Legislature OKs measures for members, retirees
The Ohio General Assembly this week approved legislation that will have a positive effect on Ohio Public Employees Retirement System members.
The bill included two proposals endorsed by OPERS: one on joint retirement and another that will allow participation in the OPERS Medicare Connector by members who do not qualify for premium-free Medicare Part A insurance. Lawmakers included the measures in Senate Bill 42, which focused on education safety.
The bill was sent to Gov. John Kasich for his signature. It will become law 90 days after the governor signs it.
The joint retirement measure will regulate how service time is incorporated when public employees retire with time in multiple systems. OPERS has worked with the State Teachers Retirement System of Ohio and School Employees Retirement System of Ohio for more than a year to bring about the changes. The Medicare Part A law will allow OPERS members who did not qualify for premium-free Medicare Part A during their careers to join the Connector.
“We’d like to thank Ohio legislators for their diligent work in making these improvements for our system,” said OPERS Executive Director Karen Carraher. “Through communication with our stakeholders, it was clear that these are changes that will be of great benefit to our members and retirees.”
The legislature also passed a series of corrective changes to Senate Bill 343, the pension redesign bill passed into law in 2012. They made technical corrections and non-substantive changes to the provisions of the bill to make it consistent with administrative rules and business processes.
The OPERS Board of Trustees this summer recommended that OPERS staff pursue changing the section of Ohio Revised Code that defines how the system provides insurance to retirees over 65 but who did not qualify for premium-free Medicare Part A hospitalization coverage throughout their careers.
Under the new plan, OPERS will reimburse 100 percent of the retirees’ Medicare Part A premium as well as any applicable surcharges when the retiree enrolls in Medicare Part A and selects a plan through the Connector. Enrolling in Medicare Part A makes these retirees eligible to select health coverage through the Connector and receive an applicable allowance. OPERS also will reimburse a portion of the premium for retirees’ spouses, as well as any applicable surcharges.
The Board took this action following requests from our qualifying retirees that they be allowed to participate in the Connector. Nearly 3,700 members returned postcards to us this fall in support of the measure. These retirees realized that without the option of the Connector they would see their health care costs increase by $300 a month in 2018 when the health care changes are fully implemented.
Ohio law requires OPERS to provide a Medicare Part A-equivalent plan to the approximately 6,500 affected retirees. The provision will begin in 2016 as the Connector begins operations.
You can click here to watch a video in which OPERS Health Care Director Marianne Steger explains the proposal. Click here to read our previous blog on the changes.
The updates to joint retirement will help participating systems save money when amounts are transferred upon the retirement of members who have service time in more than one system. Currently when this occurs, we transfer all member and employer contributions and actuarial interest.
What’s new is that in the future we will use a retention percentage approach to joint retirements. After sending the appropriate member contributions to the paying system, each system will keep the same percentage of employer contributions and transfer the remaining amount to the paying system.
The systems agreed to a 5 percent retention amount to reflect the unfunded actuarial accrued liability and other costs. We will review this amount every five years or if employer contribution rates change.
The amendment also allows independent retirement. Inactive members will be able to refund their contributions from the inactive system without a reduction in service credit, as long as they’re not currently employed with the same public employer. We will begin educating members next year on their options.
Under the new rules, the paying system will continue to certify service credit. But members will not be awarded service credit from more than one source for time worked concurrently. The transferring system won’t be able to certify more than one year for any “year” of service credit as determined by the transferring system.
The agreement also affects restored funds, in which our members may restore a refund by payroll deduction at SERS or STRS. Currently, funds paid to restore service time are held by the other systems until retirement. The new law will require transfers of these funds at least annually.
Because the joint retirement amendment puts in statute the actual agreement, there are still business processes and rules that need to be finalized. That will come in the days leading up to implementation of the law. OPERS expects collaborative discussions with the other Ohio public pension systems to continue through implementation.
Michael Pramik
Michael Pramik is communication strategist for the Ohio Public Employees Retirement System and editor of the PERSpective blog. As an experienced business journalist, he clarifies complex pension policies and helps members make smart choices to secure their retirement.
