Category Archives: healthcare

TRS to vote on changes to retiree healthcare plan next week

Drugs and MoneyIf you are a retired educator or someone planning to retire soon from the profession, you’ll be interested in next week’s meeting of the Teacher Retirement System (TRS) Board of Trustees. The board will meet Friday, Aug. 25, to discuss and adopt modifications to the TRS-Care healthcare program for retirees.

As we reported on Teach the Vote back in June, TRS recently announced several changes to the design of its healthcare plans after the legislature failed to completely fill a funding shortfall during the regular session. But in response to outcries from educators, legislators convinced Gov. Greg Abbott to add retiree healthcare costs to his call for the special session that ended Tuesday. The legislature passed House Bill 21 by Rep. Dan Huberty during special session that will funnel $212 million in additional money to TRS for healthcare.

TRS logoThe attached document from TRS staff provides details on plan changes that TRS board members are expected to adopt next week. Changes to TRS-Care will go into effect on Jan 1, 2018.

TRS board approves major healthcare changes

TRS logoThe board of trustees for the Teacher Retirement System (TRS) of Texas met Friday to make changes to healthcare and retirement following the actions of the 85th Texas Legislature, which adjourned sine die on Monday.

Before delving into plan information, the board approved new contracts with CVS Caremark as the pharmacy benefit management (PBM) administrator for TRS-Care Standard, TRS-Care Part D, and TRS-ActiveCare. Staff then reviewed the two major pieces of legislation that will define healthcare and retirement benefits under TRS moving forward:

Senate Bill (SB) 1

The state budget covered roughly $480 million of the estimated $1 billion shortfall facing TRS-Care by increasing contributions by both the state and school districts, including one-time state supplemental funding of $182.6 million. While this prevented a worst-case scenario for retirees, the balance will unfortunately have to come from higher premiums and benefit reductions.

House Bill (HB) 3976

This bill represents a major structural overhaul of TRS-Care. It establishes two separate plans: A single High Deductible Plan for non-Medicare participants and a Medicare Advantage and Medicare Part D Plan for Medicare participants.

Under HB 3976, TRS cannot charge a premium during the 2018-2021 plan years to disability retirees who retired as a disability retiree effective on or before January 1, 2017, who are currently receiving disability retirement benefits, and who are not eligible to enroll in Medicare. The bill eliminates the statutory requirement to provide a free healthcare plan for retiree-only coverage, but will provide free generic preventative maintenance medications for enrollees in the high deductible plan. The new program provides an opt-in window for retirees under the age of 65 who choose coverage elsewhere to opt-in to the Medicare Advantage Plan at age 65.

What’s next

On Friday, the board approved the new TRS-Care plans created under HB 3976. From September 1, 2017, to December 31, 2017, the agency will maintain the current TRS-Care 1, TRS-Care 2, and TRS-Care 3 Plans, such that FY 2017 will be an extended 16-month plan year. Deductibles and out-of-pocket accumulators will not restart on September 1, 2017. The agency plans to maintain current retiree premium contributions by plan, Medicare status, family size, and years of service.

New TRS-Care plans

Non-Medicare participants on the TRS-Care 1, TRS-Care 2, and TRS-Care 3 plans will be absorbed into the new TRS-Care Standard Plan. In-network coverage will include a $3,000/$6,000 deductible, $7,150/$14,300 maximum out-of-pocket limits, and 80/20% coinsurance. Out of network coverage will include a $6,000/$12,000 deductible, $14,300/$28,600 maximum out-of-pocket limits, and 60/40% coinsurance.

Medicare participants will be absorbed into the TRS-Care Medicare Advantage/Medicare Part D Plan, which includes a $500 deductible, $3,500 maximum out-of-pocket limit, 95/5% coinsurance, $500 IP hospital copay per stay, $250 OP hospital copay per visit, $65 ER copay, $35 urgent care copay, $5 PCP office visit copay, $10 specialist office visit copay, $0 preventive services copay, $5/$25/$50 retail pharmacy copay, and $15/$70/$125 mail order pharmacy copay.

TRS will make an alternative plan available for certain participants who are Medicare eligible but not enrolled in either Medicare Part A or Medicare Part B, or cannot access a provider through the TRS-Care Medicare Advantage Plan.

