How To Fund The Health Care Program In Ohio

Transcription

1 Overview of STRS Ohio s Health Care Program Tim Myers, Retirement Board Member 2015 Public Pension Funding Forum Berkeley, CA

2 Agenda STRS Ohio Health Care Program Snapshot Eligibility History Demographics 2016 health care plans Funding Future Questions 2

3 Snapshot 82% of enrollees live in Ohio 76% of retired teachers have 30 or more years of service and receive the highest subsidy Average age is 61 for non-medicare enrollees and 75 for Medicare enrollees 5,060 disabled enrollees; average age is 53 for non-medicare only 12% (11,702) of the 97,341 Medicare enrollees have Medicare Part B-only 25% of eligible retirees opt out of STRS Ohio coverage Pension reform created a swell of early baby boomer retirements 3

4 Eligibility 15 years of service needed to be eligible Beginning in 2023, 20 years of service needed Members eligible to enroll at retirement or with a qualifying event including: Within 31 days of loss of other coverage Upon Medicare eligibility During any annual open-enrollment period Eligible benefit recipients earn a subsidy of 2.1% per year of service to a maximum of 63% Eligible spouses and dependents do not receive any subsidy but are eligible for health care coverage 4

5 History 1970s 1980s: Health care program created; low enrollee costs 1974: STRS Ohio established a health care program for all benefit recipients; plan had $0 premium and $20,000 lifetime benefit 1977: STRS Ohio reimbursed the Medicare Part B premium to benefit recipients 1978: Free coverage provided to spouses 1980: Free coverage provided to dependent children 1983: Health Care Stabilization Fund established with initial balance of $107.5 million 1984: First enrollee deductibles and premiums for spouse and dependents introduced 5

6 History (cont.) 1990s: Program expanded to include PPOs and HMOs and enrollee premiums grew 1992: Benefit recipients started paying a premium for health care coverage 1993: Preferred Provider Organization (PPO) was introduced along with an additional vendor, Blue Cross and Blue Shield of Ohio 1995: Benefit recipients with 25 years of service pay 15% of the premium cost; dependents pay 40% of the premium cost 1996: Number of health care plans offered expanded to eight (five HMOs and three PPOs) 1998: 8% of employer contributions allocated to Health Care Stabilization Fund (prior annual contributions had been 2% 4%); number of health care plans offered expanded to 13 6

7 History (cont.) 2000s: Program contracts, enrollee costs increase significantly and funding decreases 2000: Employer contributions reduced to 4.5% and further reduced to 1% in : Seven HMO plans terminated 2002: Disease management programs introduced : Impact of prior year s financial downturns lead to beginning of significant funding concerns and changes: Premium subsidies reduced for retirees and eliminated for spouses and children Higher deductibles and out-of-pocket maximums added to plans Some plans eliminated and Plus and Catastrophic Plans added Years of service needed for health care eligibility increased to 15 years from 10 years 7

8 History (cont.) 2005: Dedicated 5% health care funding legislation sought requiring 2.5% from teachers and 2.5% from employers ultimately unsuccessful 2007: Future health care liabilities projected at $10 billion 2010: Aetna Medicare Advantage program introduced with enrollees opted in 2011: Retirement Board adopts strategic framework: Focuses resources on Medicare population Reduces health care subsidies over four-year period Eliminates richest non-medicare plan : Subsidy reductions and significant cost shift implemented for non-medicare enrollees; one goal is to minimize the ACA excise tax that begins in : Ohio legislators pass pension plan reform (SB 342) 2014: Employer contributions to health care fund suspended to help pension funding 8

9 Demographics As of June 1, 2015 Medicare Non-Medicare Total Benefit Recipients 30 or more years 60,808 (73%) 22,204 (85%) 83,012 (76%) Less than 30 years 22,188 (27%) 3,932 (15%) 26,120 (24%) Benefit Recipient Totals 82,996 26, ,132 Spouses 14,204 4,071 18,275 Other Dependents 141 3,414 3,555 Grand Totals 97,341 (74%) 33,621 (26%) 130,962 9

10 Demographics (cont.) Funding Method Enrollment/ Percent of Total National Plans (124,294 enrolled, 94.9%) Aetna Medicare Plan* Fully Insured 86,577 / 66.1% Medical Mutual Plans* Self-Insured 37,717 / 28.8% Regional Plans (6,668 enrolled, 5.1%) AultCare Plan* Fully Insured 2,598 / 2.0% HealthSpan Plan Fully Insured 2,154 / 1.6% Paramount Plan* Fully Insured 1,916 / 1.5% *Express Scripts Prescription Drug Self-Insured 128,808 National plans cover 95% of enrollees 10

11 2016 Health Care Plans Non-Medicare Plans Non-Medicare Medical Mutual Basic AultCare HealthSpan Paramount Deductible $2,500/$5,000 $2,500/$5,000 $2,000 $2,000 Out-of-Pocket $4,000/$8,000 $4,000/$8,000 $4,000 $4,000 Coinsurance 80%/50% 80%/50% 80% 80% Medicare Plans Medicare Aetna Medicare AultCare HealthSpan Paramount Deductible $150/$500 $150/$500 $150 $150 Out-of-Pocket $1,500/$2,500 $1,500/$2,500 $1,500 $1,500 Coinsurance 4%/8% 4%/8% 4% 4% Prescription Drug (included with all medical plans) Deductible $225 Out-of-Pocket $4,850 Retail $10 generic; $30 brand name Mail Order $25 generic; $75 brand name 11

12 Funding 2015 costs are projected to be $730 million Non-Medicare program accounts for 40% of costs Retired teachers with 30 or more years of service pay 1/3 of the cost; retirees with 15 years of service pay 2/3 of the cost Spouses and dependents pay 100% Employer contributions of 1% were suspended July

13 Future The State Teachers Retirement Board is committed to helping build financial security during retirement The Board understands the importance of affordable health care during retirement After finalizing updates to the current pension funding policy, the Board plans to review health care funding The 2015 actuarial projections for the health care fund balance indicate the fund will be exhausted in less than 19 years 13

14 Questions? 14