FACTS AND ISSUES:
The North Carolina retirement policies allow for retirement following a certain number of years in service, rather than the Federal program which is age-based. For most positions, 30 years of service is required, while Police only need 20. This allows people who have met the length of service requirement to retire potentially in their 40s or 50s. However, with retirement comes the issue of health coverage, as early retirees are not eligible for Medicare until they turn 65.
At the time of separation, employees are allowed to purchase no more than 18 months of employer health coverage through the COBRA program. Some communities address this gap by allowing retirees to receive health coverage at the Town’s cost until they hit 65 years of age. Currently, this is about $8,000 per year for our employee insurance plan. We do not offer this benefit. For an employee retiring in their 40s, this could be a significant financial obligation on the part of the Town.
We have talked with the Personnel Committee about adding a benefit for employees at the point of retirement of one month’s salary. For all employees, this would give their final pay level a boost, which would increase their retirement income. For employees retiring early under Social Security, it would provide some financial support to cover health care costs until they reach Medicare eligibility.
The cost to the Town would be covered by the hiring process (seldom is a new employee coming in the door as the former employee is leaving), and, particularly with long term employees at the top of the salary range, a new employee would likely not come in at the same level.