Health Insurance Premiums: Who Pays What?

While cash strapped companies plan to follow the federal lead and offer buyouts, Senior Correspondent Mike Causey says the Chief Executive wants future retirees...

Companies all over the nation, places as different as General Motors to The Washington Post and LA Times, are trying to cut current/future costs by offering buyouts to high-salary workers. They figure they can save money in pay and perks by replacing some of those workers with lower-paid individuals, contract workers (who don’t get fringe benefits) or by not replacing them at all.

In strict numbers Uncle Sam remains the buyout king (in volume if not in generosity). Tens of thousands of retirement-age feds were paid pre-tax buyouts of up to $25,000 during the early 1990s. Many of them were not replaced, or their work was consolidated and farmed out to the private sector. The government is still offering both early-retirement and buyouts (sometimes both) on a limited basis in parts of some agencies.

But while buyouts are often welcome by long-time employees as a nice cash nudge for doing what they planned anyhow, other cost-cutting ventures are not as welcome.

One of the proposals in President’s budget would trim the government’s share of health insurance premiums for workers retiring in the future. He made the same pitch last year and Congress ignored it. Currently the government pays an average of 72 percent of the total health premium for both federal workers and retirees.

Federal unions say that in reality the government pays “only” about 70 percent of the total premium. Either way, that’s 70 to 72 percent more than most companies pay if they even offer health insurance to retirees! Most don’t.

It’s unlikely Congress will act on that prospective change this year. But anything can happen in an election year Congress. For details click here and check out the Retirement Life Magazine article “How Will Feds/Retirees Fare in the FY 2009 Budget“.

Maryland Tax Break

Maryland homeowers can get a Homestead Tax Credit on their primary residence. In the past it’s been automatic, but this year people must make a one-time application so they can get, or keep, the break. That application was buried in tax assessments most people got (and many ignored) by mail in January.

Bob Leins, of the Rockville-based National Institute of Transition Planning, is warning his tax clients about the change. Here’s part of his alert:

…For most homeowners this credit currently substantially reduces the amount of property tax due. So please be certain to complete the applications so that your credit continues.

Homeowners of properties reassessed in 2007 should have received an application in the mail from the Dept. of Assessments and Taxation in early January. The application needs to be submitted by April 1, 2008. Homeowners of properties reassessed in 2008-2009 will have until December 31, 2009 to submit the application…however (it) can be submitted early.

The application is available at or you can call 1-866-650-8783.

Although this applies only to Maryland homeowners, residents of other states may want to check and see if something similar is going on in their state.

Nearly Useless Factoid

The owner of Barney the Dinosaur has sold Guinness World Records… to Ripley’s – believe it or not.

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