Answers from our education road shows
Here are a few issues that often came up when we met with members
By Marc Tubbs, Ohio Public Employees Retirement System
Jan. 8, 2020 – The OPERS leadership and education teams traveled all over Ohio last fall, sharing a presentation about our health care and pension funding needs and potential solutions for the future. Here are answers to a few of the questions we’ve heard most frequently during these sessions.
Q: I know OPERS has proposed doing away with the OPERS-sponsored group medical plan for pre-Medicare retirees beginning in 2022. Will you offer something different or am I on my own?
A: Under the current proposal, we would replace the OPERS sponsored group plan for pre-Medicare retirees with an allowance that retirees would use to purchase the plan of their choice on the open market. This allowance can be used to help pay premiums for the plan you choose or for other health care expenses.
The full monthly allowance amount hasn’t been determined yet but, like now, your percentage of the total allowance amount will be based on your age and years of qualified service when you retired and first enrolled in the OPERS health care plan. In addition, the current proposal includes an open Health Reimbursement Arrangement. This means you can purchase the plan of your choice without restrictions to certain plans or carriers. Additionally, OPERS will contract with a vendor who will to assist you in finding a plan on the open market that best fits your needs.
Q: The Windfall Elimination Provision is reducing the amount of Social Security benefits I receive from my years working in the private sector. Is there anything that can be done to change this provision?
A: According to current law, retirees who are eligible to receive a pension from OPERS (or other public retirement systems) often see their Social Security benefit reduced if they qualify for Social Security retirement.
Last year two bills were introduced in Congress to update the Windfall Elimination Provision: the Equal Treatment of Public Servants Act, sponsored by Kevin Brady, R-Texas, and the Public Servants Protection and Fairness Act, sponsored by Rep. Richard Neal, D-Mass.
OPERS has endorsed both WEP reform bills, as you can read in this PERSpective blog entry. We believe both bills offer a workable solution to a problem that negatively affects millions of Americans, including many OPERS members.
Q: I made money on my personal investment account for the last several years. Why does it seem like OPERS’ investments are not seeing the same type of gains?
Comparing the performance of the OPERS pension fund to an individual investment account is not an apples-to-apples comparison. Individual investors invest their personal income. An individual portfolio receives contributions and grows until you retire. At retirement, the account switches to pay-out status.
OPERS is an institutional investor. We invest to pay not only future benefits but also current and continuous benefits, even as payouts sometimes exceed contributions to the fund. The OPERS portfolio must be designed to grow and distribute assets at the same time.
For example, in 2018, OPERS received approximately $3.5 billion in member and employer contributions. Also in 2018, OPERS made approximately $7 billion in pension and health care payments. We are paying out more than twice the amount that is received through contributions. The difference is made up through investment returns.
OPERS invests for the long term and for the benefit of all current and future retirees. We don’t adjust plan design or investment policy as the result of one or two good or bad investment years.
Marc Tubbs
Marc Tubbs is the manager of OPERS’ Education division. He oversees the development and delivery of educational content that helps members and retirees make sound financial-wellness and retirement-related decisions.
with the removal and migration of retirement health/medical coverage to a stipend-like assistance it is highly recommended that OPERS provide a 401(h) option to all current working members in OPERS to supplementally save. See ICMA-RC’s plan (https://www.icmarc.org/products-and-services/retirement-health-savings.html) and Washington University (https://wustl.app.box.com/s/3de458auex8gnmxgmu0j8pt1ko5qk68k) as examples – kindest regards; Tom Komlanc
What are the chances of the windfall provision law being changed or eliminated and what would the timeline be?
Congress has until the end of 2020 to pass WEP reform. If WEP reform does not pass in 2020, the process starts over.
It will be a miracle to get any WEP GPO legislation passed. No support.
For any pers members don’t count on it ever passing.
WEP was initiated in 1983 .
Almost every year since then, supporters of Public Employees have tried to get it reformed by Congress.
The reform as NEVER been supported by Congress.
I have heard about WEP reform during the entire 26 years I worked for the State, and nothing has ever come of it.
I would not get your hopes up.
Is there a link that lays out in detail all of the proposed changes to health insurance benefits? In the absence of that, can you answer the following question:
Will pre-Medicare retirees who are already retired and enrolled in the group plan prior to 1/1/2022 be dropped from the plan and given the stipend and expected to find healthcare insurance coverage on the open market, or will there be any sort of grandfathering provision? Put another way, assuming there are two individuals with the exact same age and service credit except for their retirement eligibility dates (say “Mary” can and does retire as of 11/30/21 and “John” can and does retire on 1/31/22), on 7/1/2022 are they now both receiving a stipend of some sort and expected to purchase their own health insurance?
Mike,
Beginning Jan. 1, 2022, all pre-Medicare retirees will move to an open market model regardless of their retirement date. Instead of purchasing health care through OPERS, you will be given an allowance, based on your age and years of service, towards your health insurance premiums and other eligible health care expenses.
