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.

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25 thoughts on “TRS board approves major healthcare changes

  1. sandra brooks

    Can just the prescription benefit be purchased and not the medical benefits? (for a TRS member’s spouse.

    1. Mark Wiggins Post author

      Hi Sandra! That’s a great question. TRS does not currently provide a pharmacy-only plan. You may be able to find a plan that just provides prescription coverage through another provider. The pharmacy benefits manager for TRS is CVS Caremark, so for the sake of convenience you might look for a plan that is compatible with CVS — just to keep you from having to run to different pharmacies.

      Hope this helps!


  2. Jorgannie Carter

    This publication states that the Employee & Family rates for ActiveCare are increasing for HD and Select by 16.8% and 6.9%, respectively.

    The board packet had them at 6.9% and 16.8%, respectively.

    Which one is correct? Thanks in advance.

    1. Mark Wiggins Post author

      Thanks for the catch, Jorgannie. You’re absolutely right, somehow those two numbers got transposed in my head as I was writing them down. I’ve just updated the article for accuracy. I hope that didn’t cause too much distress.

      Thank you for pointing that out!


  3. Rebecca Cowart

    For a TRS Medicare retiree with a spouse Medicare dependent, is the monthly premium discounted from the $590 amount shown on the new 2018 Medicare Advantage plan schedule? Current plan premiums make a distinction between Medicare spouse dependent and non Medicare spouse dependent.

    1. Mark Wiggins Post author

      Thanks for the question Rebecca. My understanding is that the $590 premium is for a Medicare retiree and spouse, while non-Medicare retiree and spouse are looking at a $739 premium. I would refer any more specific questions you may have to TRS, since the information we received was very general. Follow this link and there are several options for connecting. Let me know if you have any trouble.


  4. Larry Moore

    Don’t worry. I was assured by TRS, when I called about our change to humana. NOTHING IS GOING TO CHANGE was what I was told. I asked ” Why are we changing?” ” It’s cheaper” was the answer. My reply ” So we’re switching to a different company, because it’s cheaper but nothings is going to change?” ” Rrrriiiigggghhhhttt ” my comment. I’ve already had to pay for blood work because the hospital doesn’t take Humana! On the 16 of June 2017, I will be having my right kidney removed because of four cancerous tumors. Last year when I had a hip replacement, I had to pay $75 up front. Just got a call today that it will be $250 upfront. Wonder, what other things, that aren’t going to change, will I encounter?

  5. Jeannine blankenship

    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.

    I qualify as this. Does this mean that my premiums won’t change, but the services covered will? It sounds like I’ll be paying my current premium, but be automatically put in the high deductible, generic medals plan. Correct?

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  7. Lydia Renfro

    For a member not eligible for medicare, who are currently enrolled in TRS Care 3, will we have the option to opt out until we are eligible for Medicare plan? Currently, if you leave the plan, you are not allowed to enroll at a later date.

  8. Lydia Renfro

    Will members not eligible for medicare be allowed to opt out of the TRS health care plan until they are eligible for medicare? Currently, if you opt out, you are not allowed to re-enroll.

    1. Mark Wiggins Post author

      Hi Lydia,

      I’m not sure the answer to this specific question. Have you run this by the TRS help hotline? I’d be curious what you hear from them, since I’m sure many people are in this same situation.



  9. Angela Cast

    My mother has been paying monthly for a beneficiary sum that will pay out for a lifetime for her children when she passes. Will this change? If so, can she be reimbursed? I’m not sure if she has an annuity or how this works.

  10. Lawrence Lowe

    If the employee is 60 and the spouse is 66, how will TRS-CARE work?
    Can they both in TRS-CARE 1? or employee can be in TRS-CARE 1 and the spouse has to be in TRS-CARE Medicare Advantage/Medicare Part D plan?? or what will be the possible options?

