County Seeks an Incentive for Employee Retirements : Budget: Supervisors to consider a plan to extend workers’ health insurance coverage at reduced rates. They hope savings of as much as $5.7 million would avoid layoffs.

Searching for ways to shrink the county’s work force, Ventura County officials want to offer veteran employees extended health insurance at reduced rates as an incentive to retire early.

The plan is intended to help the county reduce a mounting budget deficit and avoid possible layoffs by eliminating the higher salaries earned by older employees.

“This method makes a lot more sense than laying off lower-level people who have many years left to serve,” said county Personnel Director Ron Komers.

The proposal, which the Board of Supervisors will consider today, could save the county as much as $5.7 million next year if 100 senior employees retire early and are not replaced.

If those jobs were filled with entry-level employees, the savings would drop to $1.15 million. And after the first year, the savings would diminish as new employees receive annual raises, said county Auditor-Controller Thomas Mahon.

Union leaders endorsed the plan in March, but they acknowledge they have no idea whether the proposal will encourage employees to retire early.

“It could be 50, it could be more,” said Ronald Coleman, president of the International Union of Operating Engineers, which represents about 200 county employees. “For those employees who are worried about layoffs, it may help.”

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Given the prospect of layoffs, Supervisor Frank Schillo said the county would be remiss not to try this program.

“If somebody is contemplating leaving, it might be better they get a benefit and leave through an early retirement than face the uncertainty of not knowing whether their job would be there,” he said.

Under the proposal, about 900 employees who are age 50 or older and have served the county for a decade would qualify for the lower insurance rates.

They would be allowed to maintain their current benefits for the same rates charged to employees plus a 2% administrative fee.

Under the present system, employees who retire early can continue with the county health insurance plan for 18 months under the federal COBRA program as long as they pay the full monthly premiums. After 1 1/2 years, the COBRA coverage expires and former employees face even higher insurance premiums if they want to remain with the county health coverage.

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The proposal would allow retirees to stick with the county’s health insurance at the active employee rate for at least five years or until they turn 65 years old and are eligible for Medicare.

For families who would have to buy health insurance under existing retiree rates, the savings would be significant.

If approved by the supervisors, an eligible retiree and two family members would pay $284 a month for coverage under an HMO run by Foundation Health. Under the current rates for retirees, the same family would pay $654.

For individuals, the plan represents less of a savings. A single person would pay the same $284 monthly fee as a family, a savings of only $21 off the regular retiree rates.

To guarantee the rates with insurance companies, the county would have to set aside as much as $500,000 in case new retirees file more medical claims than expected. That money would come from an existing reserve fund that may be used only for the county’s benefits plan.

Some union officials expressed concern about the use of reserve funds to subsidize the lower rates for retirees.

Dave Williams, president of the 850-member Deputy Sheriffs’ Assn., said those reserves instead could be used to offset future increases in medical insurance.

Yet union officials are now more worried about the possibility of layoffs, Williams said. “I guess the feeling was, if 50 people take advantage of it and they take 50 positions and move them elsewhere, then you save 50 people from being laid off,” he said.

Komers said the idea for the incentive came from survey of retirees who listed the high costs of medical care as one of their biggest concerns.

“It’s so significant,” he said, “that some people who would like to retire are unable to retire because of the high cost.”

Supporters of the plan hope the lower rates will reduce the need for layoffs, and the related costs of unemployment benefits.

Laying off 100 employees, Komers said, would cost the county $414,000 in unemployment checks before the jobless benefits expire.