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20 Jun
0

TRTA Policy Discussion: TRS Care, Day 6

Today, the Texas Retired Teachers Association (TRTA) continues its discussion about the Teacher Retirement System of Texas (TRS) sustainability study of the retiree health insurance program TRS-Care.

In our first Inside Line article about the TRS-Care study, we reviewed Option 1: Pre-funding the long-term liability. We also discussed Option 2: Funding on a pay-as-you-go basis for the biennium. Option 3 covered funding for 10-year solvency. We reviewed Option 4: Retirees pay full cost for optional coverage and Option 5: Mandatory participation in the Medicare Advantage and Medicare Part D plans.

Today, we will review Option 6: Defined contribution—Establish a Health Reimbursement Account (HRA) for non-Medicare Retirees. 

Some Very Uncertain Ground

TRTA wants to provide the most accurate information available to our members. We believe you need to have the most comprehensive review of the various options being considered by the Teacher Retirement System (TRS) for resolving the TRS-Care crisis.

It is with this in mind that we want you to know there are many unanswered questions about Option 6. While we will do our best to present the information we have heard in public meetings or have researched through our various partnerships, we admit that Option 6 seems riddled with flaws.

The primary and fatal flaw of TRS-Care Option 6 is the elimination of TRS-Care as we know it today. This means that TRS-Care 1, 2, and 3 for pre-65 retirees (or those who are not age-eligible for Medicare) would be completely eliminated. In its place would be either the federal public exchange that was created by the Affordable Care Act, or a new private exchange created by TRS from which pre-65 retirees could then purchase coverage. As of this writing, we have no idea what a potential TRS-Care private exchange could provide as benefit coverage or may cost in monthly premiums.

Further, Option 6 may allow TRS retirees who qualify for both Medicare Part A (hospitalization) and Part B (physician care) to participate in the Medicare Advantage and Medicare Part D plans. We do not know what the premiums for these plans would be. All we know is that under proposed Option 6, TRS may continue its Medicare Advantage and Medicare D plans.

Option 6 and the HRA Discussion: What is a Health Reimbursement Account (HRA)?

HRA plans are employer-funded medical reimbursement plans. The employer sets aside a specific amount of pre-tax dollars for employees to pay for health care expenses on an annual basis.

The primary requirements for an HRA are that (1) the plan must be funded solely by the employer and cannot be funded by salary reduction, and (2) the plan may provide benefits for substantiated medical expenses only. All employer contributions to the plan are 100% tax deductible to the employer, and tax-free to the employee.

HRAs are most commonly offered in conjunction with a high deductible health plan; however, in this TRS-Care Option 6 scenario, retirees would use the money provided by the HRA to shop for their own coverage.

TRTA understands that TRS-Care Option 6 is introducing the HRA concept as a way for the Legislature to appropriate some dollars towards the cost of retiree care so that premiums may be more affordable for the pre-65 population. This concept, however, may have significant hurdles.

Retirees may not be eligible to have HRAs once they are no longer employed. Typically, HRA accounts are used in employer/employee partnerships so the employee can use those tax-sheltered dollars to pay for health care costs. Since TRS-Care participants are retired and no longer “employed,” we are not sure how or even if these type of accounts can be created for TRS retirees.

TRS may be considering a special class of HRA, such as a Retiree HRA (RHRA), but it was not immediately clear how TRS would implement this option. This option would require legal research and could require legislation to authorize TRS to administer an HRA.

Depending on how, or even if, the HRA may be established under this option, the IRS may see any contribution to a retiree for purchasing insurance as additional income and want to tax those dollars.

What About TRS Retirees with Lower Incomes and Federal Subsidies Linked to ACA?

TRS is taking into consideration that there are many TRS retirees who may meet federal guidelines and qualify for subsidies towards health care under the Affordable Care Act (ACA). Depending on how Option 6 may be implemented by the Legislature, those retirees eligible for subsidies may decide to refuse the HRA funds and participate in the federal ACA with subsidy arrangement.