Fantastic news! Thanks to everyone for the great work!!!…sigh of relief
AS ONE OF THE 6,000—thank you opers!
GREAT News!!!!
Great news!
Great News. Surprised that legislatures worked that quick. Thanks to you and the legislatures for quickly passing the bill.
That is great news ! This is a wonderful Holiday gift. Thanks for your efforts!……another sigh of relief
I do not understand what is happening to spousal coverage. I watched the video and Marianne states that the spouse will get a 50% premium reimbursement. But Marianne seems to suggest that will terminate on the same schedule as all other spouses. 2016, 2017, and 2018. Is this correct for those who did not pay into Medicare Part A coverage? Spouses will receive no assistance after this occurs. If this is the case then members are in a worse position. Are they not? The member will be able to go on connector, but their spouses will be on their own for all cost.
Tischer,
OPERS would continue to reimburse spouses 50 percent of the Medicare Part A premium, but the Connector allowance for spouses would be reduced on the same schedule as the allowance for other spouses.
–Ohio PERS
Just saw this good news for those of us who are not eligible for Medicare Part A. Thanks to the OPERS staff who worked tirelessly to help us!
I want to thank everyone for your tireless efforts to help OPERS retirees in this effort to include everyone in the connector who was not previously eligible for Medicare Part A. God bless you and thank you.
I am so grateful to the OPERS staff for their hard work in seeing this through.
A BIG sigh of relief!
First, although I am not one of the 6500 or so of our members who are the benefactors of this windfall, I do applaud OPERS for coming to the rescue, once again. I cannot say enough good about our retirement system and the people who run it.
But now, for the sour grapes side of the story. I know this will sound mean-spirited, but it has to be said. In your explanation for the need for this legislation, you say these folks “were never given the opportunity to pay into Medicare Part A hospitalization coverage throughout their careers.” Oh yes they were! It was called a “second job” and it is what thousands of us did to insure we got enough credits to qualify for premium-free Medicare Part A insurance when we retired. So while I’m happy for these folks who will now have OPERS pay their premium for them, I can’t help feeling somewhat agitated that I went through the sacrifice of working those “second jobs” (many of them) for nothing.
Tom,
Thank you for your compliment about our system. Not everyone’s life circumstances permit them to hold down two jobs, which, we presume, they would have gotten paid for.
–Ohio PERS
Furthermore I am not apologizing for being agitated about not benefiting from the part a inclusion, by losing my part b reimbursement , and losing my spouses coverage. What I do feel sorry for is the widows and widowers who were married to an Opers contributed in their later lives and are losing Opers paid health care coverage.
Just as not all spouses life circumctances could be determind, Is OPERS going to help them?
My question is; Retired members on Medicare that already qualify for part A (because they have paid into Social Security for 40 quarters ) are losing part B reimbursement ,they are losing their spouses coverage and are not benefiting from part A being paid? Is this correct? Should not these members get a credit on the exchange for the cost of part A Medicare they are saving Opers?
D,
OPERS is not required to provide health care coverage. However, Ohio law requires OPERS to provide insurance to those retirees over 65 who do not qualify for premium-free Medicare Part A coverage. We have determined that insurance will be more affordable for these members if they join the Connector.
–Ohio PERS
This gentleman makes a valid point. Those of us who already qualify for Medicare Part A should receive some kind of credit since OPERS will not be required to pick up those costs for us. I do not know how it all can be made equitable but it seems to me all members would benefit from the Part B reimbursement being covered by OPERS as was previously done and those who do not qualify for Part A need to take care of those costs. OPERS seems to have made this decision on covering Part A in order to save themselves money by making everyone eligible for the connector.
Carolyn,
We are mandated by state law to offer coverage to this group of members who were not permitted to pay into Medicare Part A after Medicare rules changed in 1986. It is the only health care coverage we are required to offer. For years, we offered them a group plan. Now, they will have the more-affordable choices of plans on the Connector. Reimbursing their Medicare Part A premium, rather than running a group plan, is cheaper for OPERS.
