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Legislation limits amount public employers may pay for employee medical benefits

Published 10:37pm Tuesday, September 27, 2011

LANSING — Gov. Rick Snyder on Saturday signed legislation that limits the amount public employers may pay for government employee medical benefits. The change also affects elected officials, including state lawmakers.
“These changes result in a fair and equitable approach that brings public employee benefits more in line with the private sector,” Snyder said. “Getting these currently unsustainable costs under control now helps ensure Michigan’s long-term future and allows us to all move forward together.”
According to a 2009 survey from the U.S. Bureau of Labor Statistics, employees in the private sector in Michigan are responsible for, on average, 21 percent of the cost of their medical benefits for single coverage and 27 percent for family coverage. Michigan public employees, however, only cover on average 10 percent for single coverage and 15 percent for family coverage.
Beginning on Jan. 1, 2012, a public employer such as a city, county or township will be limited from paying more than $5,500 for health benefits annually for a single employee, $11,000 for an employee plus spouse or $15,000 for family coverage. These amounts are tied to inflation based on the medical component of the Consumer Price Index.
Alternatively, a public employer may split the cost of medical coverage with its employees, who will have to pay a proportion of their health insurance costs. Under this option, a public employer may pay no more than 80 percent of the annual cost of medical benefits.
A local unit of government that is held to this new standard may exempt itself from these requirements with a two-thirds vote of its governing body.
Senate Bill 7, sponsored by state Sen. Mark Jansen, is now Public Act 152 of 2011.

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