Retiree benefits suit headed back to court

Groups want state to write a new plan for health benefits

Posted: Friday, November 11, 2005

A battle over the state cutting benefits for retired Alaska public employees, first waged some seven years ago, will be heard again by a Superior Court judge in January.

Last month, a judge in Anchorage agreed to hear a case to find out whether changes made to retirees' health coverage actually reduced benefits, and whether retirees should receive compensation.

Sara Hornberger said she and others who filed the suit are not greedy; they just want the state to keep its promise.

"I totally trusted the state," Hornberger said. As a teacher and education worker for the state since 1963 but now retired, she said she is paying a lot more for health coverage than she expected.

State attorney Kathleen Strasbaugh said the judge will not look at individual benefits but the plan as a whole.

In 1998 and 1999, the Alaska Division of Retirement Benefits rewrote several guidelines that showed improvements in health care coverage, but also some decreases.

Reductions to the plan included increasing the deductible from $100 to $150 per year, eliminating the lifetime co-payment of 100 percent once $50,000 in claims was paid, and requiring the retiree to pay 20 percent of costs up to $4,000 instead of $1,950.

Some of the changes resulted in an increase of out-of-pocket payments from $690 to $800 per year. Also, retirees not using the mail-order service for drugs, which is free, need to pay $4 and the price of name-brand drugs increased from $5 to $8.

Strasbaugh said retiree groups suggested changes be made to benefit them, but in order to do so, the division had to take away benefits to balance out the value of the plan.

The Retired Public Employees of Alaska filed a lawsuit saying the state cannot reduce coverage in public employee retirees' health plan.

The Alaska Superior Court ruled in 2002 in favor of the plaintiffs, citing state constitutional protection of coverage.

The state appealed the decision in 2003 but the Alaska Supreme Court upheld the decision and referred the case back to the Superior Court for further review on changing the plan.

Hornberger said it will be "expert versus expert" in the upcoming trial to prove whether the changes reduced benefits and retirees are owed compensation.

"We didn't want to file the lawsuit," said Sam Trivette, president of RPEA. He said his group had no choice after the state would not meet to discuss changing the health plan after the Supreme Court ruling.

Trivette said because the courts found the changes to be unconstitutional, the state should write a new plan.

Alaska has about 40,000 public retirees, Trivette said.

• Andrew Petty can be reached at andrew.petty@juneauempire.com



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