Amherst Supervisor Satish B. Mohan wants a legal opinion from the state attorney general's office to determine if the town can switch 178 retirees from their current medical insurance providers to Medicare, saving up to $300,000 annually.
As it is, Amherst is subsidizing Medicare and providing a windfall for private insurance companies that cover retirees, Deputy Supervisor Roy Wixson said.
Mohan's insurance proposal prompted outcries from some retirees at a recent Town Board meeting, but he argued that the change could provide better coverage for retirees while saving money for the town.
Mohan was out of town and could not be reached to comment. But Wixson said the switch would end an arrangement that now requires Amherst to reimburse each retiree for about $92 a month in deductions charged by Medicare, as well as pay for their traditional medical coverage.
"In effect, Amherst taxpayers were subsidizing the Medicare system," Wixson said.
Even worse, Medicare now pays the reimbursements to the insurance companies that provide coverage for retirees, Wixson said.
"This is really a windfall to the medical insurance companies because we not only have paid for their claims, but the insurance company also takes the reimbursement from Medicare for the retirees' claims," Wixson said.
Spokesmen for the retirees appeared at the last board meeting and denounced town officials for considering the changes. Under its labor contracts with workers, the town is providing medical insurance for about 266 retirees, ages 65 and older, who were hired as full-time employees prior to 1977.
About 88 of those covered by the agreement have already switched to Medicare, with Medigap insurance paid by the town.
"We've not received any complaints, and the important thing is, they still can chose their doctors, and if they travel or live outside of the area, that's covered too," Wixson said.
Wixson also said that the town's labor agreements require Amherst to provide equal or better coverage than they now receive but do not prevent the switch.
"We're trying to make sure the coverage is equal or better, and to achieve that we're not only providing the Medigap insurance, but we're also continuing to pay the $92 for Medicaid Part A insurance, and just in case there is something else that needs to be taken care of, we're giving them each a $500 insurance card," he said.
"There's simply no point in subsidizing the Medicare system and giving the medical insurance companies a windfall profit," Wixson said.