“This is a perfect opportunity for the town to provide services people have been getting all along,” said Luca. “Good work.”