The Texas House Appropriations Committee met Monday, April 17 to discuss House Bill 3976, the TRS-Care bill filed by Chairman Trent Ashby. HB 3976 proposes to make significant plan design changes to TRS-Care, and increases state and school district funding to the retiree health care program.
The bill was voted out of committee yesterday. It will soon head to the Texas House floor for a vote. As progress is made on addressing the huge financial issues burdening TRS-Care, it is vital that our members read and share this information with fellow retirees and any active educators they know!
If Nothing Is Done
During Monday’s hearing, Texas Retired Teachers Association (TRTA) Executive Director Tim Lee testified, “TRS-Care is on a collision course for disaster if no action is taken this session.”
Currently, TRS-Care offers a no-cost option known as TRS-Care 1. Because the predicted shortfall is so high (more than $1 billion), TRS speculates that without legislative action the plan will have unaffordable premiums.
“If this plan (TRS-Care) does not have a solution, our retiree premiums will skyrocket,” said Lee.
The premiums are expected to exceed $1,200 to $1,500 per month, and many retirees would rush to the available free option, cutting program’s revenue drastically. This forced shift and loss of revenue would send TRS-Care into a death spiral, and the program would likely die in the coming biennium.
TRS-Care’s Central Problem: The Funding
The issues with TRS-Care emanate from the total funding made available for the program. Both versions of the budget started with no additional funding to mitigate the huge premium increase for retirees. TRTA has worked diligently with House and Senate leaders to secure additional funding. The results of that effort are evident, as the House proposal contains $633 million for TRS-Care.
The Texas House is proposing a much higher level of appropriation for TRS-Care than the Senate, providing supplemental funding for the program at twice the rate of the Senate.
|Total Texas House increase in TRS-Care funding for FY 18/19||$633 million|
|Total Texas Senate increase in TRS-Care funding for FY 18/19||$311 million|
The Legislation: HB 3976 vs. SB 788
At its core, HB 3976 is not that dissimilar from SB 788. However, when you compare the House appropriations to TRS-Care to the appropriations suggested by the Senate, there are significant differences in the real out-of-pocket-costs retirees will pay under the new healthcare plan design.
Pre-65 retirees: Retired educators who are not Medicare age-eligible (under the age of 65) would see their current plan options (TRS-Care 1, 2 and 3) transition to a single option, the “high deductible” (HD).
All figures stated are projections based on the ever-changing budget shortfall. The Texas House is proposing a $3,000 deductible for pre-65 retiree individual coverage. Comparatively, the Texas Senate proposed a $4,000 deductible. Both the House and the Senate propose a coinsurance coverage level for all. The deductible includes all medical and prescription drug costs. Once the deductible is reached, the plan will cover 80 percent of prescription drug costs. The plan has a $7,150 Maximum-Out-Of-Pocket (MOOP) cost for individuals. Once the MOOP is reached, all prescription drug costs will be covered.
The House bill adds an open enrollment provision for retirees when they become 65. This is an important provision as some pre-65 retirees enrolled in TRS-Care may leave the program and want to re-enroll when they become Medicare eligible.
Projected Pre-65 Retiree Premium Costs (Retiree only):
|Year||House Premium Plan||Senate Premium Plan|
Pre-65 Disability Retirees: The bill also provides a zero-cost premium for TRS-Care pre-65 members who retired with a disability annuity. Please note, the zero-cost option would only apply to the disabled retiree, not to the spouse and the provision will end in FY 2021.
Retirees age 65 and over: All retirees 65 and older will be transitioned to Medicare Advantage. The premiums would be approximately $146 per month.
Projected 65 and Over Retiree Premium Costs for Medicare Advantage (Retiree only):
|Plan Year 2018-2021:||$146/month|
The Bottom Line
TRS-Care solutions are complex and costly. Retirees and state elected officials do not control the cost of healthcare. But, we all have to figure out how to pay for it.
While TRTA is working to keep TRS-Care as intact as possible, the state budget demands are vast and revenue in this budget cycle is extremely tight. Most items in state government are getting cut, and TRS-Care is one of the very few exceptions that may receive additional revenue.
The situation is dire, and whatever the Legislature decides, all solutions lead to TRS-Care participants paying more for health care coverage.
TRTA supports HB 3976. The bill is part of a broader budget plan that the Texas House has put forward to address the TRS-Care shortfall. It utilizes state revenue, as well as money from the Rainy Day Fund to lower retirees’ total out-of-pocket costs.
TRTA did not oppose SB 788. We were neutral on that bill as we hoped the Senate would continue to refine their plan and lower the out-of-pocket costs for retirees. For the time being, SB 788 has been removed from the Senate calendar and its fate is unknown. Eventually, the Senate will have to take action on a TRS-Care solution and take a stand on what they will support when it comes to your health care costs.
TRTA wants the best deal possible for retiree healthcare, and we do wield considerable influence in the Legislature. Your advocacy ensures our words carry weight with legislators.
We are working every day to help improve this situation. Ultimately, though, TRS-Care decisions will be made by the Texas Legislature. The best option on the table is HB 3976 and the House budget proposal because it proposes utilization of the Rainy Day Fund, also known as the Economic Stabilization Fund (ESF). It also proposes additional revenue from school district contributions.
The House plan represents a true “shared-pain” solution with the state taking on the biggest portion of total cost for the projected shortfall.
We need your help to keep this bill moving forward through the process. Without your support, the worst possible outcome may occur!
The TRTA Board of Directors is working with our state advocacy team and wants to find additional ways to help retirees. Chief among those areas of improvement are reduced prescription costs for pre-65 retirees. Additionally, TRTA is working directly with Chairman Ashby and other members of the Legislature on various strategies to ensure broad-based acceptance of the TRS-Care Medicare Advantage plan.
While the bill is alive and moving, we have opportunities to work with our friends in the Legislature to accomplish these goals. TRTA SUPPORTS these endeavors!
TRTA does not support doing nothing! As an organization representing more than 82,000 members, the idea of TRS-Care coming to an end is unthinkable. We cannot risk losing access to healthcare!
If you believe in doing something and working for the best possible outcome, please call your state Representative and thank them for helping to pass HB 3976. Thank them for using the Rainy Day Fund to help fund our TRS-Care needs, and ask them to use any and every opportunity to find additional ways to improve this plan for all TRS retirees!
Call your Representative using our toll-free Legislator Hotline at 1.888.674.3788!
Thank you for your help. Thank you for standing with TRTA as we do everything we can to help make this the best possible situation for our retirees. No matter what the outcome, TRTA always will work for you and do our best to protect your retirement security.
TRTA will have more details about HB 3976 as the session unfolds.
Thank you for your membership to TRTA. We are fighting ardently for your benefits every day at the Capitol. If you are not yet a TRTA member, please join here. Be sure to read our comprehensive Frequently Asked Questions about TRS-Care here.