Julie, OPERS
Non Medicare retirees – those who were hired when Medicare deduction was not made – how is this being handled
Teresa,
The Board voted to keep the current Medicare A premium reimbursement policy. There is no change.
Julie, OPERS
What will happen to retirees on the open market if the Affordable Care Act is eliminated or provisions for protecting pre-existing medical conditions are eliminated. Does OPERS have a backup plan in the event that either of these should occur?
Is there a site we can access for pre-Medicare retirees to test shop insurance plans in order to get an idea of what’s out there and cost range?
Scott,
All ACA qualified plans for 2020 are available for review at http://www.healthcare.gov. Click on the “Preview Now” button under the “See Plans & Prices” section just below the main body.
You will be asked a few questions about income and where you live. You can then preview 2020 plans in your area. In addition, based on your income, you will find out whether you qualify for the tax credits, also known as the federal subsidy, that can lower your premiums.
Please know that rates, plan options and carriers are likely to change each year.
Julie, OPERS
When OPERS moves to an allowance for pre-Medicare retirees to find their own plan on the open market, would this allowance be available for one to use to pay toward the premiums, if, for example, they chose to go on their spouses health plan. This is assuming that there would be an added cost for the spouse to add them to their plan.
Pre-Medicare retirees can use their Health Reimbursement Arrangement allowance, or HRA, to pay premiums for the health care plan of their choosing. This plan can be offered through the healthcare marketplace, a spouse’s employer or any private health care insurance carrier.
Julie, OPERS
I am surprised and disappointed that my wife and I (both OPERS retirees) had to find out via a text from a friend about the elimination of our OPERS health plan beginning in 2022. The lack of information and answers to questions about what the future holds is unsettling and upsetting.
Shouldn’t OPERS have prepared a system-wide email to members to be issued immediately following the Board’s vote? Or at the very least, something on the OPERS website with more details?
We have communicated and engaged with members and retirees for the last two years about the problems we are facing and potential solutions regarding health care. These have included the monthly Board Report, member newsletters, presentations across the state and regular blog posts.
To ensure you are receiving our communications, please check your online account to make sure we have your correct email and mailing address. You can access your online account through opers.org.
Julie, OPERS
Will the stipend be added to our monthly benefit or go into a separate account?
And I had to drop medical this year due to no longer able to afford it with mounting medical bills. Do I still qualify for the stipend?
The Health Reimbursement Arrangement, or HRA, is a separate account. Anyone currently eligible to participate in the health care program will continue to be eligible.
Given that the problem for all pension funds (as stated many times by many sources) is that people are retiring sooner and living longer, why is OPERS rewarding early (pre-medicare) retirement with a stipend three times larger than that given to post-medicare retirees ? Seems to me that either a person can afford to retire before becoming eligible for Medicare or they cannot. Heath care cost is a part of that calculation. Post-Medicare retirees are paying out of pocket for medicare , supplemental, and part D drug coverage and then get a smaller stipend. I don’t get it.
The health care plans available for those under 65 are much more expensive, compared to the plans offered to Medicare retirees. To compensate for the price difference, OPERS is providing pre-Medicare retirees a larger base allowance amount.
So those who either chose to continue to work or are forced to for one reason or another until they are 65 + are essentially penalized by not given the same reimbursement as those who chose not to continue. Makes no sense
Once pre-Medicare retirees become eligible for Medicare, their allowance percentage remains the same but the base allowance amount changes to $350. Medicare covers 80% and we provide an allowance for a plan to cover the other 20%. A pre-Medicare plan must cover 100% of costs.
I understand OPERS doesn’t have the exact figures on how much they will give a retiree instead of insurance until they are medicare age but there should be a range at the very least. Also I realize all that is promised is my pension but in my years ive been here which is 32 spouses are now exempt when a person retires from health care now this. It seems to me the writing is on the wall where soon it wont be offered in any way shape or form. Respectfully submitted
Beginning Jan. 1, 2022, all pre-Medicare retirees will move to an open market model. Instead of purchasing health care through OPERS, you will be given an allowance, based on your age and years of service, towards your health care premium and other eligible medical expenses. We’ve created a dedicated page on the website for all 2022 health care changes, including an updated allowance table, at https://www.opers.org/healthcare/health-care-2022/index.shtml.
Julie, OPERS
If the HRA allowance is determined by the date the retiree 1st signed up for health care, will the retiree that was on pers health care for one year but has been providing health care for themselves for the past 8 years be treated the same?
The allowance amount is based on your years of service at retirement and your age when you enroll in OPERS health care. To determine your allowance amount, go to https://www.opers.org/healthcare/health-care-2022/index.shtml
So in 2022 when this starts is pers giving the money back that i pay for insurance though pers , plus additional money to purchase new insurance though market?
