The Henderson City Council voted Tuesday to end an employee benefit program that subsidizes retiree health insurance premiums because officials said it’s projected to run out of money in just over a decade.
The council voted 4-1 on measures amending agreements with the Henderson Police Officers Association, Henderson Police Supervisors Association and Henderson Professional Firefighters Local 1883 despite pleas from many retired city employees or their loved ones who urged to delay a transition away from the subsidy program.
City officials acknowledged the move would be unpopular. Assistant City Attorney Kristina Gilmore said during Tuesday’s meeting that moving away from the benefit will help ensure the city stays in good financial health.
“Quite frankly, it’s a lose-lose situation when you have to take back a benefit,” Gilmore said.
The changes will transition employees away from a benefit program called Retiree Health Insurance Premium Assistance, or RHIPA, in favor of enhanced Retirement Health Savings, or RHS, accounts, Assistant City Attorney Kristina Gilmore told Council members during a presentation during Tuesday’s meeting.
Each union approved the amended agreements and the transition will also affect non-represented city employees, Gilmore said. She added the city and its first responder unions have grappled with finding a sustainable funding structure for the program.
Mayor Michelle Romero said waiting to amend the benefits agreement would further strain the estimated $2 million remaining in the RHIPA fund, which is projected to become insolvent because retirees are receiving benefits faster than employees are contributing to the fund.
“The further we kick the can down the road, the longer it takes to make a decision,” Romero said. “It’s going to make the problem worse and worse.”
‘I’m not here to assign blame’
Bonnie Croft has worked as an engineer for the city since 2002 and urged the council Tuesday to delay consideration. She also submitted a 51-page document outlining reasons why the city should wait.
Croft, who according to the document is a two-time cancer survivor planning to retire in May 2027, said non-represented employees, especially those close to retirement, should be given more time to adequately prepare for the benefit change.
Croft was one of 10 people who asked the city to postpone consideration of the plan.
“I’m not here to assign blame or interfere with the agreements that Police and Fire have already negotiated, what I’m asking you to consider is equity for people affected by this transition,” Croft told Council members.
Mimi Murphy, who said she retired from the city earlier this year, told Council members she planned her retirement partly around the RHIPA benefit and was blindsided by the city’s decision.
Like Croft, Murphy asked for more time before making a decision.
“These decisions were made without any input from the individuals who it impacts the most: the retirees,” Murphy said.
‘Quite frankly, it’s a lose-lose situation’
RHIPA provides retirees participating in the city’s self-insured health plan with a monthly subsidy ranging from $200 to $500, depending on their years of service, according to a June 16 letter from the city’s labor negotiators to the unions.
The benefit plan was amended in 2019 and again in 2023, increasing employee contributions to $24.20 per paycheck, the letter said. The city also contributed a yearly lump sum of $330,000, and contributions from employees and the city were set to increase in the future had the council not voted to end the program.
Even with increased contributions from employees and the city, a projected increase in retirees and expected increases in healthcare costs could require the city to spend up to $7.5 million annually to keep RHIPA solvent, Courtney Redsull, the city’s employee benefits manager, said during Tuesday’s presentation. RHIPA is projected to become insolvent by 2037, negotiators said in the June 16 letter.
Gilmore said that RHIPA funds will be transitioned into individual accounts, which can be used for eligible healthcare expenses in retirement. Unlike the RHIPA fund, which Gilmore said was held in an account that earned returns similar to Treasury investments, RHS accounts can grow over time through investment earnings.
Employees will be compensated based on their tenure, reduced by any RHIPA benefit they have already received, Redsull said.
An employee with 25 years of service or more will receive 100 percent of their contribution; those with 20 to 25 years of service will get 80 percent; those with 15 to 20 years of experience will get 65 percent; and anyone with 10 to 15 years will be given 30 percent of their total contribution, Henderson Assistant Finance Director David Weiser said.
Redsull said about 85 percent of retirees have already received more in RHIPA benefits than the amount they contributed into the program. RHIPA recipients will be given a three-month grace period to receive their final subsidy payments, Redsull said.
“This isn’t sustainable,” Redsull said. “Because current employees are funding existing retiree benefits with no guarantee that future benefits will be available to them when they retire.”
Contact Casey Harrison at charrison@reviewjournal.com. Follow @Casey_Harrison1 on X.
