Last week, the Teacher Retirement System of Texas (TRS) held its regularly scheduled meeting of the Board of Trustees to discuss various issues, including the TRS-Care retiree health insurance program and the TRS-Active Care active employee health insurance plan.
The TRS staff shared some good, if not great, news with the trustees. The pension trust fund now has $126 billion, the most amount of money that has ever been held in trust for our public education retirees in the history of the fund’s existence.
The Texas Retired Teachers Association (TRTA) Executive Director, Tim Lee, had the opportunity to testify at the meeting, sharing his appreciation of the great work the TRS staff does to maintain and grow the pension fund as well as the concerns of TRTA members about the impending shortfall to the TRS-Care retiree health insurance program.
Tim also expressed his support for the active educator community and their health care plan, TRS-Active Care, which is also in need of additional funding.
Several members of the TRS Board of Trustees made impassioned statements about the Texas Legislature’s role in funding both health care programs and their own role in providing support for both active and retired teachers.
Although Texas statute prohibits TRS and the trustees from advocating a position or lobbying the government, the sentiment expressed by these board members was uplifting. They expressed a spirit of cooperation as TRS, the Legislature, and TRTA work together to preserve the health care plans and minimize hardship on retirees and active school personnel.
We have heard from many of our own members in regards to the sustainability study being conducted by TRS. Your concerns are being heard, not just by TRTA but by TRS as well. Please know that the study is being done to prepare the Legislature in advance of the shortfall crisis.
TRS is reviewing multiple options and sharing those options with us in an effort to educate and inform. TRTA has NOT taken an advocacy position on any of the options being studied yet and the Legislature has not received the results of the study (the study will be completed by September and presented to the Legislature in the fall).
If you are concerned about the options being discussed, the best thing you can do right now is to SHARE the information you are receiving with every retiree and pre-retiree that you know! Any changes that are made to the TRS-Care health insurance plan will impact all current and future participants.
What we do know is that without intervention from the Texas Legislature, everyone will be affected in an adverse way by either increased premiums, reduced benefits, or both. This means it is up to ALL OF US to be ready and armed with information well in advance of the legislative session. We must review the information now, formulate a plan together, and pursue it together!
Our best hope for protecting TRS-Care is a united front. Please encourage others to get involved now. As one TRTA member said, “it is time to wake up!” If we are not active next session, we could be facing the unacceptable outcome of losing one of the best benefits available to our public education retirees.
Remember too that TRS cannot lobby: it is up to TRTA and its thousands of members to represent your interests in the Texas Legislature. Join us, work with us, spread the word!
Medicare Advantage Update
TRS provided some updated information about the TRS Aetna Medicare Advantage plan. Betsey Jones, Director of Health Care Policy and Administration for TRS, provided the enrollment figures for the Medicare Advantage plan and the Medicare Part D prescription drug plan. The current participation rate in Medicare Advantage is 68%, while the Medicare Part D plan has 81% participation.
TRS recently began auto-enrolling TRS-Care participants who are aging into Medicare into the Medicare Advantage plan. This means that participants on TRS-Care who are turning 65 years old will automatically become enrolled in Medicare Advantage, with the ability to opt out. This process began in April 2014.
To improve enrollment in Medicare Advantage, TRS is considering new methods, such as mailing postcards to eligible members and offering to provide one-on-one phone calls to members to help them learn more about the program. They will also create an informational video to better explain the plan as well as the purpose of Medicare Parts A, B and D and how these insurances impact members financially.
TRS-Care Sustainability Study Update
Betsey Jones also reviewed the progress of the sustainability study for TRS-Care. The project will be completed by September 2014. She revealed that the non-Medicare population costs the TRS-Care program six times as much as the Medicare population. 32% of TRS-Care participants are non-Medicare.
As of April 2014, TRS-Care has 243,100 participants:
- TRS-Care 1: 30,100 (12%)
- TRS-Care 2: 55,000 (23%)
- TRS-Care 3: 158,000 (65%)
TRS-Care will be solvent through FY 2015, but will be insolvent by FY 2016. The shortfall, which was projected to be $1 billion, has improved slightly to approximately $900 million. This is due to a recent rise in active education employee payroll, which had been flat since 2009.
Options for helping resolve the TRS-Care funding crisis are not mutually exclusive and it will possible to combine some options. As we mentioned earlier, we do not know yet which of these options may be instated, whether it is one option, a combination of several, all of them or none at all. It is important, however, that we know how each option affects the participants and the program’s financial status.
The 9 options being reviewed in the sustainability study are (TRTA has reviewed four options so far and will continue its review of the remaining five options over the next two weeks):
- Pre-fund the long-term liability
- Fund on a pay-as-you-go basis
- Fund for 10-year solvency
- Retiree pays full cost for optional coverage
- Mandatory participation in the Medicare Advantage and Medicare Part D plans
- Defined contribution-establish a health reimbursement account (HRA) for non-Medicare retirees
- Modify eligibility for TRS-Care 3 standard plan
- Steerage plan design for the non-Medicare population
- Combine TRS-Care and TRS-Active Care
Several board members expressed their desire to keep the plan affordable with good benefits for its participants and made suggestions for other elements that should be included in the study. The study is ongoing, and the final version will be made widely available to all members of TRS.
The Board also discussed premiums for TRS-Care. It is the intent of the Legislature not to increase premiums for TRS-Care participants for 2014-2015. The TRS staff provided the following information:
- A 1% increase in premiums for TRS-Care equals $3.8 million
- A 10% increase in premiums for TRS-Care equals $38 million
- If premiums were to increase by 10% now, TRS-Care would have a negative fund balance of $754 for FY 2016-17.
Following the intent of the Legislature, the TRS Board of Trustees confirmed that will be no premium increases for TRS-Care for 2014-2015. To see a complete list of premium rates, please click here.
However, there have been some benefit changes to TRS-Care 2 and TRS-Care 3, which can be viewed by clicking here.
TRS provided the following statement regarding the changes:
“Consistent with ACA requirements, the deductibles and coinsurance paid by TRS-Care 2 & 3 participants will now be counted to satisfy the out-of-pocket maximum beginning with the 2014-2015 plan year. Since this allows participants to reach their out-of-pocket maximum faster, out-of-pocket limits will be increased slightly to achieve the same approximate actuarial cost to the plan. This eliminates the need to increase our participants’ premiums for another year.
Also, when TRS-Care 2 & 3 participants have their medically necessary lab work done at a Quest Lab, they will have no out-of-pocket cost due to a special arrangement Aetna has with Quest. Even if you can’t go to a full service Quest lab, many providers can have your specimens sent to a Quest lab for processing via Quest couriers.”
Thank you for being a member of TRTA. If you are not a member and would like to join, please contact our Membership Department at 1.800.880.1650.
Please continue reading the Inside Line over the next two weeks as we provide detailed updates about the remaining five options being studied by TRS to improve and sustain the TRS-Care health insurance program. We will resume with TRS-Care Sustainability Study Option 5 later this week.
Share these articles with every retiree you know, as well as with active school personnel! Your input is important. Your membership and support are crucial. Thank you for all your help and support.
Contact us at firstname.lastname@example.org with your questions, thoughts, or concerns.