Improved Retiree Healthcare Benefits & Vacation Usage Flexibility: Tentative Agreement Reached!

Dear OCEA member,

For years, County workers have sought improvements on two important workplace issues: retirement healthcare costs and vacation usage. Standing together, your voices have been heard. OCEA is excited to announce significant potential improvements on both of these critical items.

 

Retiree Healthcare Benefit Improvement

Healthcare is often one of the biggest expenses a person faces in retirement. In fact, the cost of retiree healthcare leaves many workers to conclude they cannot afford to retire. Currently, the County only offers retired workers the Retiree Medical Grant (RMG), which can only be used by certain retirees for very specific out-of-pocket healthcare premiums. The RMG cannot be used for most common expenses, and except in limited circumstances requires California residence.

The RMG simply does not provide adequate coverage or flexibility for workers when they retire.

Our current County MOUs include a reopener on retiree medical. This provision was included in the MOUs because both OCEA and the County have a mutual interest in creating a superior benefit that helps more workers. Although the COVID-19 pandemic initially delayed progress on this item, last year OCEA and the County resumed reopener discussions, which were focused on ways to improve your healthcare benefit upon retirement from County service.

IMPORTANT! These discussions are separate from our normal negotiations for new MOUs which will begin in the Spring of 2023. No part of the County's cost for these items will be charged against you or OCEA in upcoming MOU negotiations.

Following months of deliberations, the OCEA Executive Committee and Board of Directors are excited to announce OCEA and the County have reached a tentative agreement on a superior retiree healthcare benefit for workers in all OCEA-represented bargaining units.

The current RMG is a monthly grant available to eligible County retirees receiving a monthly retirement allowance from OCERS. The RMG is restrictive. The RMG is ONLY available to workers who retire after 10 years of service and stops accruing value after 25 years of service. The RMG can ONLY be used to offset premiums for County-sponsored retirement health plans and (if eligible) Medicare Part A and Part B premiums. The RMG is generally ONLY available to California residents as the vast majority of County-sponsored health plans require in-state residency. In fact, the RMG has proven to be so limiting that more than 20% of eligible retirees walk away from the RMG, which means they choose to LEAVE their money on the table rather than be constrained by its limitations.

The enhanced benefit we have negotiated is a Health Reimbursement Arrangement (HRA). An HRA is an IRS-approved, County-funded, individual account through which you can be reimbursed for any IRC-qualified out-of-pocket medical expense after separation from the County. An HRA removes the limitations from the current system. It provides workers with more flexibility when they retire. An HRA can be used with any health plan, even out-of-state, and for ANY IRC-qualified out-of-pocket medical expenses. Workers are eligible for participation after one (1) year of employment and there is no 25-year cap. ALL full years of service are counted.

HRAs are the preferred arrangement of other unions in the County because it provides a superior benefit for more workers. Moving from the RMG to an HRA will provide OCEA workers the flexibility and coverage needed in retirement.

Most importantly, the tentative agreement provides you with a CHOICE. The tentative agreement gives you the OPTION to choose from an RMG/HRA Hybrid or an HRA-Only benefit. Because the RMG will be frozen effective June 16, 2023, you may opt into and remain eligible for the revised RMG for up to 25 full years of County service prior to June 16, 2023. The value of your years of service over 25 years prior to June 16, 2023, will be credited to your new HRA account. Beginning June 16, 2023, the County will begin biweekly contributions to your HRA account. Under this option you will have a hybrid retirement health benefit: (a) the RMG for up to 25 full years of service prior to June 16, 2023 and (b) the HRA for all service beginning June 16, 2023 (increased by a credit for any pre-June 16, 2023, County service over 25 years).

As an alternative option, at your discretion you can choose the HRA-Only option by opting out of the RMG entirely and having the cash value of your RMG as of June 16, 2023, contributed to your new HRA account (at a value of $855 for each year of service) and the County will begin biweekly contributions to your HRA account on that date.

You will need to consider many factors when deciding which option is the best CHOICE for you and your family. Rest assured knowing you will have the tools and the information needed to make this personal decision when the time to choose arrives.

 

Vacation Usage Improvements

Over the last few years, the pandemic and related staffing shortages have limited workers’ ability to use accrued vacation time. Despite the ability to cash out vacation time, many workers, especially those with an Annual Leave (AL) balance, hit their vacation accrual caps and stop accruing. Currently, workers with an AL balance and less than ten years of service are required to use their AL prior to using vacation time. Workers with an AL balance and ten or more years of service are permitted to use a maximum of 40 vacation leave hours each fiscal year. Moreover, the amount of vacation time and AL any worker with an AL balance may cash out if they will reach their accrual cap is so limited that it fails to solve the problem for many workers. The need for more options and greater flexibility was self-evident. After month of discussions, OCEA finally moved the County to make much-needed changes.

The OCEA Board and Executive Committee are happy to announce OCEA has, as part of the tentative agreement, reached agreement with the County to provide workers with additional flexibility on vacation leave usage and cash-out.

Under the tentative agreement, workers subject to the cap of 80 hours of cash-out with 80 or more hours of AL will be able to cash out an additional 20 hours of vacation leave. Workers subject to the cap of 120 hours cash-out with 80 or more hours of AL will be able to cash out up to 120 hours of vacation leave or annual leave. Lastly, ALL workers with 80 or more AL hours may elect to use a maximum of 60 hours of vacation leave each fiscal year, regardless of length of service!

 

Next Steps

Now that a tentative agreement has been reached, OCEA members in every bargaining unit will have the opportunity to vote to ratify (i.e., accept) the agreement. In the next week, OCEA will hold three (3) informational meetings regarding the tentative agreement followed by a week of ratification voting. These informational meetings will be both in-person and virtual. The Dec. 6 meeting will also be recorded and made available online for members to view at your convenience. In addition, OCEA staff will be available all week to answer questions in-person at OCEA (830 N. Ross St. in Santa Ana), by telephone, by email, and by submitting a question online. 

The informational meetings will be held:

• Noon–1 p.m. Monday, Dec. 5
  at OCEA (830 N. Ross St. Santa Ana, CA 92701)

• 5:30–6:30 p.m. Tuesday, Dec. 6
  on Zoom (Check home email for Zoom details)

• Noon–1 p.m. Wednesday, Dec. 7
  on Zoom (Check home email for Zoom details)

Electronic voting will open for OCEA members ONLY at 1 p.m. Wednesday, Dec. 7, and will close at Noon Thursday, Dec. 15.

You can see more about the tentative agreement by following one of the links below:

• Frequently Asked Questions
• Grant vs. HRA Comparison
• What Are My Options?
• Tentative Agreement Between OCEA and the County

The OCEA Board unanimously recommends a YES vote on the tentative agreement.

In Solidarity,

OCEA

Publication Date: November 30, 2022