TRTA Member Alert: Legislative Study Group Releases Health Insurance Report, Retirees to Bear Burden of Growing TRS-Care Costs

Members! Click here to send an email to your Senator and Representative!

Special Comment from Tim Lee, TRTA Executive Director: 

Dear TRTA members, friends and supporters,

The information you will read below is TRTA’s first analysis of a Texas legislative report that is nearly seventeen months in the making. The information is bleak. The report suggests drastic, painful cuts to TRS-Care. The Texas Legislature will convene in January 2017, and this report will be the starting point for a discussion on how to address the TRS-Care funding shortfall. 

TRTA is prepared to champion your interests on this vital health care program and what may come for TRS-Care in the future. It is important for every TRTA member to know, though, that your current TRS-Care health insurance benefits are secure. Your TRS-Care plan is funded on a two-year budget cycle, and the work we did last legislative session protects your plan today and through 2017.

While we have experienced some modifications to the TRS-Care plan that were implemented this past summer, your TRS-Care plan is one that you can count on and that is funded currently. 

We say this because what you will read below is, unfortunately, not very encouraging. From time to time, TRTA members have questioned if they should even remain in TRS-Care. Someone may even read the report and consider leaving TRS-Care before the legislative session begins. This would be a rash decision and one that may have irrevocable consequences! 

A decision to leave now is almost certainly the wrong decision to make. If you leave TRS-Care, the options available to return are extremely limited. TRTA recommends speaking to a TRS counselor on any decisions you may make about your retirement benefits.  

We know the information in this legislative report is very concerning, even a little scary. TRTA has many friends in the Legislature, and we still have time to come together and work to find more reasonable solutions for TRS-Care. 

Let’s all come together and do our best to educate our legislators about the need to improve funding for TRS-Care! Our response will not be measured by fear and misinformation, but by leadership, courage and the belief that when we come together and work in good faith, better solutions will be the outcome.

TRTA will keep you informed about every step taken to improve TRS-Care. Stay informed on this important issue by reading the Inside Line or following our social media.

I believe we can send a strong message to the Legislature when TRTA increases its membership from 80,000 to 100,000 or more! Let’s rally around the cause of protecting our health care program and be ready to fight for affordable health care for all retirees.  

Sincerely,

Tim Lee, Executive Director, Texas Retired Teachers Association (TRTA)

TRTA Analysis of Interim Study Group Report

Members! Click here to send an email to your Senator and Representative!

The legislative study group tasked with analyzing TRS-Care, the health insurance program provided by Texas for retired teachers, released its highly anticipated report and recommendations for the program on November 17. Members can read the full text of the report by clicking here.

The Texas Retired Teachers Association (TRTA) appreciates the work of the members of the interim committee, as well as their diligence in releasing the report prior to January’s 85th Legislative Session.

TRTA has stated for years that TRS-Care and TRS-ActiveCare are in trouble, and this report confirms our belief. The report says “continuing to fund (TRS-Care) on a biennial basis is no longer feasible because costs continue to rise at an alarming rate.”

TRTA retirees are extremely grateful for the health care program provided by the Teacher Retirement System of Texas (TRS). The partnership between all involved parties is what has made this important benefit available for retirees. Unfortunately, this report’s primary recommendation is to put the burden of change, the impending $1.3 to $1.5 billion budget shortfall, on retirees.

While this conclusion is not a surprising one, it is disappointing. The two solutions presented in the study as potential options avoid the “share the pain” approach that has been utilized in the past to resolve funding deficiencies with the program, and ultimately shifts all of the burgeoning costs onto the backs of our public education retirees. Neither option would put more revenue into the program from any contributing group (the state, school districts, active employees) other than retirees. The report’s recommendations do not address the inadequacy of TRS-Care’s current funding mechanism.

In TRTA’s opinion, the options presented are not “fiscally responsible solutions to ensure long-term sustainability” as dictated by Senate Bill 1940 when the committee was established. Rather, the solutions presented would eliminate the TRS-Care program as we know it today!

The proposed plans would shift an additional $600 million in health costs for retirees in 2017. These additional costs would likely increase each year thereafter.

