A ‘slap in the face’: Retired state workers in Maryland outraged by drug plan switch

Before receiving a heart transplant in 2020, Mark Varner avoided imagining his life too far into the future.

Instead, Varner — a professor emeritus at the University of Maryland, College Park, who was diagnosed with multiple organ failure — only allowed himself to think ahead to the next day, to wonder if he’d wake up that morning.

That changed after he got his transplant. Varner traveled to visit elderly friends and family members, went on hikes and adopted a puppy. But lately, uncertainty has clouded the future of his health once again — and this time, the problem isn’t his heart.

In 2011, the Maryland General Assembly passed sweeping pension changes that aimed to curb the state’s long-term spending on retirement. As part of that package, lawmakers agreed to transfer all state retirees from Maryland’s prescription drug plan to Medicare Part D — the federal health plan that helps more than 50 million Americans afford the cost of their medications.

A legal challenge to the law delayed the shift for years. But in January, Varner and thousands of other retired state workers received a letter from Maryland’s Department of Budget and Management, telling them that their current prescription drug coverage would end in December.

There are about 55,000 retired Maryland state workers, according to the department.

The budget and management department says the two plans are comparable in price, especially after changes made to Medicare Part D by a 2022 federal law called the Inflation Reduction Act. However, Maryland retirees — many of whom say they chose state government jobs over higher-paying careers in the private sector partially because of the retirement benefits — aren’t convinced.

Each day, Varner takes 10 medications to keep his immune system from rejecting his transplanted heart. He has even more prescriptions to take under specific circumstances, like if he needs a cavity filled. But some of his medications weren’t included in the list of drugs that Part D covered this year, he said. Under the 2024 Medicare Part D plan, he said he would have paid about $4,000 in out-of-pocket costs — compared to the $568 he pays under his current plan.

Varner won’t know for sure whether Part D will cover his medications in 2025 until early this fall, when details about the plans are released.

“I’m not the only one,” he said. “There are tens of thousands of us that are in a similar situation.”

Earlier this year, Varner testified in support of a pair of state bills that many retirees saw as their last shot at canceling the impending shift in their benefits.

Sen. Mike McKay — a Republican who represents Allegany, Garrett and Washington counties — introduced one of the bills this year. It would have allowed retirees who started working for the state before 2011 to maintain their current benefits. Although about 175 people testified in support of the bill, McKay said, the Budget and Taxation Committee didn’t vote on it.

McKay said he knew going into the legislative session that it would be difficult to get his bill passed. It had a price tag of about $96 million, and the state faces a tough fiscal year. Still, he was disappointed the legislation didn’t advance. The bottom line, he said, is that the state made a promise to its retirees and it should keep that promise.

“It was not intended as a bait and switch, but that’s what has ended up happening,” McKay said. “Instead of me getting the Cadillac, I’m getting a GMC. I’m still getting a car, and I’m still getting a good car, but it’s not the Cadillac.”

Del. Robin Grammer — who sponsored a similar bill in the House of Delegates with seven other Republicans — had harsher words.

“For me, the legislature just doesn’t care about these people, who need this coverage in their vulnerable years,” Grammer said.

The Baltimore County Republican added that he plans to wait and see how the shift in coverage affects retirees next year before he decides whether to introduce further legislation. Democratic Sen. Guy Guzzone of Howard County and Democratic Del. Ben Barnes of Anne Arundel County — chairs of the committees where the bills were introduced — did not respond to questions about why the legislation did not advance.

There is a lot of anger among state retirees after both bills died in committee, said Anne Seibert, who retired in 2007 after 28 years as a social worker in Washington County. The number of people hired before 2011 — when state lawmakers passed pension changes — will only shrink, she noted, until eventually the state no longer has any financial obligation to the group.

She’s well aware of how complicated Medicare is to navigate. Before she retired, she worked with elderly people and people with disabilities. During every open enrollment period, her phone practically melted from the calls she’d get from people who were confused about how to choose a plan.

Now, she and her husband are both 80. They’re lucky that they know how to use a computer, Seibert said. Other retirees aren’t so technologically literate. It will be a struggle for them to compare the premiums, deductibles and co-pays between each Part D plan every year and choose one, she said.

“That’s all well and good, as long as you have all your faculties and plenty of time and you don’t throw your computer out the window,” Seibert said.

Gus Mercanti, a former state worker who retired in 2017, described the letter notifying him of the impending change in benefits as a “slap in the face.” He remembers being told about the benefits he’d receive in retirement when being hired by the Chesapeake Biological Laboratory at the University of Maryland Center for Environmental Science. Later, when he was hiring people for the laboratory in Southern Maryland, he told them about the same benefits.

Many state retirees aren’t wealthy, said Peta Richkus, who served as Maryland’s secretary of general services from 1999 to 2003 and has been an advocate for retired state workers over the last several years.

“Many of them stayed with the state, even when they were subjected to furloughs, pay freezes, et cetera, et cetera, because they were told that, ‘Well, yeah, the salary is terrible, and we can’t give you a raise for years and years, but you will have these benefits,’” Richkus said. “Now, they don’t have that.”

Retired state workers earned an average final salary of about $55,000, according to the fiscal year 2023 report from the Maryland State Retirement and Pension System.

The budget and management department is hiring a company to provide one-on-one counseling, as well as in-person and virtual educational sessions, to help retirees select a Part D plan. Retirees will receive more information this summer about these services, once the state contracts with a company, according to the department’s website. Open enrollment is between Oct. 15 and Dec. 7 each year.

Under the federal Inflation Reduction Act, the out-of-pocket maximum for Part D plans will drop from $8,000 to $2,000 per person in 2025. Additionally, state lawmakers created health reimbursement accounts for retirees in 2019 to help alleviate costs they may face when they move to a Part D plan. The state will load these accounts, which retirees will be able to use like debit cards when buying drugs, with $750 at the start of 2025.

“To maximize our outreach efforts to retirees, the State will collaborate with legislators and others to provide guidance and connect individuals to the administrator,” said Raquel Coombs, chief of staff for the budget and management department, in a statement. “The Department is committed to a smooth transition for our retirees.”

But Richkus is concerned that some retirees will see the cost of their medications increase by more than $750 next year, if some of their prescriptions aren’t covered by Part D. She fears some will go into bankruptcy or won’t take their medications if they become too expensive.

“I just worry about what’s going to happen,” she said.