New premiums are scheduled to take effect January 1, 2018. A non-Medicare retiree only will see a monthly premium of $200, and a Medicare retiree only will see a monthly premium of $146. Premiums for retiree and spouse are $739/$590, retiree and children $433/$504, and retiree and family $1,074/$1,106.

The TRS-Care Medicare Advantage network is a PPO plan network with an out-of-network benefit equivalent to the in-network benefit. Providers do not need to be in network as long as a provider accepts Medicare and agrees to bill Humana, the TRS-Care vendor.

The agency has already begun the first phase of implementation, which involves communicating to participants the changes that will take effect January 1, 2018. These communications will include a monthly e-newsletter, direct mail correspondence, and online information. While these changes will increase the burdens on plan participants, they are estimated to keep TRS-Care positively funded until 2021.

TRS-ActiveCare Changes

The legislature did not pass any legislation affecting TRS-ActiveCare, which is a self-funded program, but the board did make significant plan changes on Friday.

The sole source of funding for TRS-ActiveCare is premiums. The state contributes $75 per month per employee through the school finance formulas, and districts contribute a minimum of $150 per month per employee, with some districts contributing more. Employees contribute the remainder of the projected gross premiums. Funding requirements for the state and districts have not changed since the program’s inception in 2002.

While in much better shape than TRS-Care, TRS-ActiveCare is facing a shortfall of just under $100 million in 2018, which has placed pressure on premiums. The agency’s goal is to balance premium increases against the need to build the fund balance to protect the plan. The target fund balance at the end of FY 2018 is one month of claims, or $158 million. Without plan design changes, staff suggested an average rate increase of 9.9 percent would be required to achieve the target ending fund balance.

With that in mind, the board approved a number of changes based on agency recommendations. Those on the TRS-ActiveCare-Select and TRS-ActiveCare-2 plans will see increased costs associated with out-of-network providers, and will see ER copays increase to $200 from $150. There are no changes planned regarding prescription drug benefits.

These changes will allow for a slightly smaller 8.1 percent average rate increase. TRS-ActiveCare-1HD rates will increase 2.9 percent for employee only, 8.4 percent for employee and spouse, 9.1 percent for employee and children, and 6.9 percent for employee and family. TRS-ActiveCare Select rates will increase 6.2 percent for employee only, 10.2 percent for employee and spouse, 7.1 percent for employee and children, and 16.8 percent for employee and family. TRS-ActiveCare-2 rates will increase 10.7 percent for employee only, 9.1 percent for employee and spouse, 1.9 percent for employee and children, and 25.5 percent for employee and family.

Other legislative changes

At Thursday’s meeting, executive director Brian Guthrie told board members “we are very pleased” with how the legislative session turned out for TRS. Three key bills related to the system passed within minutes of a crucial deadline late in the session. Debriefing the board, TRS governmental relations director Merita Zoga identified several additional items passed by the legislature related to TRS:

  • HB 89 prohibits governmental entities from contracting with or investing in a company that boycotts Israel.
  • SB 253 adds to the existing divestment statute, prohibiting TRS from investing in companies designated as terrorist organizations.
  • SB 252 prohibits government entities from contracting with companies doing business with Iran, Sudan, or a foreign terrorist organization.
  • SB 7, the teacher misconduct bill, includes language related to TRS. The bill strips the service retirement annuity from a TRS member who is convicted of felony sexual abuse, sexual assault, or improper relationship between educator and student. All or part of the annuity may be awarded instead to an innocent spouse.
  • SB 500 would strip the service retirement annuity of a member of a public retirement system, such as TRS or ERS, if the member is an elected official and is convicted of certain qualifying felonies, including bribery, corruption, perjury, and other offenses related to their official capacity.
  • HB 1428 would allow TRS to act as a mediator in balance billing disputes.

Staff pointed out that the legislature did not pass any bills related to a cost of living adjustment (COLA), TRS-ActiveCare, or pension studies. Other major bills affecting TRS include the following:

SB 1954

This bill allows Optional Retirement Program (ORP)-eligible employees who are not notified properly additional time to elect ORP participation. The proposed bill creates an error correction process for reporting an ORP employee to TRS when the employee is not eligible for TRS. The person would be restored to ORP participation and member, state, and employer contributions related to the incorrect reporting, plus interest, would be paid to the employee’s ORP account. Amounts contributed to TRS that are in excess of participant contributions due to ORP would be refunded to the individual.

