Libby Fuller began her career with the Rancho Santiago Community College District in 1986. In October of 1988, she gave birth to a daughter. At just 15 months of age, that daughter was diagnosed with Prader-Willi Syndrome, a rare genetic disorder. She is now 33, diabetic, and has a care team of multiple specialists. She regularly receives epidurals and cortisone treatments and is currently prescribed 13 medications.
With the changes coming to retiree health benefits, Fuller is unsure if the treatments keeping her daughter alive are covered. She is one of over 600 former faculty and staff members impacted by the board of trustees’ Aug 9 decision to transition its retirees from their promised medical benefits for life to Medicare, the federal medical provider for those over 65.
The retirees aren’t going down without a fight, however. They have spoken out against the proposed changes at multiple district board meetings, even as the board has progressively increased their time to wait to speak, from around 15 minutes to sometimes several hours. They have also filed a civil suit against the District for breach of contract.
And it isn’t just the retirees who are concerned with the changes the district is making to the benefits it promises employees. “What is the significance of the community that does not honor its history? I’m wondering sitting here today about to be acknowledged, right? How long am I going to feel this pride and this honor to be a part of this community,” wondered current SAC Philosophy professor Carlos Brocatto, who was present to be acknowledged by the board for his contributions to the college.
Many are on fixed incomes and were blindsided by the District’s reneging on negotiated medical expenses, leaving them struggling to make impossible choices in their golden years.
“I feel like, at this point, I have to choose between my husband and I going broke or he dies,” said Hilda Roberts. She worked for the District from 1972 until retiring as Dean of Business from Santa Ana College in 2010.
Roberts says her husband requires monthly IV treatments that had been covered by their District paid insurance until the change. It is projected to cost them over $21,000 per month. While the supplies and a nurse administering the medication are covered under Medicare, the drug is not.
Before the board’s 2021 August decision to transition its retirees to Medicare, the District’s most recent contract, in effect until Jun 30, 2022, states in section 5.4, “for employees whose first paid date of contract service is before May 31, 1986, who have fifteen years of service, the District will pay its portion of the insurance premium for life. For employees whose first paid date of the contract, service is on or after May 31, 1986; the District will pay its portion of the insurance premium until the retiree reaches age 70.”
It had previously been interpreted by those who negotiated for it to mean that the District would continue to provide the same healthcare coverage for employees upon their retirement. Many affected have been retired for 20 or more years and have continued to receive and depend on those benefits. Now they feel as though the rug has been pulled from underneath them.
The retirees, including former union negotiators, say they repeatedly chose to pass up pay raises in favor of the money instead contributing to a retiree healthcare fund. Those funds are in an irrevocable trust – a type of account that can not be changed once the paperwork has been finalized. As for the 2021-2022 district budget, that account was about of $62 million.
RSCCD was contacted but has not responded to requests for comment as of publication
Some retirees say the promise of health benefits for life was what kept them at RSCCD for most, if not all, of their careers. While positions in other districts sometimes paid better, they say none offered lasting healthcare. Now, with the transition to Medicare, not only did they retire with pay rates lower than those in other districts, but they also will not have the superior insurance on which they were counting.
It isn’t just about the money but also the principle. By not honoring the arrangements made in their contracts, others aren’t just concerned for themselves. Still, about the message, it will send to students. “What we are demonstrating to students is if a contractual obligation can just be dishonored. How can we expect students to be honorable in the classroom and then in the workforce?” asked Bonita Jaros. She worked as both a professor and a coordinator at SAC.
Retirees have only recently begun receiving the plan’s specifics, that is, to replace their current healthcare in less than a month. While the District maintains that the new program offers comparable care, the retirees are finding that there seem to be several significant caveats.
One issue is the matter of Medicare coverage itself. Nation-wide, employees get money deducted from their paychecks to pay into a federal fund to cover Medicare costs once they turn 65. A person must pay into Medicare for a minimum of 40 quarters, or 10 years, to receive fully paid Medicare. Since California teachers were legally not allowed to pay into Medicare until 1986, some of the retirees were not able to contribute for long enough to have their premiums, or monthly fees, fully covered.
Even those employees who have paid into Medicare long enough are still required to pay the premiums for part B, which covers doctor’s visits and outpatient treatment. Those premiums start at $170 per month for one person.
And those premium costs don’t include possible penalties. Those eligible for Medicare must register for part B when they turn 65. Those who haven’t will receive a penalty of 10% of their premium per year over 65 when they register.
While the District had said they plan to pay those penalties for former employees over 65 when the change was made, they have not told them when or how those payments will be made. Retirees are skeptical that the District will honor the offer, given their alleged breach of contract over the insurance itself.
“How do I know the district will continue to pay the penalty when it wants to nullify this basic medical health benefit for retirees with a lifetime of service to the district,” asked Karen Dennis, who worked for the District until she retired from Santiago Canyon College in 2015.”
Another problem is that the new plan, called a Medicare advantage plan, only works as a booster to Medicare coverage. Unlike their current coverage, which fills in gaps in Medicare coverage, the proposed plan will increase the amount covered on Medicare-approved things. Retirees will now be stuck paying out of pocket for any medications or procedures Medicare doesn’t deem “medically necessary.”
Retirees are also concerned that being put on a Medicare advantage plan may lead to delays in treatment. Those plans are provided by for-profit companies, meaning the less treatment they cover for patients, the better their bottom line looks. A recent Federal Inspector General report found that slightly over one in ten prior requests for treatment, or prior authorizations, was wrongfully denied in cases reviewed. They also found that nearly one in five claims for payment was turned down even though they met both Medicare and Advantage billing rules.
On Jan 27, the Rancho Association of Retired Employees filed a civil suit with the Superior Court of Orange County, citing breach of contract. An injunction, or request for a temporary hold on the changes, was denied on Feb 10. However, at that time, while they knew they were being transitioned to a Medicare Advantage plan, they didn’t yet know the scope of care that would no longer be covered.
On Jun 10, attorneys for both sides will meet with a judge to discuss the status of the case and decide when and how to proceed.
In 2010, a similar case was brought to the Superior Court of the County of Fresno. In that ruling, Fresno Unified School District and its board of trustees were required to reinstate the pre-existing retiree benefits and reimburse any retirees who had already begun contributing to Medicare before the ruling was made. Legal counsel for RARE, Jeffrey Lewis of Keller Rohrbach LLC, confirmed that Rancho retirees seek a similar judgment.
“This is not going to stop here. I will spend my last breath, I have two years of life left, and I will spend that two years, whether I take my medication or not, fighting for the retirees who are the backbone of this institution,” said retiree Maria Hernandez.