As you will notice in the explanation below, some of this information will speak about retirees with lower incomes forfeiting this benefit to qualify for federal subsidies if they go to the exchange to purchase coverage. Again, TRTA is very uneasy about these discussions without more information on the details of how Option 6 would actually be implemented. Like so many other aspects of this proposed Option 6, TRTA is left with speculating on how this part of the plan may actually work.

A chart available at this link provides more insight into what income qualifications are necessary to be eligible for subsidized coverage through ACA. The column on the left of the chart tells you if you may qualify for health care tax credits, lower out-of-pocket costs, or low-cost health care through Medicaid.

Option 6 Does Not Seem Favorable to TRS-Care Participants

The TRS-Care crisis is real and must be addressed. TRS is doing what they must in order to provide information to the Legislature and to all interested parties to work out solutions for TRS-Carfe. They are providing information about as many scenarios as possible to address the crisis. Unfortunately, these scenarios are not easy to hear about and digest.

Still, TRTA will not run from any challenge! We are confronting this crisis head-on. TRTA is not in favor of Option 6, and we will do what must be done to ensure that all TRS retirees have access to affordable and quality health care coverage.

What you may want to take away from this update about Option 6 is that the Legislature may choose to eliminate TRS-Care coverage as we know it today and force TRS to manage a Medicare Advantage only option for post-65 retirees who qualify for Medicare Parts A and B. Options for legislative appropriations to HRA accounts is speculative and may disadvantage some low-income retirees who qualify for subsidies through the ACA and the federal exchange.

Perhaps the most significant takeaway is that TRTA views Option 6 as the invalidation of a promise made, a promise kept. Option 6 would have serious repercussions on the financial security of our retirees who, as active school employees, made significant contributions to TRS-Care hoping to have equal access in their retirement years. Now, those active employees are retiring into a funding crisis that could jeopardize their ability to pay for basic costs due to a drastically different health insurance reality.

The TRS Retiree Advisory Committee (RAC) expressed their own concerns about Option 6 and had several questions about how the option would function. Some of those questions included who would be considered the employer in this option: the state of Texas, the school districts or both? The committee also inquired about an estimated amount that would be set aside for each HRA.

At this time, TRS is still studying these areas of option 6 and we do not have a definitive answer for you. However, as the study continues and we receive more information, we will report on Option 6 again. In the meantime, please let us know your thoughts and your questions about Option 6 so that we may provide feedback to TRS.

The TRS-Care Study is Ongoing

As a reminder, the information we are sharing in this special TRTA series on TRS options for sustaining our retiree health care program are part of a study. These options are NOT part of any absolute plan that is being implemented.

Could these options be implemented? Yes. Will TRS make these decisions? Not likely. Will this TRS study guide a conversation on how to deal with these important issues? Yes. Will the Legislature be involved in this TRS-Care crisis before any option or plan is implemented? Yes!

Does TRTA and its membership have an opportunity to lead on this issue and make the outcome better? Absolutely!!!

Ask yourself this one question and feel free to pose it to any other TRS retiree or future retiree you may know: Will the Legislature’s response be more favorable or less favorable to the TRS-Care crisis if we are not organized and TRTA does not play a part? We know the answer is that TRTA members MAKE A DIFFERENCE!

Thank You!

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 as we provide detailed updates about the remaining three options being studied by TRS to improve and sustain the TRS-Care health insurance program. Our next update is about Option 7: Modify eligibility for TRS-Care 3 standard plan.

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 info@trta.org with your questions, thoughts, or concerns.

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13 Jun
0

TRTA Policy Discussion: TRS Care, Day 5 Follow-Up

Yesterday, the Texas Retired Teachers Association (TRTA) sent out a review of Option 5 of the ongoing TRS-Care retiree health insurance sustainability study being conducted by the Teacher Retirement System of Texas (TRS).

We have received an enormous response to our review of Option 5. First of all, THANK YOU for your responses. The hundreds of emails we have received should prove to any elected official that you are ready and willing to participate in this vital discussion! Your feedback enables TRTA to approach both TRS and the Texas Legislature with the information that is needed to make workable, reasonable solutions that will impact hundreds of thousands of retirees.