SB 1663

SB 1663 provides a number of member friendly benefit and administrative changes. It allows the TRS board to go into executive session to discuss particular investment transactions, strategies, portfolios, and other potential transactions related to private investments if the board determines that deliberating or conferring in an open meeting would have detrimental effect on TRS’s negotiations with third parties or place TRS at a competitive disadvantage in the market. The bill provides TRS with the authority to charge late fees on late reports by reporting entities.

It further allows TRS to add an additional five years of service credit when determining whether an early age reduction is applicable and the amount of the reduction, for a 100 percent joint and survivor annuity payable at the death of an active member. The bill amends current law to provide that disability retirees with less than 10 years of service credit who choose a $150 per month annuity for the number of months of membership to allow their beneficiaries to receive any remaining member contributions as an additional death benefit if the disability retiree dies before the period ends. The bill also moves the TRS sunset review to 2025.

SB 1664

SB 1664 bill provides IRS code compliance, statutory corrections, and member friendly benefit changes. It provides additional time for TRS members to purchase sick and personal leave service credit at retirement and corrects an error referencing the TRS board rather than the Texas Higher Education Coordinating Board to certify state contributions to the ORP.

SB 1665

This bill continues the use of derivatives and external managers capped at 30 percent of total assets and repeals the sunset dates on the authorities.

Update on TRS-Care legislation

Drugs and MoneyThe Texas Senate is expected to vote soon on House Bill (HB) 3976 by Rep. Trent Ashby (R-Lufkin), a bill to reform the state’s healthcare program for retired educators. The Texas House approved the bill unanimously earlier this month. Here’s a look at the background and history of the legislation, as well as its current status.

Part I: How did we get here?

For at least the past four years, the TRS retiree health insurance program known as TRS-Care, has been headed toward a financial disaster. During the 83rd legislative session in 2013, the legislature began supplementing formula funding for TRS-Care to cover a projected shortfall. In the 84th legislative session in 2015, lawmakers increased the amount of supplemental funds to $768 million again to cover the TRS-Care shortfall. Covering the projected shortfall this session would take more than $1 billion above and beyond what the current funding formulas call for. That amount, already considered unsustainable, is only projected to rise in future years.

The issues driving TRS-Care toward disaster are runaway health care inflation and a statutory requirement to offer a free health insurance option.

TRS-Care presently has three funding streams: premiums associated with TRS-Care 2 and TRS-Care 3, since TRS-Care 1 is free; formula funding generated from the state, school districts, and active TRS members; and Medicare reimbursements from those over 65 who are on Medicare. The formula funded part of the equation is based on active TRS member payroll. Specifically, the state pays 1 percent of payroll into the fund while school districts pay .55 percent and active members pay .25 percent. Active TRS members’ total payroll generally increases over time at about 2 percent each year. This in turn means the formula funding for TRS-Care similarly increases over time at about 2 percent.

ThinkstockPhotos-177774022-docUnfortunately, healthcare costs have increased at over 7 percent annually for many years. This has led to a situation where the costs for TRS to pay healthcare claims has dramatically exceeded the funding available to pay for those claims, and the gap between funding and costs is only growing.

Without the legislature writing a check to cover the funding gap described above, TRS-Care would go into what is known as a death spiral. TRS would be forced to dramatically raise the premiums on TRS-Care 2 and 3, which are the current paid options offered to retirees, in order to cover the cost of all TRS-Care claims. The dramatic increase in the cost of these optional plans would drive more retirees to choose TRS-Care 1, the free option. As more retirees migrated to TRS-Care 1, the funding stream from premiums would dry up, further increasing the gap between revenueand the cost of paying claims, and the whole system would collapse.

How has the state responded?  The short answer is – not well!

State lawmakers currently have, and have previously had, only three options for addressing the TRS-Care problem. One, they can work to legitimately bring down the costs of retiree health care. Two, they can pay the additionally costs. Three, they can shift the costs to someone other than the state, i.e. retirees, school districts, and active teachers.

Legitimately bringing down healthcare costs, while likely possible, is challenging at the state level and at best a long-term process. Much of what impacts healthcare costs involves federal law over which state legislators have little or no control. Effectively that leaves as the only viable options putting in more money, either from the state or from somewhere else.

