Eleven University of Maine System retirees filed a lawsuit against the public university system Thursday over its switch to a new retiree health plan that the retirees say violated their contractual rights and will result in higher health care costs for many.
The lawsuit, filed in Cumberland County Superior Court, alleges that the UMaine System violated retirees’ contractual rights to group health insurance when it approved the switch to a new plan without retirees’ knowledge or approval, and without negotiating the change through collective bargaining.
The suit seeks an injunction to stop the change, which is set to take effect on Jan. 1 and will affect about 3,000 retired University of Maine System employees. The retirees are seeking class-action status for the lawsuit.
The change rolled out in August will switch university system retirees from a defined benefit to a defined contribution plan for the health benefits they receive as retirees. A defined contribution plan provides retirees a certain amount of money to access undefined health benefits. A defined benefit plan entitles retirees to benefits outlined ahead of time, irrespective of cost.
Plan members will be given $2,100 for individuals and $800 for spouses to spend on care in a seperate account and will need to shop for plans through Aon Retiree Health Exchange, the university’s contractor. Retirees will pay for their care, then receive reimbursement.
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The switch is expected to save the public university system $2.5 million annually on its retiree health insurance benefit, which fills Medicare coverage gaps for eligible retirees. But retirees have raised concerns that the switch will increase their health care costs in the middle of a pandemic.
“Filing this lawsuit was not the route we wanted to take but this was the route the University of Maine System’s Board of Trustees pushed us into,” said Jim McClymer, an associate professor of physics at the University of Maine and president of the faculty members’ union, the Associated Faculties of the Universities of Maine. “We have retirees who under their new plans can no longer afford the prescriptions they need to stay alive, and others who are making the tough choices to stop taking one medication so they can afford another at a cost of their own health.”
A university system spokesperson, Dan Demeritt, declined to comment on the litigation. However, Demeritt said more than half of eligible retiree health care plan participants — about 1,550 retirees — have already signed up for the new plan. The University of Maine System has also committed to increasing the $2,100 contribution — which can cover health insurance premiums or direct health care expenses — over time to preserve purchasing power, Demeritt said.
“Insurance is a complicated business and we understand the uncertainty among retirees,” he said. “Benefits specialists are holding hundreds of appointments per week to help our former employees and their spouses choose the right plan for their circumstances.”
Retirees are signing up for the new plan because they risk losing health care coverage and the UMaine System contribution altogether if they do not, according to Lydia Savage, a geography professor at the University of Southern Maine and president of the Associated Faculties of the Universities of Maine’s USM chapter.
Additionally, if former employees do not sign up for the Aon plan by the end of this year, they forfeit the contribution that the university system offers forever, Savage said.
“It is outrageous for the UMaine System to act like [retirees] are signing up because they are so excited about it,” she said. “It is especially cruel to tell retirees that if they do not sign up this year, they forever forfeit any UMS benefit.”
University of Maine System employees and retirees have publicly protested the benefit changes at UMaine System trustees’ meetings since September. The faculty senates at five system universities have passed resolutions urging the Board of Trustees to revert to the old retiree health care plan.
After the trustees’ November meeting, the system announced plans to hire an independent consultant to field questions from retirees about their new health care coverage and update trustees on the switch.
Elected officials have also become involved.
In a September letter to UMaine System Chancellor Dannel Malloy, most Maine Senate Democrats and 47 of the party’s House members equated the change to “pulling the rug out” from retirees.