SALEM — When Jack Rubin retired in January after 37 years in the fire department, he received a plaque from the city, some congratulatory handshakes from city councilors — and a letter informing him of a 78 percent rise in his health insurance premiums.

For Rubin, it meant his monthly premium would jump from $290 to $520, a sudden expense he hadn't budgeted for.

"Frostbite, broken fingers, broken ribs. Then you give me a 78 percent increase on my medical," said Rubin. "They can have their plaques back. I don't need them. I just feel like I got stiffed."

Rubin and 91 other retirees will see their health insurance premiums jump beginning this month.

Letters issued by the city initially told the retirees the entire increase would take effect in July.

That's not the case anymore.

Attempting to soften the financial blow, the city sent out a subsequent letter this week saying it will spread the increase out over the next three years.

So why are premiums going up?

For years, not all the city's retirees have been paying the same percentage in their premiums, said Mayor Kim Driscoll.

One group — mostly recent retirees under age 65 who are not yet eligible for Medicare — has been paying 23 percent. Another group — mostly Medicare-eligible retirees 65 and up — has been paying 35 percent.

The increases are intended to bring the non-Medicare eligible group up to 35 percent by 2010.

"We're just trying to be equitable in terms of how we treat seniors and how we manage a $12 million operation," said Driscoll. "We understood it was a bit of a hardship for some people to take this additional payment all at once, so that's why we're phasing it in."

The increases are not a result of the changeover in health insurance coverage from Tufts HMO to Blue Cross/Blue Shield, Driscoll said. While the changeover saved the city money, the plans are identical and one new plan actually offers the option of lower premiums as a trade-off for higher deductibles.

Effective this month — for the first year of the three-step increase — the estimated monthly increase will be $28.60 for individual plans and $77.39 for family plans.

While many retirees like Rubin point the finger at the city, retired firefighter Dennis Flynn, a former chairman of the retirement board, said rising health insurance costs isn't just a Salem problem.

"Let's face it," said Flynn. "This is the 800-pound gorilla in the United States today — health insurance. Something has got to be done. I understand the city's position and the retirees' position, but someone has to get this under control. ... It's going to take the government of the United States of America to solve this problem."

Health insurance costs to the city continue to rise every year, Driscoll said. Costs will rise from just over $8 million in 2006 to just below $16 million by 2013.

With no solution in sight, both cities and their workers may have some tough decisions ahead of them.

"We were looking at a place in Florida," said Rubin. "Now it's out the door. ... Little stuff I wanted to do after 37 years, having peace and quiet and a trip — might as well kiss it goodbye."