The report provides two options for the Legislature to consider: provide a $400 monthly stipend to non-Medicare eligible retirees to purchase health insurance, or create a high-deductible plan for non-Medicare eligible retirees. Each option would require all Medicare eligible participants, retirees who are 65 and older, to go into Medicare Advantage or choose another plan outside of TRS-Care.

OPTION 1: Health Reimbursement Account & Medicare Advantage Plan ("HRA Plan")

Non-Medicare participants: Receive $400 per month in a Health Reimbursement Account (HRA). These participants would purchase health care via the federal exchange and would be prohibited from using TRS-Care plans until Medicare eligible.

Non-Medicare participant dependents: Unable to use TRS-Care plans until the retiree becomes Medicare eligible.

Medicare-eligible participants: Must use TRS-Care Medicare Advantage plus Medicare Part D for prescriptions, the only plan available through TRS, or utilize an option outside of TRS-Care.

Non-Medicare eligible dependents of Medicare eligible retirees: Eligible to enroll in the TRS-Care 2 plan.

Proposed effective date: January 1, 2018

Concerns:

  • This option assumes that the health care exchange will still be available in January 2018, an issue TRTA has concerns about.
  • A retiree-only HRA is not subject to the Affordable Care Act's insurance market reform rules.
  • Though many TRS retirees who are Medicare eligible enjoy the Medicare Advantage plan, retirees in rural areas struggle with having adequate access to providers.
  • It is unclear from the report whether or not Medicare Part B only participants will be required to purchase Medicare Part A out-of-pocket, which would be an additional cost of approximately $400 per month.
  • The out-of-network maximums are not limited by federal law, meaning the maximums would be set by the TRS Board.

OPTION 2: High Deductible & Medicare Advantage Plan ("HD Plan")

Non-Medicare participants: Eligible to enroll in a high deductible health care plan similar to TRS-Care 1. The plan would feature a $4,000 in-network deductible.

Non-Medicare participant dependents: Eligible to enroll in a high deductible health care plan similar to TRS-Care 1. The plan would feature a $4,000 in-network deductible.

Medicare-eligible participants: Must use TRS-Care Medicare Advantage plus Medicare Part D for prescriptions, the only plan available through TRS, or utilize an option outside of TRS-Care

Non-Medicare eligible dependents of Medicare eligible retirees: Eligible to enroll in the TRS-Care HD plan

Proposed effective date: January 1, 2018

Concerns:

  • A $4000 in-network deductible would be very difficult for retirees to afford, in addition to the maximum out-of-pocket limits.
  • Though many TRS retirees who are Medicare eligible enjoy the Medicare Advantage plan, retirees in rural areas struggle with having adequate access to providers.
  • It is unclear from the report whether or not Medicare Part B only participants will be required to purchase Medicare Part A out-of-pocket, which would be an additional cost of approximately $400 per month.
  • The out-of-network maximums are not limited by federal law, meaning the maximums would be set by the TRS Board.

IF NOTHING CHANGES AND RETIREES PAY FULL COST OF SHORTFALL

Below is the committee’s prediction of FY 2018 premium costs for retirees assuming no plan design changes and no increase in contributions from the state, school districts, or active school personnel. These amounts would increase year over year as medical costs continue to rise.

The Bottom Line

There is no silver bullet to resolve this issue. Our work with the Legislature in providing quality, affordable health insurance for our public education retirees is far from over.

Members, know this: while the options presented by the study group may cause you concern and are far from the solutions TRTA wanted to see, inevitably, TRS-Care faces a $1.3 to $1.5 billion shortfall by the end of the next biennium.

These may not be the options that pass, but drastic measures must be taken during the 85th Legislative Session! If the Legislature does nothing at all, retiree premiums would have to cover the entire $1.3 to $1.5 billion shortfall. This also means increased copayments, deductibles, and out-of-pocket expenses for all plan levels.

We have many friends in the Texas Legislature. We must work hard, together, with them, with a strong, unified voice to find the best solutions for your health care!

Thank You

Thank you for your membership to TRTA. We will continue to follow the progress on TRS-Care. TRTA will provide you many more opportunities to get involved as we protect your hard earned retirement benefits!

If you are not yet a member, we need you to help us protect your retirement security. Please join TRTA today!

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