Please remember the information we shared at the beginning of this special TRTA series on TRS options for sustaining our retiree health care program are part of a study. These options are NOT part of any absolute plan that is being implemented.

Could these options be implemented? Yes. Will TRS make these decisions? Not likely. Will this TRS study guide a conversation on how to deal with these important issues? Yes. Will the Legislature be involved in this TRS-Care crisis before any option or plan is implemented? Yes!

Does TRTA and its membership have an opportunity to lead on this issue and make the outcome better? Absolutely!!! 

Ask yourself this one question and feel free to pose it to any other TRS retiree or future retiree you may know: Will the Legislature’s response be more favorable or less favorable to the TRS-Care crisis if we are not organized and TRTA does not play a part? We know the answer is that TRTA members MAKE A DIFFERENCE!

None of the study options are being implemented this year. TRS-Care is strong and solvent with no major benefit changes and no premium increases expected for this fiscal year that ends August 30, 2015. This should not lull us into a false sense of security. TRS-Care is in crisis, it has a projected $1 billion shortfall, and action will be necessary next session or the outcomes will be very difficult for all TRS-Care participants.

The actions taken during the next session WILL HAVE A DIRECT IMPACT ON THIS CRISIS. We believe our members deserve to know all the options that are being considered so that we can effectuate the most positive outcome possible. TRTA believes you deserve quality health care benefits at a reasonable cost. TRTA’s mission is to protect and improve your retirement security!

TRTA Members Respond to TRS-Care Option 5

As you read in yesterday’s Inside Line, in Option 5, the mandatory participation in the Medicare Advantage and Medicare Part D plans for Medicare-eligible TRS-Care participants includes a caveat that non-participation would provide the insured with TRS-Care 1 only. This option includes an appeal process, allowing participants to opt out if there is inadequate access to providers that accept Medicare Advantage plans.

The majority of responses received from our members indicated that Option 5 is unacceptable to them. While many of our members participate in the Medicare Advantage plan and have found that it works well for their medical needs and is accepted by their doctors, numerous others said that their doctors do not and will not accept the plan. Many live in rural areas where access to medical care is limited already.

TRTA believes that Aetna and TRS must work with the medical providers and promote the TRS-Care Medicare Advantage plan. As TRTA has reported on other occasions, not all Medicare Advantage plans are created equally. TRS and Aetna have developed one of the best, most comprehensive Medicare Advantage plans available compared to other products. It is a credit to TRS and Aetna that our Medicare Advantage plan is so much better than just about any other plan offered.

While we may know this and our members who participate in TRS Medicare Advantage will attest to it, TRS and Aetna must convince those skeptical doctors and providers who are holding out that our plan is better. Without the doctors and hospitals buying into the option, our members’ participation will be less than what TRS and Aetna predicted and hoped to see.

Some TRTA members expressed their willingness to try the Medicare Advantage plan, but would be at a loss for what to do if the plan did not work for them and their only option would be to use the catastrophic plan, TRS-Care 1. Many of our members who opted not to take the Medicare Advantage plan despite eligibility prefer and enjoy using TRS-Care 2 or 3. The idea that these plans would no longer be available to them is alarming. TRS-Care 1 does not provide the kind of coverage many of our members need, especially if their health concerns escalate.

TRTA is sharing your concerns with TRS. In yesterday’s article, we briefly mentioned the TRS Retiree Advisory Committee (RAC), which consists of retired members of TRS who participate in the retiree health insurance program. This committee of volunteers may create cost-benefit analyses and recommendations regarding TRS-Care, and may recommend related actions to the Board. The RAC does not support Option 5 and has asked that the option be removed from consideration.

Until the sustainability study is completed in September, TRTA does not know if this option will be on or off the table. However, we must be aware of every option that is being considered because the Texas Legislature is not required to abide by the results of the study. The more that our members know now, the more prepared we can be when we work with our legislators in 2015 to resolve the TRS-Care funding crisis.

Please know that TRTA will not advocate for any option that reduces access for TRS-Care participants or forces many to use a plan that ultimately provides them with little or no benefit personally.