This measure has no ill effect on those members who already qualify for Medicare Part A. It actually helps them because our Health Care Fund will have more money overall.
–Ohio PERS
How much is OPERS going to pay for part A Medicare ? How much was Opers paying for insuring those retirees that were not on part A ? Opers imust be saving money by paying part A or OPERS would not have changed their coverage? Am I correct?
D,
Our actuaries tell us we are saving about $1 million over 10 years by helping those who do not qualify for premium-free Medicaer Part A coverage to join the Connector.
–Ohio PERS
Question. I turn 65 in June, will I have to pay out of my own pocket for Medicare Part A until the connector starts up in the fall? Not sure how this will work, really can’t afford to pay 400 a month for 4 or 5 months until the connector starts up. I am one of the thousands who did not pay into part A, through no fault of my own. TY
Karl,
You would be on OPERS retiree insurance until you “age into” Medicare.
_Ohio PERS
I believe the response to Karl (January 15, 2015) was confusing! What does “age into Medicare” mean? Karl is turning 65 in June. If he is covered with Medicare Part A and B effective June 2015 he will need to pay around 400 dollars a month for Part A as he is one of the several thousand employees who did not have the opportunity to pay into Part A during his working years. Karl is asking would he need to pay out of his pocket for Part A for the months of June, July, August, September, October, November and December. The Connector does not take effect until January 2016. Karl’s Medicare Part A costs will of course be reimbursed by OPERS from that point on but Karl is concerned about June 2015 thru Dec 2015. Does your response imply that Karl would have OPERS medical coverage thru Dec? If so,should he delay enrolling in Medicare Part A? Please address this question in more depth as it is confusing to some of us!
Also, Last week I talked to the Worthington Social Security office.They said a gentleman recently applied for Medicare and stated he would get Part A reimbursement from OPERS in the future. The Social Security employee told me they thought he was “confused”. I told her the gentleman was likely correct and updated her on the recent legislation. Perhaps OPERS might communicate with Social Security to avoid possible misstatements by social security staff that might confuse some of our retirees already struggling with recent changes to health care.
Barbara,
The comment we resonded to was unclear. We interpreted it as turning 65 during 2016, after the Connector had already been in operation.
–Ohio PERS
Thanks to the Ohio Legislature and to PERS for changing the law.
When we will get more information about the joint retirement changes? When will implementation of these new rules be? Thank you!!
PH,
The joint retirement changes go into effect on March 19. We will be detailing the new process in the near future, certainly before the implementation date.
–Ohio PERS
Tom B.
First of all, we were under the assumption that when we became employed by The Ohio State University, that we would have a private health care In our retirement years. Second, in the late 1980s when they changed the system to withholding Medicare for reitirement health care. They told us that we were grandfathered in and that we didn’t have to worry. Surprise, now we find out that was not true. So now we are part of that 6500 group of people that have to pay! Had we been told the truth, we would have gotton that second job so we would be covered.
You are certainly correct that we were blindsided by the astronomical increases in medical health care costs. I began my career with the State of Ohio in 1970, and always believed my wife and I would have fully paid health care coverage for the rest of our lives. Too good to be true!! But I always knew that we would not have Medicare Part A premiums paid by OPERS and that was the reason for the second jobs. In no way do I begrudge those of you eligible for this benefit, and understand that some folks had circumstances that prevented them from working non-state jobs to accumulate the credits necessary to have Med A paid for. Again, my hat is off to our OPERS management for their untiring efforts to do all they can for their retired members!!!!
So I am trying to understand the joint retirement for those of us who worked in the schools (SERS) then do to cut backs were forced from the school system & found employment under (OPERS) employers. I was & told my retirement acct w/SERS must stay in that system until I retired & I was not able to transfer it to our new system. I was told I would not lose any contributions that way (ex: would still rec’v both mine & the schools contributions to my SERS acct) & depending on the system I had the most years of service, is the system I would retire from but was assured my acct would remain my acct in its entirety. Now I am understanding that the two systems decided between yourselves that you will now give a % (currently 5% but this could change, likely to be a higher %) of my SERS acct to them for holding it (against my wishes) & then transferring my contributions that belong to me to OPERS & then keeping a portion of my balance for their profit? I hope I am mistaken but that is how it appears to read to me…
Trisha,
We are not keeping 5 percent of your contributions. The 5 percent refers to the way the pension systems exchange funds with each other regarding joint retirements. It will not affect your benefit amount.
