The TRS Retiree Advisory Committee (a group of active and retired TRS members that advises TRS on benefits issues and presents concerns) met to discuss changes and potential options for modifying the TRS-Care health insurance program.
Bill Hickman, a TRS consultant from Gabriel, Roeder, Smith & Company, reported that projections show the TRS-Care program will be solvent through FY 2014. As you know, concerns were raised during the last legislative session about the sustainability of the program, which received less funding from the state for the current biennium than in previous years.
Though the date at which TRS-Care was expected to run out of funds has improved, TRS has been tasked with finding options that will extend the program for a longer period of time. At today’s meeting, the news about maintaining revenues and managing costs was good; but if the plan begins to lose money, “it loses it fast,” potentially creating major funding problems very quickly for the TRS-Care program.
Maintaining the plan through FY 2014 is great news; however, this issue will dominate legislative discussions next session. FY 2015 and beyond may be negative growth years, meaning the plan is likely to run out of money quickly after next session if nothing is done to improve the situation.
TRTA members were instrumental in working with the Texas Legislature last session to protect retiree premiums. At the time, the Legislature indicated its intent that health care premiums for retirees not be raised by the TRS Board of Trustees during this biennium.
Positive changes for TRS-Care include a new pharmaceutical benefits manager (PBM). TRS-Care participants will be transitioned from Caremark to Medco, effective September 1, 2012. The TRS Board of Trustees selected Medco because of a significant cost savings to the program. An important note about Medco: Medco is now owned by Express Scripts International (ESI). Materials about your pharmacy benefit change will mention transitioning from Caremark to MedcoESI. Eventually, the Medco name will be dropped altogether, and will be referred to only as Express Scripts or ESI.
New Health Care Rules Could Save BIG Dollars
The TRS Board of Trustees has discussed and will continue to talk about TRS-Care plan savings that are made available through the Affordable Care Act. One of those changes is a program that we have already reported on called the Employer Group Waiver Program (EGWP, pronounced “Egg Whip”).
This option allows anyone who is Medicare A or B eligible and who has been on TRS-Care 2 or 3 to receive better prescription drug benefits than currently provided by TRS-Care. In addition, it saves TRS-Care hundreds of millions of dollars.
Betsey Jones, Director of Health Care Policy for TRS, explained to the committee that this plan would provide a better benefit for retirees. Examples of these improved benefits include:
· No penalty for using brand name drugs over generics;
· Low income premium assistance; and
· Reduced premiums for participants who experience catastrophic levels of coverage.
The rules governing these changes will allow a person to opt out of the program; however, the more people that opt out, the less beneficial this is for the TRS-Care program financially. TRS knows that this program could potentially save the plan hundreds of millions of dollars and provide a better benefit to retirees. TRS also knows that many people have a low propensity for change, so they may develop additional incentives for staying in the program.
It is also good news that Medco will be the TRS-Care Medicare Part D provider. If approved, this change would become effective next January.
Another change that will be discussed in more detail next week is a Medicare Advantage plan. This plan would take the place of traditional Medicare Part A and B plans. The Medicare Advantage plan would be available to TRS-Care participants that qualify for both Medicare A and B. Like the prescription drug benefit change already discussed, this Medicare Advantage plan would provide the same or better coverage and would save TRS-Care enough money that the TRS Board may consider additional incentives for retirees.
There are many TRS-Care participants who are over age 65, but may not qualify for both parts of Medicare (these individuals may not have changed jobs in their school district after 1986, or both spouses are educators they did not pay the Medicare tax after 1986). These people would not qualify for the Medicare Advantage plan that is being considered by TRS. TRTA is working to get an answer to the question about their continued health care coverage and cost. Since these issues are still new and developing, we have been told that these people will stay on their current plan at the same rate, but they would not be eligible to receive some of the additional benefits that are part of the Medicare Advantage plans. We are still researching this answer, but it will be a major factor in our discussions with the TRS Board of Trustees.
Several Medicare Advantage vendors are being considered, but TRS reports that all vendors provide additional services above and beyond Medicare A and B. Upon selection of a vendor, this plan would become effective in January 2013.
The board will consider this issue at next week’s meeting on June 7 and 8 (link to meeting agenda: http://www.trs.state.tx.us/about/documents/board_agenda_jun12.pdf). If you would like to watch this meeting live online, click on the following link (June 7: http://trs.mediasite.com/mediasite/Viewer/?peid=d749d3be9fd9448b82eea83c7b85b9f01d and June 8: http://trs.mediasite.com/mediasite/Viewer/?peid=170cb0c841414722810aa66d99daede21d).
TRS is still studying changes to non-Medicare eligible TRS-Care participants (people who are not yet age-eligible for Medicare coverage). Younger retirees not participating in Medicare due to age factor at a higher cost than Medicare eligible participants. This is because Medicare becomes the primary insurance for the retiree, with TRS-Care being secondary.
TRS staff said today that every consideration, from changing the eligibility age to pre-funding the plan, is being studied. At this time, no options have been selected. Study results are due to the Texas Legislature in September. Betsey Jones of TRS pointed out that there are only three methods of improving the program: 1. Adjusting eligibility and benefits; 2. Raising retiree premiums; and 3. Increased funding from other sources (includes the state, active personnel, etc.).
As you know, TRTA is against raising retiree premiums or accepting benefit changes that simply cost-shift the burden onto retirees. We will continue to push for additional funding from the state as a means to help sustain the TRS-Care program.
Although many of the changes that were discussed today are positive, one major challenge is communicating these changes to the retiree population. It is important that our members understand what is taking place. We at TRTA will answer your questions about changes to the TRS-Care health insurance program to the best of our ability. As the summer progresses and TRS continues its legislative study, we will provide more detailed information to you through The Inside Line and The VOICE.
It is also important to note that these changes will be discussed and voted on by the TRS Board of Trustees. This provides TRTA more time to ask questions, study the options, and learn more about how changes may protect your health care benefit or provide cost savings to you.
Also, these changes are dependent upon the results of the Supreme Court case over the Affordable Care Act (ACA). These options may only be beneficial if the ACA remains intact. That case is expected to be resolved this month (June 2012).
The TRS staff and Board and TRTA are all working to keep your TRS-Care program viable in a way that provides a health care benefit that is as good or better at the same or lower cost to you. These are significant challenges, but there is good progress being made. June is an important month to participate in this process.
This is a confusing topic with questions that must be asked and issues that need to be resolved. While we are not ready to say that these plans should be accepted, we do think the work being done is very promising. Many things can still happen that would change the current considerations, so please do not think this issue is solved or that these proposals are ready to be implemented. We still have a long way to go! Next week’s TRS Board of Trustees meeting is vital to knowing in what direction we are heading.
You are our number one priority. TRTA takes its role as your voice and advocate very seriously. We want to know that our members and all TRS retirees and TRS-Care participants will be better off if these plans are implemented. Please feel free to email us your questions, concerns, and suggestions.
We appreciate your membership in TRTA. If you are not a member and would like more information about joining, please contact our office at 1.800.880.1650. Thank you for all you do to support TRTA!