Instead of deducting the cost of health care from your pension check, you will receive an allowance in a separate account to be used for your eligible health care expenses. Your net pension amount will increase.
so it seems if you have dependents age 26 or less, then retirement is no longer a reasonable option as dependents would get no healthcare help from opers ;so if you keep working and do not take your “allowance amount” for this reason you basically Lose that money and are at a disadvantage and not taking the money you have coming to you because you want to help your college and high school age kids with their insurance?? i thought Obamacare required kids be covered until age 26?
Eli,
Since OPERS will be providing funding and not a group plan beginning in 2022, the dependent coverage requirement in the Affordable Care Act does not apply. A retiree could use his or her own HRA to be reimbursed for qualified medical expenses for an eligible dependent.
Julie, OPERS
Thanks for the information.
Pre-Medicare retirees can use their Health Reimbursement Arrangement allowance, or HRA, to pay premiums for the health care plan of their choosing. This plan can be offered through the healthcare marketplace, a spouse’s employer or any private health care insurance carrier.
My Question.
Will the company that transitions Pre-medicare retirees to the open market have access to the available private health care insurance carriers or solely the plans available in the ACA Healthcare marketplace?
OPERS anticipates offering an open coverage model in which participants will be able to select a plan that meets their individual needs from the OPERS selected vendor or from a vendor of their choice. We will be communicating extensively with retirees over the next two years until the changes go into effect on Jan. 1, 2022. We encourage all OPERS members and retirees to read their mail, refer to our website, blog and social media sites for more information.
Julie, OPERS
I understand the pre-medicare amount provided will be able to be rolled over to the next year if it is not all used, what all can that money in the HRA be used to pay for other than insurance premiums and deductibles?
Mary,
Beginning Jan. 1, 2022, your monthly Health Reimbursement Arrangement (HRA) allowance can be used for any eligible medical expense. As you note, if you don’t use it all each month, it can be rolled over for later use. Qualified medical expenses as determined by the IRS can be reimbursed. For more information on qualified medical expenses, go to https://www.irs.gov/pub/irs-pdf/p502.pdf.
Julie, OPERS
As a group B member my eligibility for healthcare after pension reform in 2012 was 20 years of service and 60 years old. If I retire in 2021 and cannot enroll in healthcare because I am not yet 60 (with a reduced pension) will I still receive an allowance when I age into healthcare at 60 in 2025? Or would you have to be enrolled in healthcare before 2022 to be “grandfathered”? I see that I will lose eligibility if I retire after 2021 unless I have an unreduced pension. I have already called in to speak with a representative but the answer was not clear. I suggest that more examples for group B members are necessary in your educational materials, including some with reduced pensions retiring in 2021. This will be the second major change for us in the last stretch of our careers and we need to know approximately what our allowance would be after 2024 because some of us would not be eligible until that time or later. Of course that’s assuming we’re eligible at all which as I said was very unclear.
Thank you for the suggestion. We will be providing more examples as we communicate the health care changes.
To answer your question, any retiree currently eligible to participate in the health care program will continue to be eligible after Jan. 1, 2022. You can “age into” health care by waiting until you’re 60 before accessing your allowance.
The last day to retire under the current rules is Nov. 30, 2021 in order to have an effective retirement date of Dec. 1, 2021. (Your effective retirement date is always the first day of the month following your last date of employment. Retiring in December 2021 would have an effective retirement date of Jan. 1, 2022.) Also, working longer means you will have a larger pension as well as a higher percentage on the allowance chart.
Julie, OPERS
I will turn 65 in June 2022. Will I have to go through the process of getting health insurance through the pre-Medicare process for those few short months, than turnaround and go through the process of getting health insurance through the Medicare process?
Yes. Beginning Jan. 1, 2022 you will receive an allowance you can use to reimburse eligible medical expenses, including the health care plan of your choice. This plan can be offered through the healthcare marketplace, an employer (you or your spouse’s) or any private health care insurance carrier.
Once you are eligible for Medicare, typically 65, you will enroll in Medicare parts A and B and enroll in a medical plan through the OPERS Connector.
For more information about navigating the Medicare application process, go to https://www.opers.org/life-events/.
For more information about the OPERS Medicare Connector, go to https://www.opers.org/healthcare/plan-options/ViaBenefits/index.shtml.
Julie, OPERS
I am confused about this “helps” $3000 amount that I can take off of my husbands taxable income. I am trying to save money doing taxes online and it says he can “take” the deduction (take $3000 off of his taxable income) as he was a corrections officer that went thru the riot and had to take disability. (Still put in over 25 years) He pays over $300 a month for insurance and it is taken out by OPERS to Med Mutual.
Is he eligible to take this reduction ?
Paula,
Please call us at 1-800-222-7377 and a member of our staff can look into your situation. However, you should talk to a tax professional for tax advice.
Julie, OPERS