03/26/2014 01:11 EDT | Updated 05/26/2014 05:59 EDT

Retired Public Servants' Health Premiums To Double: Tony Clement

OTTAWA - Federal public servants will be required to pay more toward their retirement health benefits under an agreement that one union says was negotiated with a gun to the heads of retirees.

Under the deal, announced by Treasury Board President Tony Clement, premiums paid by retirees for those benefits will double for all but those with the lowest incomes.

Both sides made compromises to reach a deal on the changes to the Public Service Health Care Plan, Clement said.

"Quite frankly we both put some water in our wine," he told reporters on Parliament Hill.

"That's the nature of negotiated settlements."

He called the agreement fair and reasonable.

But the unions had little choice but to negotiate, said the Professional Institute of the Public Service of Canada.

"The federal budget brought down in February included references to increasing retiree premiums for the PSHCP and increasing the years of service required for eligibility for the PSHCP as a retiree," said a statement on the union's website.

"While we are opposed to these changes, it was made clear to us that if we didn’t come to an agreement, these changes would be legislated."

Currently, retired civil servants pay 25 per cent of their health premiums while taxpayers pay 75 per cent.

Under the new agreement, premiums will be split 50-50.

Clement says the deal means the federal government will save $6.7 billion over six years.

The new cost-sharing formula will be phased in over a four-year period.

Clement says low-income pensioners will not be subject to the 50-50 funding formula and the plan's annual deductible is also being eliminated.

Low income under the agreement is defined as $16,728 for a single person and $22,080 for a couple.

Anyone receiving benefits under those income thresholds would continue to pay 25 per cent of premiums.

As well, civil servants will be required to put in six years of pensionable service to be eligible for the benefits, up from the current two years.

The threshold would not apply to veterans employed by the government, medical retirees, permanently disabled retirees, spouses and dependents of employees who die with less than 6 years’ service and members with more than 2 years’ service who have been laid off.

The unions and groups representing retirees were able to negotiate three new benefits, which would be available to retirees effective October 1.

The plan will now cover laser eye surgery, with a lifetime cap of $1,000, repairs and replacement parts for sleep apnea machines, up to $300 a year and a doubling of paid psychological services, capped at $2,000.

Green party Leader Elizabeth May declared the agreement bad for seniors who are already struggling to survive on fixed incomes.

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