–Ohio PERS
I regularly visit OPERS website and read the newsletters sent to me to keep updated on all the topics that could affect my retirement. I was shocked today to learn that the service credit that OPERS accepted from STRS for me earned by intermittent substitute teaching several years ago that provided me about 4-5 months of additional service credit on top of my OPERS credit has now been reduced as of February 1 due to the impact of these legislative changes pertaining to members’ time spent in more than one system. If I understand it correctly, calculations of time awarded are now being done on month to month basis and because teachers receive a full year of service credit and do not actually “work” 12 months, this has prompted this change and allows OPERS to adjust (reduce) service credit earned in STRS. If I had known of this impact, I may have retired at end of January when I still had my entire STRS service I read back over this information but I feel it does not directly explain these recalculations and furthermore, it has always been true that a member cannot earn more than one year’s worth of service credit and concurrent time does not earn someone extra time.
My STRS time was both concurrent and non-concurrent and OPERS was given me credit for only the non-concurrent to begin with. But now they are reducing this and I am losing about half on what I thought I had so my overall service credit is less now than what I had 2 weeks ago.
Warning to others in like situation: you better check with OPERS because you are probably going to experience this same reduction.
I do thank one of OPERS phone counselors, Sandy, who was immensely helpful in researching my information and explaining what is actually occurring with this change.
Carolyn,
The issues likely are because of the way we have to determine service credit and evaluate for concurrent time when there is OPERS credit in the same year.
If you earn a year of OPERS credit in any one calendar year, your time in STRS would not be applicable because members can’t earn more than one year of credit during a calendar year.
If you earn partial OPERS credit in one year and have STRS time that same year, we divide your credit percentage by 12 and multiply the result by the number of non-concurrent months in which you earned the STRS credit.
–Ohio PERS
If I may ask for a clarification. I do have concurrent time in OPERS and STRS. I understand that concurrent time can only be counted as one year of service time. I do not have enough service time in STRS to qualify for a pension from STRS. As I am not yet retired and will retire under OPERS, what happens to the funds that have been withheld for the STRS pension and are still sitting there? Can these funds be reimbursed to me or can they be placed in the OPERS annuity program? Or do I have to apply to STRS to get the funds back since I will not be retiring from STRS? Can I do this before I retire from OPERS? Or are the funds lost to me?
William,
We recommend that you contact STRS for clarification. You’re correct that concurrent time won’t provide any additional service credit. However, depending on when the concurrent time was earned, and if you would decide to go with joint retirement, it could impact your final average salary. If it does not impact your FAS, you are now permitted to refund the contributions at STRS without penalty.
–Ohio PERS
How do pension contributions from State benefit my retirement? Currently, the online calculator shows only my contributions to my pension. Do I need a certain amount of years before these contributions make a difference? Please advise.
Linda,
We’re not exactly sure how to answer your question, but we will go with the odds and assume you are in the Traditional Pension Plan.
It is true that the Benefit Estimator indicates only your contributions and does not reflect the employer contributions. But the vast majority of the employer’s contribution goes toward pensions, and those contributions essentially are reflected in the pension calculation.
Remember that the benefit formula is your Final Average Salary x (times) your service credit years x (times) 2.2 percent.
The Benefit Estimator indicates your accumulated contributions, but that is not used in the calculation. It is your projected FAS and the number of years that you believe you’ll work that are used.
Remember that the accumulated contributions figure might differ from the current value of your account, which you see when you log in. OPERS offers an enhanced refund for those who at any time wish to cash out their Traditional Pension Plan accounts. Members who have more than five years but less than 10 years of service credit earn an additional 33 percent in account value. Members who have 10 or more years earn an additional 66 percent. So your total account value might be higher than your accumulated contributions.
–Ohio PERS