The TRS Board of Trustees received some very good news about the overall condition of the pension trust fund, but the news was not as good for the TRS-Care health insurance program.

The TRS prediction on the program’s fund balance sees a dramatic shift as of FY 2014. The plan is expected to be running a shortfall of $334 million at that time. If left unresolved, projections show a shortfall as high as $1.79 billion by FY 2016.

TRS health care actuaries believe the cost drivers in this program include:

  • increased medical costs;
  • increased prescription drug costs;
  • maintaining access and choice in managing providers;
  • increased utilization;
  • potential increase in number of retirees who are not age-eligible for Medicare; and
  • potential plan changes in the Medicare program.

TRTA worked hard this session to protect the TRS-Care program and approve a legislative funding strategy to prevent retiree premiums from increasing. As you may recall, the projected premium increase exceeded 80 percent! We must impress on the legislature the importance of maintaining this health insurance program.

The legislature created a setback for the TRS-Care plan this past session when the state budget reduced funding for the TRS-Care plan. At minimum, TRTA recommends that the legislature restore full statutory funding for TRS-Care as of the next session. Representative Jim Pitts, Chairman of the House Appropriations Committee, took action last session modifying budget language to restore TRS-Care funding in the coming biennium. TRTA will work closely with the legislature to ensure the funding is restored.

In addition to the regular sources of TRS-Care funding, the plan benefited from one-time federal funding from the Early Retiree Reinsurance Program. While this supplemental funding was widely discussed during the last legislative session and was supported in the legislative process, there has been some national media coverage on this one-time revenue source. The bottom line is that these federal funds helped control costs this fiscal year.

TRTA is very involved with the ongoing discussions about the TRS-Care plan. The short term is promising, considering that your legislative participation kept premium costs in check. However, there are hard decisions that must be made to preserve this benefit in the future. The concern is that the future is coming sooner than many of us would like, and the hard decisions about TRS-Care funding likely will happen next session.