Knowing that this problem was approaching, legislators could have taken action six or eight years ago and aggressively pushed TRS-Care participants toward healthier and therefore cheaper outcomes, eliminated the free option under TRS, and at the same time increased the TRS-care formulas. Had they made these changes back then, before TRS-Care was facing a giant funding deficit, the pain to the state and to retirees would have been very minimal. However, back when these issues weren’t yet urgent, it was easier to keep ongoing state costs at a minimum and keep the potent voting block of retired teachers happy by ignoring future realities. Even when deficits between TRS funding and the cost of paying claims began to appear over the last two sessions, while times were good and state coffers were flush, it was easier to simply write one-time checks to prop up the system and ignore the oncoming train wreck.

Now that state revenues are lean and the TRS-Care deficit has grown into a billion dollar hole, it’s too late to reap the slow savings associated with bringing down costs. Lawmakers are unwilling to take on billion dollar ongoing funding increases, and the pain that retirees will experience from the state’s shifting the cost of covering the funding gap to them will be substantial, and in some cases, possibly lethal.

Part II: Where are we now?

The Senate State Affairs committee has legislative oversight for TRS-related issues in the upper chamber, and it is chaired by Sen. Joan Huffman (R-Houston). Having no intention of asking her colleagues to fund the TRS-Care deficit for a third session, Sen. Huffman starting crafting a plan during last year’s interim that was designed primarily to shift the cost of paying for TRS-Care to retirees. Stakeholders, including active and retired teachers, were given an opportunity to provide their input at one perfunctory hearing. However, by the time of that hearing, the majority of the plan that was to become Senate Bill (SB) 788 was already in place.

In early February 2017, SB 788 was filed. As originally filed the bill eliminated TRS-Care plans 1-3 and replaced them with two plans: one plan for retirees under the age of 65 and one plan for retirees age 65 and older.

  • The under 65 plan was a high deductible plan with a first deductible of $4,000. After the participant hit $4,000 in out-of-pocket costs, the plan would have transitioned to offering 80/20 coinsurance coverage up to a maximum out-of-pocket cost of $7,150. After hitting the max out-of-pocket cost in a given plan year, the plan would have covered additional in-network costs at 100 percent. Like all high deductible plans, there are no medical or drug co-payments; you simply pay 100 percent (or 20 percent after the first $4,000 deductible has been met) of the full contracted price for the drug or medical service. As filed, the SB 788 plan was projected to require premiums of $430 a month. Thus, the total annual cost for participants covered by the plan would have been between $5,160 and $12,310. (For perspective, the average TRS annuity is approximately $24,000 a year.)
  • The 65 and over plan in SB 788 would have replaced all current TRS plans with a Medicare Advantage plan. Under a Medicare Advantage plan, Medicare is the primary insurance and the advantage plan is supplemental insurance designed to cover what Medicare does not. The deducible for this plan was projected to be $500 with monthly premiums of $140.

ThinkstockPhotos-162674067-pillsEven with these changes delineated under SB 788, TRS projected that TRS-Care would still have a funding deficit of approximately $300 million during the upcoming biennium and increasing deficits in subsequent years. As filed, the Senate plan did not increase the TRS-Care funding formulas. Instead, the Senate envisioned writing another one-time supplemental check to cover the balance of this biennium’s deficit, leaving a continuing and growing problem for future legislators to address.

Thanks to the tireless efforts of active and retired teacher advocates and receptive House members, the plans for TRS-Care while far from perfect have continued to improve over the course of this legislative session. SB 788 has been left pending, as the House bill, HB 3976, continues to proceed.

As it stands today, the TRS-Care bill moving forward still eliminates the current structure and replaces it with two age-dependent options.

  • The under 65 plan is still a high deductible plan with an out-of-pocket first deductible of $3,000 and maximum out-of-pocket cost of $7,150. The monthly premium will start at $200 a month for the first year and will increase for the following three years to approximately $370 a month. The plan also includes language that lets a TRS retiree opt out of the pre-65 plan and opt back into TRS for the 65-and-over plan once the retiree becomes Medicare eligible. Additionally, members under 65 who have retired due to a disability before January 1, 2017, will not have to pay premiums for the first four years. The plan will also cover a list of generic maintenance drugs, such as blood pressure and cholesterol medications, free of charge.
  • The 65-and-over plan is essentially the same as filed, but TRS at the request of multiple legislators is committed to expanding access to medical providers willing to take the TRS-Care Medicare Advantage plan. Restricted access to doctors has been one of the primary concerns about the Medicare Advantage plan.

