Joe Polce, a Frederick County Public Schools retiree, was paying $6.60 a month for his life insurance premium.
His payout is $50,000, and through the years, the premium had risen marginally, increasing by only $3 or so since he retired in 1997.
As of July 1, Polce’s premium nearly quadrupled, to $24.85 a month for the same level of coverage as a result of a cost-saving measure approved in May by the Frederick County Board of Education.
The move startled some retirees, several of whom said they received no communication from Frederick County Public Schools prior to the board’s decision.
“We had no idea that this was coming,” Polce said. “That was the part that upset everybody.”
For decades, FCPS offered life insurance equal to the annual salary of an employee, capped at $50,000, with the school system paying 25 percent toward the cost of the premium.
Under the change voted on by the board at a May 6 worksession, which netted roughly $264,000 in savings, any employee can retain the full $50,000 coverage, but would need to pony up 100 percent of an increased premium.
An employee could choose to fall back to $25,000 or less, and the board would pay the full premium.
Retirees received a letter dated May 12, just six days after the vote, informing them of the change. They were given a deadline of June 1 to return a mailed form to the FCPS benefits office, and decide whether to reduce their coverage.
In the May 12 letter, FCPS said that once the retirees maintained or reduced their coverage, this plan would be locked in, unless the retiree wanted to drop the coverage completely.
After backlash from the retirees, with several appearing before board members at their meeting in late May, the deadline for the decision was extended to June 15. Retirees can now elect to reduce their benefits every year during the open enrollment period in May.
“They were throwing us a carrot,” Polce said.
Dan Garrett, who retired from the school system in 1992, said in an interview that he felt like the board was treating the retirees as “dead weight.” He estimated that he and his wife will pay $630 more in the combined increase to life and health insurance.
Though the retirees had never received anything in writing from previous school boards cementing the life insurance rates, Garrett noted that the insurance coverage was a “promise” that every other board had honored. He could not identify the year that the school board had promised this level of coverage, but said through other conversation with retirees, Garrett gleaned the plan had been enacted in the ‘60s.
Garrett met with two Baltimore County lawyers to discuss the possibility of filing an age discrimination lawsuit against Frederick County Public Schools or the board, but both informed him that such a case would likely not succeed, Garrett said.
Though the retirees will receive a 1.6 percent increase in their state pensions at the end of July, Garrett said this extra money wouldn’t cover the costs of the increased life insurance premium, nor the increased health care premium, which increased not only for retirees, but current employees as well.
For a Medicare eligible retiree with 25 years of service, the monthly premium jumped $8, to $98.61 a month.
Life insurance can be much more costly with outside agencies. AARP, for instance, for a life insurance policy issued to a person at age 70, charges a $183.54 monthly premium.
For some retirees, particularly those who served the school system as support staff, $24.85 a month for life insurance premiums could break the bank, especially on a fixed income, said Sally Smith, president of the Frederick County Retired School Personnel Association, a 660-member advocacy group that represents the interests of all retirees.
The association does not possess bargaining rights like the teachers union, the Frederick County Teachers Association, or the support staff or administration unions, Smith said.
“This was the plan for their spouse, or for their family, when they passed away,” Smith said. “And maybe $300 a year is a lot to them. Because for some people, it’s either pay for food or prescriptions.”
As of January 2015, 1,667 retirees had enrolled in life insurance coverage with FCPS, which uses Standard Insurance Co. for life insurance.
Of those, 956 retirees opted for the maximum $50,000 in coverage, 399 took coverage levels between $25,001 and $49,999, and 312 had signed up for $25,000 or less, according to data published by FCPS.
At the May 6 works session, only Board of Education President Brad Young voted to maintain the current coverage plan for retirees, and said in an interview he felt like the retirees got a raw deal.
“It was unfair to change it,” he said. “We had promised them, and they originally weren’t given a lot of time to make the decision.”
The insurance agency is now slated to remove quite a bit of liability from its books, though Board of Education member Joy Schaefer said the board did not approach the issue with that as the consideration.
The board members who voted in favor of the change hated to do so, said Schaefer, one of the “yes” votes. She said that the board had been presented with four options, but felt this was the most fair.
The school system has faced tough fiscal constraints, Schaefer said. For many years, she said, the county had funded FCPS at the level of maintenance of effort, the minimum amount required by law, and with inflationary factors, this amounted to decreases in the school system budget. Other cuts were made across the board, Schaefer said.
“None of us were happy to do that,” she said. “If we would have the ability to continue to carry that cost, we absolutely would have.”
Liz Barrett, vice president of the board, called the decision “regrettable,” but said the board needed to balance the needs of the 40,000 FCPS students, and current and retired employees.
“The goal is to get back to a place where we never have to consider going back on any of those commitments,” Barrett said.