March-April 2018 Advocate: Retiree health coverage
FULL-TIME RETIREES’ HEALTH BENEFITS
CalPERS healthcare coverage working well for retirees
by John Searle, President, District Association of Retired Teachers (DART), CSM Professor Emeritus
Like all good writers/speakers, I begin with my self-disclosures: I have been happily retired for the last ten years, enjoying full medical coverage, courtesy of my chosen option, Kaiser. (God bless Kaiser). In fact, at breakfast meetings with a couple of retired colleagues, we begin with a prayer of thanks to our Kaiser benefactor. In my case, two new improved eyes (cataract removal/lens replacements), at an outrageous cost of $15 copay per eye, (an operation listed at $9000 an eye on the open market), bored out sinuses, and a patch-up job on one rotator cuff (shoulder). I might add my two friends have notched up a couple of hip replacements, a TURP (prostate) clean out and more. While teaching, I went through two office partners, both of whom had bypass surgery while still teaching, though I claim I was not responsible for either. In both cases, their cost was $10 copay (it was a number of years ago).
CalPERS provides good health plans
Having said this, not all Kaiser insurance options are equal; we happen to be offered one of the higher end varieties. Equally true is that the District/CalPERS also offer other HMO and PPO options for both working and retired teachers. My choice was influenced by life being complicated enough without having to plow through the various HMO and PPO offerings, then search out a given doctor; so I plead ignorance outside Kaiser.
Health Benefits Committee investigating alternatives to CalPERS
So, having said this, it is with some alarm that we read that there is a Health Benefits Committee that has already met three times (a fourth meeting took place on March 15) to investigate alternatives to the CalPERS brokerage of offerings for health benefits for retired faculty, as well as for the present teaching faculty. I thought it might be of interest to share what I have gleaned about the process.
I would like to emphasize this article is written with the concern and perspective of a retired individual, but the concern should be felt by those presently teaching, anticipating the rewards in later retired life.
Health benefits were hard earned
To begin in the beginning, as part of the remuneration package to faculty, in addition to salary, the District offers a health insurance package, with PERS acting as a “brokerage” for individual insurance offerings. Although this health insurance package comes with certain limitations, health benefits were a hard-earned item in our teaching compensation that were achieved in lieu of smaller salary raises in the past, not out of the generosity of the District, and faculty should fight to keep them, or even improve on them. Since the mid 90’s, the District chose PERS as the broker to provide a list of programs with different insurance vendors/providers, each with their own descriptions of coverage and copays.
Retiree health benefits based on hire date
I have to interrupt this story by acknowledging that not all faculty members are equal. There are three key dates that decide your retirement healthcare worth. The level of coverage for a retired individual begins with the magic 75. To get full benefits, the employee’s age plus years of District service must be equal or greater than this magic 75. Also, the years of District service required are 10 years if hired prior to 9/8/1993 and 20 years if hired on or after 9/8/93.
For those hired prior to 1/1/87, the District pays lifetime medical (choice of plans) and dental coverage for both retiree and partner: if the retiree dies first, lifetime coverage continues for the un-remarried survivor. (Incidentally, one must be married one year prior to retirement for the partner to be covered.)
If hired 1/1/87 through 9/7/93, then the lifetime maximum monthly premium paid by the District is equivalent to the current cost of the Kaiser Plan; the District pays lifetime reimbursement for Medicare Part B monthly premiums; dental is as above, and the same procedure is applied to the surviving un-remarried survivor as above.
If hired on or after 9/8/93, the retiree is limited to a flat monthly maximum of $450 towards health insurance until the retiree becomes eligible for Medicare Part B; the District then pays for the lowest cost medical plans available for the retiree only (currently the Kaiser plan). The retiree only gets lifetime reimbursement for Medicare Part B monthly premiums. Here the spouse/partner only gets a share in the $450 coverage while it is being paid to the retiree!
For more details on retiree benefits packages, see the Retiree Benefits Chart
Looking for better rates for equal coverage?
Personally, I find it hard to justify the above distinctions, but that is the contract as written. With this proviso, it seems this system of PERS-contracted insurance has worked well (at least in my opinion) for many years. But recently, the District has chosen to change its dealings with its employees (AFT, AFSCME, CSEA) by wanting to give each assigned group an allotted fixed pot of money/cash and allow each group to allocate its own salary/benefits ratio. The District continued with this logic, by arguing that if (a big IF) they could get better insurance rates through a different broker, then any savings would be passed on to the respective employee groups, and every person would be happier (and wealthier.) The second hope was that new options might be available from another brokerage outfit. An example, given to me by a District official might be a second Kaiser offering to the one already on the books; this one might be a lower monthly cost, but with higher copays. The District says the yearly cost of the PERS collective insurance has been rising faster than the national average; but in the same breath, they also say the rates have fluctuated in the past, even going down as well as up.
Any potential change also has to reflect certain facts: PERS requires 6 months notice prior to allowing a group to withdraw from the program; and a 5-year waiting period prior to reentry if desired.
For the record, if we discuss numbers, I have been told there are about 990 current full-time employees, with 60% choosing the Kaiser option. In contrast, there are about 870 retired individuals, or surviving partners/spouses collecting retirement health benefits, with about 40% choosing the Kaiser option. And if we focus on teachers, then the retired number is in the 250-300 region.
Future retiree health benefits are funded
A number of years ago, there was a concern that there had been an under-funded liability associated with these retirement health benefits. Here there is some good news. The District/Trustees made a decision some time ago to start saving/squirreling away a set amount of cash (in the millions) to cover this projected failure to fund the system. Rather than just let the cash slush fund sit festering in a bank account accumulating a miniscule amount of interest, the District made a decision to borrow from this fund and use the cash generated to build three housing units, one on each campus (more correctly two built, one in the planning/building stage) to accommodate faculty, anticipating the rents recuperated would regenerate the money later for retired benefits. The benefits to the present faculty are obvious; “low income” housing on site.
The most recent Health Benefits Committee took place Thursday, March 15 when it was scheduled to make the decision whether to proceed with searching for an alternative option to the PERS brokerage. Incidentally, I was denied attendance at that meeting either as a participant or spectator.
My concern about the situation being considered by the Committee is that there are incredible complexities involved and that the present system is good for retired faculty. I am not convinced that some different broker can magically give significantly better and cheaper offerings than the present deal.