The federal government has reached a deal with public sector unions that doubles the premiums paid by retired federal civil servants for their health benefits.

Treasury Board President Tony Clement announced the deal to amend the Public Service Health Care Plan at a press conference Wednesday afternoon.

Currently, retired civil servants pay 25 per cent of their health premiums and the federal government pays 75 per cent. The new deal changes that formula to 50-50, which will be phased in over four years starting April 1, 2015.

“This modernization will result in literally billions of dollars in savings while minimizing the impact on services and on our employees,” Clement told reporters in the foyer of the House of Commons.

The new cost-sharing formula is projected to save $6.7 billion over the next six years, Clement said.

The new deal also changes the eligibility requirements for the health plan. Six or more years of pensionable service are required to be eligible, up from two years of service.

Low-income pensioners will not be subject to the 50-50 funding formula. Retirees who are eligible for the Guaranteed Income Supplement will continue paying 25 per cent.

Other changes include:

  • the elimination of the annual deductible, which was $100 per family or $60 for an individual, as of Jan. 1, 2015.
  • the addition of new benefits: laser eye surgery will be covered to a lifetime cap of $1,000; and repairs to CPAP machines to treat sleep apnea will be covered up to $300 per year.
  • an increase to the psychological services cap to $2,000, up from $1,000.

The new deal will apply to all current and future pensioners that participate in the voluntary plan.

A union representing civil servants said it felt it had no choice but to accept the new agreement.

“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,” the Professional Institute of the Public Service of Canada said in a statement.

The federal government re-announced its intention to change the health benefit funding formula in its budget last month.