    1. Mark Wiggins Post author

      Hi Lawrence,

      My understanding is the plan would be based upon whether the employee is Medicare eligible. The spouse would be wrapped into their plan, whichever it is. Note that TRS-Care 1 is going away, and all the non-Medicare plans will be wrapped into the TRS-Care Standard plan. This is the info we’ve gotten so far, and I’ll post more once I get it. I hope this helps!



  11. Patty Sisco

    I read in the paper today thar trs care offers a special benefit if the retiree has a disabled child. I am on Medicare and trs care and have primary custody of a disabled 16 year old on Medicaid. Peditricians won’t take him, and adult services are horrible. Is it possible to put him on trs care?

  12. Stephen Rorabaw

    I am retired with 30 years experience. I will not be 65 till February 2019. I’m diabetic and currently prescribed 3 types of insulin as well as other medications. I’ve priced these medications and see that on this plan I will hit my $3,000 deductable with my first refill. I will hit the $6,000 max out of pocket a few months later. What will my medications cost, if I survive this, when I’ve reached my max out of pocket?? Does max out of pocket mean no more cost??

  13. Pingback: TRS to vote on changes to retiree healthcare plan next week | Teach the Vote

  14. Deloris Wing

    Why do I have to opt out of TRS insurance in order to use Medicare with a supplement? It would seem that the plans should include the option of taking a stipend of a certain amount to be applied to a supplement plan when the area that we live in has no inclination to accept Humana Advantage plan. I cannot find a doctor in this area who will take it. I DO NOT wish to change doctors.
    Besides that, the rates indicated are not very good for the coverage and copays. It looks like someone from a large company did the negotiations! Very bad! I can buy plan F with $0 copay and Walmart Medicare part D for only a little bit more ($234 per month). Why not help me pay for that with a HRA or something?

  15. Mary Anne McMahon

    Mary Anne says
    October 11, 2017 at 7 :30 pm
    I take a Tier 5 drug and recently called both Humana and Silver Scripts to find out if my medication will be covered by the TRS Humana Medicare Advantage Plan in 2018. I am being forced out of the TRS Medicare with an Aetna supplement in 2018 which does cover my medication. Neither the TRS Humana representative nor the TRS Silver Scripts representative would tell me whether the drug is presently covered or will be covered in 2018. I was told the information for the 2018 formulary list will not be available until November. I did learn that individual plans with Silver Scripts do not cover my medication. It’s important that I receive this drug information so that I have sufficient time to make a good health care decision. I wonder how many educators will blindly transfer into the Medicare Humana Advantage plan only to learn later that they have no coverage for their medication. Being dropped from TRS Aetna group Express Scripts Pharmacy will put me into the Plan D donut hole and will cost me thousands of dollars as an individual for my medication. In addition my doctor has informed me that he will not accept the TRS Humana Medicare Advantage Plan. He, like many doctors, do not like nor accept Medicare HMO or PPO advantage plans.

  16. Venita

    I am yrs care 3
    Medicare advantage now. I’m a beneficiary. Since Humana took over my program fro. Aetna everything went up. Will this conti ue go up. Im
    67 and of course need more Dr visits and medication.i fear for our future plan.

  17. Irene Phaup

    Dear Mark,
    I am a retiree/rehire. I am paying the $200 per month TRS premium for myself from my Annuity, yet my district is charging me $550 each month for the amount of insurance the provide all employees–plus a 12% penalty for me returning to work. The $550 is before taxes, so I cannot claim it on taxes either. I do not understand the $550 fee. Can you explain?

    1. Monty Exter - ATPE Lobby Team

      You really should not be getting charged for two health insurance plans. Keeping the TRS plan now will allow you to have access to it in the future. Assuming you are sure your TRS insurance is as it should be, you should probably talk to human resources with your district and ask them how to go about declining the district insurance. If you have declined the district insurance already, then perhaps there is a district accounting error that they need to be made aware of in order to resolve.

      If you have further questions that you feel wade into legal territory with regard to your district please contact the ATPE Legal Department at 1-800-777-ATPE.


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