TRTA does support efforts by TRS and Aetna to strengthen the current Medicare Advantage network and improve acceptance of its coverage by more physicians and medical providers. The plan works very well for some, but even those participants who enjoy its advantages realize that this is not a one size fits all program.

Thank You!

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 four options being studied by TRS to improve and sustain the TRS-Care health insurance program. Our next update is about Option 6: Defined contribution-Establish a Health Reimbursement Account (HRA) for non-Medicare retirees.

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.

If you are concerned about this situation, PLEASE contact your fellow TRS retirees and ask them to join TRTA. The louder our voice is, the better our ability to develop more positive outcomes for TRS retirees.

If you know any active school employees, let them know that TRTA is working to protect their retirement benefits and their future health care options. We encourage their active participation in a professional association that represents their core interests as an active school employee, but they may also consider joining TRTA as an associate member to help us fight to protect their future retirement security and health care options.

Thank you for all your help and support. Contact us at info@trta.org with your questions, thoughts, or concerns.

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12 Jun
0

TRTA Policy Discussion: TRS Care, Day 5

Today, the Texas Retired Teachers Association (TRTA) continues its discussion about the Teacher Retirement System of Texas (TRS) sustainability study of the retiree health insurance program TRS-Care.

In our first Inside Line article about the TRS-Care study, we reviewed Option 1: Pre-funding the long-term liability. We also discussed Option 2: Funding on a pay-as-you-go basis for the biennium. Option 3 covered funding for 10-year solvency. We reviewed Option 4: Retirees pay full cost for optional coverage.

Today, we will review Option 5: Mandatory participation in the Medicare Advantage and Medicare Part D plans. Before beginning the explanation of Option 5, members should know that on its own, this option does not resolve the funding shortfall for the coming biennium, but rather could be combined with other options to improve cost savings for TRS-Care as a whole. The previous four options, on the other hand, provide a plan for sustaining TRS-Care at least through the coming biennium.

In Option 5, the mandatory participation in the Medicare Advantage and Medicare Part D plans for Medicare-eligible TRS-Care participants includes a caveat that non-participation would provide the insured with TRS-Care 1 only. This option includes an appeal process, allowing participants to opt out if there is inadequate access to providers that accept Medicare Advantage plans. Please bear in mind that in some parts of the state, Medicare Advantage is not accepted AT ALL.

A recent update provided by the TRS staff indicated that the current participation rate in the TRS-Care Medicare Advantage plan is 68%, while the Medicare Part D plan has 81% participation. The Part D plan is for prescription drugs.

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 auto-enrolling 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 are also planning to 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.

Auto-enrolling age-ins into the Medicare Advantage plan is not the same as what Option 5 does. Option 5 does not allow for participants to go back to TRS-Care 2 or 3 for their secondary payer coverage, while the current process does.

With Option 5, retirees who do not or cannot use the Medicare Advantage plan would either need to leave the plan entirely or use the catastrophic coverage provided by TRS-Care 1.

Option 5, if enacted, would not provide as significant a savings to the TRS-Care program on its own; however, in combination with other options, it could be beneficial to the program’s financial status. One reason this option does not provide a huge cost savings to TRS-Care is because it pertains to Medicare-eligible participants only. As you may know, Medicare is the primary payer and TRS-Care is the secondary payer. The non-Medicare population costs the TRS-Care program six times as much as the Medicare population.

This option is one we would like to hear a lot of feedback about. The TRS Retiree Advisory Committee (RAC) expressed concern about this option and their feedback, as well as yours, will be very helpful to TRS as they continue the sustainability study.

TRTA believes the current Medicare Advantage plan is good in many areas, but we are disappointed that the Aetna Medicare Advantage network does not provide consistent provider access across Texas. Efforts by TRS and Aetna to strengthen the current Medicare Advantage network and acceptance of its coverage by more physicians and medical providers are needed to improve the program’s inclusiveness.

Thank You!

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 four options being studied by TRS to improve and sustain the TRS-Care health insurance program. Our next update is about Option 6: Defined contribution-Establish a Health Reimbursement Account (HRA) for non-Medicare retirees.

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 info@trta.org with your questions, thoughts, or concerns.

Read More