In addition to better plan design, HB 3976 as it currently stands increases the state’s share of the funding formulas from 1 percent to 1.25 percent and increases the district’s share from .55 percent to .75 percent. The active employee share is not being increased at this time. These increases in formula funding give some assurance of a continued increase in regular appropriated spending in future years. This is a very important step for the continued existence of the retired educators’ health insurance program.

For those educators who have retired, especially those under age 65, or for those considering retirement in the near future, the changes to TRS-Care contemplated in SB 788 and HB 3976 are a lot to consider. ATPE members may contact our Governmental Relations team if you have specific questions about the bill. We also highly encourage you to contact TRS directly for questions about your retirement or your specific coverage questions about TRS-Care. You can contact Senate author Sen. Huffman or House author Rep. Ashby if you want to express your support, opposition, or any commentary on the legislation. Please remember to be courteous and respectful if you choose to contact one or both of the legislators, and remember that while this bill is not by any stretch perfect, TRS-Care health insurance will cease to exist altogether if no bill passes at all.

Teach the Vote’s Week in Review: Feb. 17, 2017

The weekend is here, and it’s time for your wrap-up of education news from ATPE:

 


FU5A8721_SB13hearing

ATPE members were at the State Capitol Monday morning to express opposition to Senate Bill 13, an anti-educator bill aimed at weakening educator associations by doing away with payroll deduction options for certain public employees who join associations or unions.

This week, the Senate State Affairs Committee approved Senate Bill (SB) 13 by Sen. Joan Huffman (R-Houston), who is also that committee’s chairwoman. The bill aims to prevent educators and a handful of other public employees from using payroll deduction for their voluntary association dues, a longstanding practice that costs taxpayers nothing.

Huffman’s bill carves out a special exemption for fire, police, and EMS employees, allowing them to continuing using payroll deduction for their dues. That decision to favor some public employees over others is not sitting well with many public servants both in and out of the bill, as well as several of the legislators being asked to act upon the issue this session.

FU5A8751_SB13hearingDozens of ATPE members traveled to Austin on Monday, Feb. 13, to attend and testify at the SB 13 hearing. Read more about their testimony in this blog post by ATPE Governmental Relations Director Jennifer Canaday from earlier this week. The pleas by educators and others were not enough to stop the committee from moving the bill forward, which happened yesterday on a party line vote. For more on this high-profile battle over public employee associations and unions, check out today’s column by Ross Ramsey, Executive Editor of the Texas Tribune, which is also republished here on Teach the Vote.

As Ramsey notes, the debate over SB 13 “isn’t about the paychecks. It’s about the politics.” ATPE agrees, and points out that political motives driving this bill aren’t even necessarily union-focused, especially since the bill creates exceptions for some union members. Backers of SB 13 say they are targeting the groups they perceive to be opponents of Republican candidates and supporters of state and federal legislation that would hurt businesses. In reality though, the largest group affected by the bill is ATPE – a non-union entity that exists only in Texas and gets no money from national or out-of-state affiliates. Furthermore, as ATPE members and lobbyists have pointed out in testimony and one-on-one discussions with lawmakers, our organization has not involved itself in business-related legislation and has always made bipartisan contributions to candidates and officeholders through our political action committee, which is not in any way funded with dues dollars.

If, as Ramsey describes it, the SB 13 debate boils down to picking “good eggs and bad eggs,” it is becoming abundantly clear that in the minds of many lawmakers and business groups, educators are the bad eggs.

 


ThinkstockPhotos-162674067-pillsThe 85th Legislature is considering some dramatic changes to healthcare options for educators. ATPE Lobbyist Monty Exter has written an analysis of a bill that would result in a major restructuring of TRS-ActiveCare, the primary healthcare program for actively employed educators in Texas. Read more about Senate Bill 789 and the changes being considered in this blog post.

 


The Texas Education Agency (TEA) wants to hear from educators about potential changes to educator certification, particularly for teachers of early childhood students. We invite educators to take TEA’s survey between now and Feb. 24, especially if you teach in an elementary grade and might be affected by these changes under consideration. Learn more about the background of the issue and find a survey link in ATPE Lobbyist Kate Kuhlmann’s blog post.

