Henderson City Council votes to eliminate retirement subsidy program

Henderson City Council voted Tuesday to end the Retiree Health Insurance Premium Assistance (RHIPA) program that subsidizes retiree wellness premiums. The council approved measures amending agreements with the Henderson Police Officers Association, Henderson Police Supervisors Association and Henderson Professional Firefighters Local 1883 by a 4‑1 margin, despite appeals from retired city employees and their families to delay the change. Assistant City Attorney Kristina Gilmore told the council that moving away from the subsidy would help secure the city’s fiscal health. “Quite frankly, it’s a lose‑lose concern when you have to take back a benefit,” Gilmore said. Gilmore explained that the shift would replace RHIPA with enhanced Retirement Health Savings (RHS) accounts. She noted that the amended agreements were ratified by all bargaining units and will also affect non‑represented city employees. Gilmore added that the city and its first‑responder unions have struggled to find a sustainable funding mechanism for the program. Mayor Michelle Romero warned that postponing the amendment would further strain the estimated $2 million remaining in the RHIPA fund, which is projected to become insolvent because retirees are drawing benefits faster than active employees contribute. “The further we kick the can down the road, the longer it takes to make a decision,” Romero said. “It’s going to make the problem worse and worse.” Bonnie Croft, an engineer who has worked for the city since 2002, urged the council to reconsider. She submitted a 51‑page paper outlining reasons to wait. Croft, identified in the paper as a two‑time cancer survivor planning to retire in May 2027, said non‑represented workers, especially those close to retirement, need more time to prepare for the benefit change. Croft was one of ten individuals who asked the city to postpone information about the plan. “I’m not here to assign blame or interfere with the agreements that Police and Fire have already negotiated, what I’m asking you to consider is equity for people affected by this transition,” Croft told council members. Mimi Murphy, who retired earlier this year, said she had structured her retirement around the RHIPA subsidy and was surprised by the council’s decision. Like Croft, she requested additional time before any change takes effect. “These decisions were made without any input from the individuals who it impacts the most: the retirees,” Murphy said. According to a June 16 letter from the city’s labor negotiators to the unions, RHIPA provides retirees in the city’s self‑insured health plan with a monthly subsidy ranging from $200 to $500 based on years of service. The program was revised in 2019 and again in 2023, raising employee contributions to $24.20 per paycheck. The city also contributed an annual lump sum of $330,000, with both employee and city contributions slated to increase had the council not voted to terminate the program. Courtney Redsull, the city’s employee benefits manager, told the council that even with higher contributions, a projected rise in retiree numbers and growing healthcare costs could require the city to spend as much as $7.5 million each year to keep RHIPA solvent. Redsull said the program is expected to become insolvent by 2037, a forecast echoed in the June 16 letter. Gilmore said RHIPA assets will be moved into individual accounts that can be used for qualifying healthcare expenses in retirement. Unlike the RHIPA fund, which earns returns comparable to Treasury investments, RHS accounts can grow over time through investment earnings. Employees will receive compensation based on tenure, offset by any RHIPA benefits they have already received. Redsull explained that workers with 25 or more years of service will obtain 100 percent of their contributions; those with 20 to 25 years will receive 80 percent; employees with 15 to 20 years will get 65 percent; and those with 10 to 15 years will receive 30 percent of their total contribution, according to Henderson Assistant Finance Director David Weiser. Redsull noted that roughly 85 percent of retirees have already collected more in RHIPA benefits than they contributed. RHIPA recipients will be granted a three‑month grace period to receive their final subsidy payments. “This isn’t sustainable,” Redsull said. “Because current employees are funding existing retiree benefits with no guarantee that future benefits will be available to them when they retire.”