Traverse City Record-Eagle

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December 11, 2013

Kalkaska struggles to pay retiree health care

TRAVERSE CITY — Charlie Shafer recently fell from a ladder, a tumble that compressed three discs in his back and damaged several nerves.

He had to undergo back surgery and is recovering just fine in his Kalkaska home.

But Shafer, 64, who worked for the Village of Kalkaska for 20 years and gave up raises to put money into a health insurance account, worries that if his fall occurred just a few years in the future, he might not have had health insurance to pay for it.

“All those years I put into that fund, it’s not fair to me not to get that,” said Shafer.

Kalkaska Village officials are hoping to change how the village pays for retiree health care, and are reexamining a decades-old agreement between past employees and the village.

“More and more people were retiring and the cost of health insurance was going up and up and up,” said Penny Hill, Kalkaska’s village manager. “People started looking at it and said we should look at it in a different way, so in the future you don’t get into a situation where it’s overly burdensome for whoever is providing the benefit.”

The small village has an estimated $5.6 million in projected retiree health care costs, but the retiree health fund contains only about $240,000. Insurance premiums cost an average of $9,800 a month, Hill said, and any overrun is pulled from the village’s general fund.

Village administrators grappled with the problem for years, ever since it became apparent that the general fund was needed to underwrite portions of retiree health insurance costs.

In the past, village employees passed on raises in order to route money into an account that would guarantee their health benefits for life. But now, only three employees pool money into that account, and are unable to support the 14 who depend on it for health care.

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