 


tea-logo-header-2School districts and charter schools around Texas received notice of their 2016-17 accreditation status from the Texas Education Agency (TEA). Factors that count toward a determination of accreditation status include academic and financial accountability ratings, program effectiveness, and compliance with education laws and rules. Nearly all (98%) of the state’s school districts received a fully “Accredited” status. Nine districts or charters were “Accredited-Warned,” seven received an “Accredited-Probation” status, two were marked as “Not Accredited-Revoked,” and one district is still “Pending.” Learn more from TEA here.

 


Stay tuned to Teach the Vote and follow us on Twitter for updates on legislative developments next week. ATPE members are also urged to visit Advocacy Central to learn more about specific bills and send messages to their lawmakers about priority issues like payroll deduction, private school vouchers, testing, healthcare, and more.

TRS healthcare bill offers fewer options, no savings

Drugs and MoneyLast fall, ATPE reported on an interim legislative study of healthcare programs administered through the Teacher Retirement System (TRS). Now that the 85th legislative session is in full swing, we’ve had a chance to see actual legislation pursuing some of the dramatic proposals outlined in that interim report. The primary vehicle for these changes would be Senate Bill (SB) 789  by Sen. Joan Huffman (R-Houston), which seeks to reorganize TRS-ActiveCare, the current health insurance program for many of our state’s actively employed educators.

Under current law, all school districts that did not previously opt out of TRS-ActiveCare offer their employees access to two health insurance options through ActiveCare: one high-deductible plan and one traditional plan featuring co-insurance and co-payments. The state contributes $75 per employee toward the monthly premiums associated with either plan and requires school districts to cover an additional $150 per employee towards premiums; many districts cover more than the minimum $150 contribution that is required, however.

If passed, SB 789 would limit districts that may participate in TRS-ActiveCare to those with 1,000 or fewer employees or fewer. The bill would also eliminate the traditional co-payment insurance plan option, leaving only the high-deductible option for employees who remain covered through ActiveCare. The bill also would give those districts with fewer than 1,000 employees another one-time opportunity to voluntarily opt out of TRS-ActiveCare.

SB 789 does not increase the amount of money the state will be spending toward employee health care premiums, nor does it increase the requirement for the amount that districts must spend toward those premiums. This is significant because compared to the private sector, our state’s employer contribution (the combination of state and district payments) toward public education employees’ health care premium cost is dramatically underfunded. When the TRS healthcare program was started years ago, the ISD/state contribution was in line with average private sector employer contributions. However, as private business has worked to keep pace with healthcare inflation, the state has never increased its contribution on behalf of school employees.

Falling US MoneyIt is also worth noting that SB 789 does not save the state any money. TRS-ActiveCare is considered a pass-through program. That means the state puts in a fixed amount of money and any increases in premiums get passed directly down to educators for them to cover. Restructuring ActiveCare as proposed in Sen. Huffman’s bill will not change this dynamic. The state pays the same amount and any changes in overall premium costs will only impact educators.

Thus, SB 786 takes away choices without saving educators money. The cost for the new high-deductible plan is estimated to be more expensive than the cost of the high-deductible plan offered under the current system. While premiums for this new high-deductible plan may be slightly less than the cost for the traditional co-pay plan under the current system, the premium combined with out-of-pocket costs for educators could very likely be more. Additionally, educators who have currently selected the traditional co-pay plan have voluntarily chosen to pay a higher premium at no additional cost to the state and no required additional cost to the district. Taking away this option without any resulting savings to either the school district or the state makes little sense.

For the 82 school districts that will be required to exit ActiveCare if this bill passes, their administrative costs will increase. Those districts will now have to hire additional personnel to administer an employee healthcare plan at the district level. That additional cost will in turn reduce the amount of money these districts will have to spend in the classroom on other needs. The same will be true of any districts that voluntarily opt out of ActiveCare because they prefer to offer their employees the option of more than one health insurance plan.

SB 789 decreases benefit options for educators while increasing district expenses, and it does so without increasing state support to educators, lowering the healthcare cost for educators, or decreasing the cost to state taxpayers. Therefore, we can find no reason for ATPE to support this bill.