City Governments In South Carolina To Shake Up Health Insurance Payments

City Governments In South Carolina To Shake Up Health Insurance Payments in Group Health Insurance

When it comes to health insurance benefits for retired city employees, local governments in South Carolina pay them as they need year-to-year. 

Once an employee retires, the city budgets the money right then, explained a lengthy article in the South Carolina State.

But the Government Accounting Standards Board (GASB) in 2004 decided local governments should have the cash on hand to cover the health benefits of every employee if they all retired.

That policy is effective immediately.

The GASB was created in 1984 to impose standards guiding cities on how they should handle the public’s money, wrote the State article.

Unfortunately for many cities, the amount of money needed to cover all employees’ health insurance benefits can reach hundreds of millions of dollars.

If a city or local government doesn’t have the money — and most don’t — the GASB counts the deficit as debt the city has to pay. Starting now, local governments have 30 years to pay off their “debt.”

Why must local governments follow the GASB’s rules?

Standards from the GASB’s standards aren’t technically law, but governments that violate their recommendations can mean higher interest rates from investors who have loaned money — or investors could financially cut them off altogether.

Now, city, county, and other local governments are scrambling to figure out ways to cut costs and pay back their debt.

One solution is to put money in an untouchable trust that invests taxpayer money in the stock market. But local governments aren’t allowed to invest public money into the stock market according to South Carolina’s state Constitution.

The case is going before the state Supreme Court.

“Either way the decision goes, it’s going to affect a large group of people,” said attorney Nancy Bloodgood.

Others are trying to cut costs and save money wherever they can. The Myrtle Beach Budget Director, Mike Shelton, is encouraging retired employees to get certain medical procedures overseas to save money.

Shelton went to Thailand to get a colonoscopy for $700, where it would have been $3,500 in the U.S. Even if the city pays for all the trip’s expenses, even for a little site-seeing, they still save money.

It looks like the whole thing is going to be an ongoing process.

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