MEDICARE PRESCRIPTION DRUG REIMBURSEMENTS FOR PUBLIC EMPLOYERS, INCLUDING SCHOOL DISTRICTS

WHEREAS, the Medicare Modernization Act of 2003 gave to public employers, including school districts, an opportunity to apply annually for a partial reimbursement of prescription drug costs of their Medicare-eligible retirees; and

WHEREAS, this rebate was intended to encourage public employers to retain retirees’ prescription drug coverage and to offset the inflationary costs of providing such coverage; and

WHEREAS, the Government Accounting Standards Board (GASB) has created a requirement (GASB 45) that public employers, including school districts, include as a liability in their budgets, the cost of providing retirees’ health insurance over a projected 30-year period; and

WHEREAS, some public employers may use or are presently using this GASB 45 requirement in such a way to negatively affect their retirees in their communities, by placing the blame of increased school taxes on negotiated health and dental insurance costs for their employees, particularly their retirees; and

WHEREAS, the Medicare regulations presently do not require that the Medicare prescription drug reimbursement received by public employers be used to safeguard, maintain or improve their retirees’ health and prescription drug benefits; and

WHEREAS, some public employers have placed these Medicare rebates into their general fund, sometimes without the knowledge of their employees’ negotiating teams; and

WHEREAS, some public employers still are reducing health insurance, dental and prescription drug benefits and increasing insurance premiums, deductibles and co-pays of both their in-service employees and retirees:

RESOLVED, that the American Federation of Teachers and its national affiliates assure that their in-service locals are aware that there is an option for their public employers to receive annually a partial reimbursement for the costs of Medicare prescription drugs upon an approved annual application to Medicare; and

RESOLVED, that the American Federation of Teachers and their national affiliates seek changes to the Medicare Modernization Act of 2003 that would forbid public employers from placing into their general fund the Medicare prescription drug reimbursements.  Such legislation should insure that these rebates be used for the purpose intended, to protect retirees’ prescription drug benefits and to offset the inflationary costs of providing such coverage.