Medical insurance a headache for EES retirees

By Thomas Wilson
STAR STAFF
twilson@starhq.com

   Higher insurance costs have become a fact of life for companies and their employees for the past two years. However, the Elizabethton Electric System's retired employees are feeling particular pain with fixed pension incomes and unfixed medical insurance costs.
   "We all understand the cost of insurance is going up," Dick Fregosi told members of the EES Board of Directors at the November meeting on Tuesday.
   Fregosi, an insurance professional with Ultimate Service financial group of Johnson City hired to represent EES retirees, said what the board didn't seem to understand is retired EES employees had no cost-of-living increase to offset increases in health insurance premiums.
   Fregosi said the monthly cost of medical insurance for the system's 26 retired employees was $11,372.51. He said eight of the 26 had found alternative insurance coverage. Retired EES employees were unable to receive any additional increase in retirement pay, and no way to offset any increase changed from the original labor code dated July 1, 1996 to June 30, 1999. Under that plan, EES pays all but $10 per month deducted from retirees' pensions. That amount increased to $20 per month this year. If a retiree's benefit covered a spouse, that figure could go to $120 per month.
   "They have no way to recoup the money," Fregosi said.
   The EES Board voted unanimously at its August meeting to amend existing Massachusetts Mutual Insurance retirement benefits to EES retirees. Board members passed a resolution that reduced the system's contribution toward employees' retirement plans from 2.15 percent to 1.5 percent and raised the minimum retirement age from 57 to 60. Those changes went into effect on Nov. 1.
   Previously, an employee retiring from the system after 30 years of employment received an annual pension equaling 65 percent of the salary the employee earned during the last year of full-time employment.
   Under the new plan, that same employee after 30 years of employment would receive an annual pension equaling 45 percent of the salary he or she earned during their last year of full-time employment.
   Board Chairman Gary Nave said the board was "sensitive" to the concerns of retirees, but added the system was facing declining revenues and increasing costs.
   "The electric system has the same problem," Nave said. "We don't have anywhere to go to get the money."
   The system's year-to-date financial data indicated falling revenue and net income for EES. Although reporting a cash flow in October of more than $3.1 million, net income through 2003 was off approximately $260,000.
   Dozens of retired and current employees have packed the boardroom during recent meetings voicing their opposition to the move. Only a handful of retired EES employees attended Tuesday's meeting compared to dozens during the past few months.
   Interestingly, two officers with the Elizabethton Police Department were present at Tuesday's board meeting. Police entered the boardroom shortly before the meeting began and remained outside the EES lobby until the meeting ended shortly after 1 p.m. Isaacs said he did not request police presence at the meeting nor did he know if any of the five board members had asked police to attend. He said he had not received threats from any EES retirees regarding the benefit changes, nor to his knowledge had any board members.
   Fregosi said after the meeting the retirement plan should have factored in a cost-of-living increase for employee pension pay to compensate for higher health insurance premiums.
   "Really no one thought this through when they did this," Fregosi said. "No one thought to include cost-of-living increases."
   In other business, the board voted 5-0 to approve upgrading the electrical infrastructure in the Martindale Estates subdivision on the county's far west end. Underground utility lines would be replaced to improve electrical service in the residential area. Isaacs said the first phase of the three-phase upgrade would cost around $40,000 to $50,000.