The Teacher Retirement System (TRS) Board of Trustees met Thursday to discuss premium and plan design changes for both TRS-Care and ActiveCare, the health insurance programs offered to retired and active public education employees. Both programs have faced significant structural funding issues that have caused the retiree plan to be financially unstable and the active employee plan to have employee premiums and out-of-pocket expenses that are greater than comparable private sector plans.
The Board adopted premium changes for TRS ActiveCare for the upcoming plan year. The good news is that those premium increases are going to be relatively small compared to historical increases. The bad news is that the increases will likely be borne entirely by employees, unless individual school districts choose to increase their contributions to employee health insurance. The state contribution remains $75 per employee per month and has not changed since the health insurance program was created in 2001.
ActiveCare premium increases and plan design changes for the upcoming year:
- ActiveCare 1 HD: 0%
- ActiveCare Select: 2.2 to 2.3%
- ActiveCare 2: 5%
- Maximum out-of-pocket limits are increased for all plans.
- Retail pharmacy co-pays for maintenance drugs are increased to $35 for generic drugs, $60 for preferred brand, and $90 for non-preferred brand.
- HMO increases range from 5% to 13% depending on the HMO and tier of coverage.
TRS-Care has faced serious structural funding problems for several years now, with claims expenditures outpacing the funding stream allocated by the Texas legislature. This problem was further exacerbated in 2011 when the legislature cut state funding for Care in half for one year as a result of a projected state revenue deficit. In 2015, the legislature was forced to allocate $768 million simply to keep TRS-Care solvent through 2017 when the legislature will meet again. At the end of 2017, Care is projected to run out of funds and will require over $1.3 billion in additional funding to operate for another two years, or more preferably a more long-term solution including potential funding changes will have to be enacted. As reported here after the last TRS Board meeting, because of a cash flow issue where some revenue dedicated for the current plan year may not be available until after the end of 2017, there is a possibility that the cash balance for Care will be negative. As a result, some plan design changes for the upcoming plan year are necessary to account for this looming negative fund balance. It is important to remember that it has been 12 years since there have been plan design changes to TRS-Care, and premiums have remained unchanged since 2005.
TRS-Care changes recommended by staff and adopted by the board:
- There will be no increase in premiums for the upcoming plan year.
- Medical deductibles and out-of-pocket expenses will be increased for all plans.
- Existing pharmacy co-pays are increased by $3 to $25 by tier for the traditional plans.
- A retail maintenance co-pay structure for the traditional prescription drug plan will be implemented.
- Effective January 1, 2017, the prescription drug plan for Medicare eligible members will be the Medicare Part D plan, with members who do not have either Part A or Part B remaining in the traditional prescription drug plan. Pharmacy co-pays for Medicare Part D will remain at current levels.
Both TRS-Care and ActiveCare are currently being studied by the legislature as the result of interim charges in the Senate and House of Representatives. Both plans will be hot topics when the legislature meets again beginning in January. Stay tuned to TeachtheVote.org for updates.