Help OPERS repeal the ‘Cadillac tax’
The Ohio Public Employees Retirement System is asking members to help repeal the “Cadillac tax” provision of the Affordable Care Act.
This excise tax, scheduled for 2018, would be assessed to health care plan providers when their coverage value exceeds certain thresholds. It would cost OPERS tens of millions of dollars if we kept our health care plan for retirees under 65 the same as it is today, something we cannot afford to do.
The result would be dramatically higher out-of-pocket health care costs, including deductibles and co-pays, for our retirees.
OPERS is advocating for repeal of this excise tax, and we need your help.
We ask you to contact federal legislators and the White House now to encourage them to repeal the Cadillac tax. Congress has introduced several bills that would do so, and your action will send a message to Congress and the White House that retirees in Ohio are being hurt by this tax.
The OPERS website Cadillac tax page contains a sample letter that you can cut and paste into an email. We ask that you send it, or your own written or phone message, to:
- President Obama
- House Speaker Paul Ryan
- House Minority Leader Nancy Pelosi
- Senate Majority Leader Mitch McConnell
- Senate Minority Leader Harry Reid
- Senator Orrin Hatch
Members of the Ohio Congressional delegation have been supportive of our efforts. We’d ask that you thank them for their actions. You can find a link to their names and email addresses on the OPERS website.
Your action will show that OPERS members are serious about removing this excise tax from the Affordable Care Act and to keep affordable health care coverage a realistic goal.
Details of the Cadillac tax
The Cadillac tax is scheduled to begin in 2018. It is a 40 percent excise tax that would be imposed on OPERS and other plan sponsors when the total premium cost of a health care plan exceeds $10,200 for re-employed retirees and retirees under 55. The threshold is $11,850 for retirees 55 and older who are not re-employed.
OPERS’ current plan costs $11,500. With the rising cost of health care, we would be subject to $25 million in taxes the first year if we retained the same level of health care coverage we have now. A recent study showed that nearly half of U.S. employers will be subject to the Cadillac tax in 2018, and that 80 percent of employers would reach it by 2023.
Health care plans such as ours could not afford to pay this tax and thus would shift more costs to retirees. OPERS has moderately increased out-of-pocket expenses, including deductibles and copays, for 2016 in anticipation of the excise tax.
The time to act is now
Because many health plan providers determine coverage and cost structures years in advance, the Cadillac tax needs to be addressed now. We cannot wait until 2018 for a solution; by that time, drastic benefit cuts or substantial increases in out-of-pocket costs will have taken effect.
Thank you for your considering this call to action on the Cadillac tax. Your efforts can help keep health care coverage affordable for thousands of OPERS retirees.
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.
Thanks, Sent to everyone listed.
Help you repeal the Cadillac tax ? Who has helped the retirees over and under 65 that are losing their spouses health insurance in 2018? Who has helped the retirees that are having their part b reimbursement fazed out? I can bet that it is just a matter of time before OPERS decides to discontinue paying health insurance for any retiree. As your disclaimer always says , OPERS does not guarantee health insurance for any retiree. Oh by the way OPERS does provide health insurance to its employees and their spouses. How’s that fair ?
Dwr,
We made those needed changes to our health care coverage because of rising costs, longer life spans and changing demographics. We are asking members to help us repeal the Cadillac tax, but don’t approach it as if you’re doing us a favor. If the Cadillac tax remains, our members are going to pay higher out-of-pocket expenses in the future. We’d like to avoid that.
–Ohio PERS
I am sorry I may live longer than who? it’s a given that prices go up over time. OPERS ‘ S MIchael P .. I worked over 30 years contributing to OPERS. cHanging demographics? What does that mean ?
Dwr,
Changing demographics means that more baby boomers are retiring, which could cause a strain on the system. Yes, prices rise over time, but it’s been widely known that health care rates are spiraling upward. Forbes reported this summer that health care costs outpaced inflation in all but one year (2008) from 2005-2015. In several years they were far above the inflation rate.
–Ohio PERS
Your Medicare eligible retirees are now paying more for their insurance because of legislation you started and got passed, but we are supposed to pity those who will end up in the same situation, but didn’t protest what was happening to us. It is beyond me how OPERS never heard of the Baby Boomers who would be retiring and needing benefits at about the same time and failed to make plans for the inevitable crunch it would cause. You had 40 years notice but no insight or caring.
Hello – so my question as a retiree is, once our health care coverage is dropped, are we eligible for the free health care that is provided through Medicaid that people who meet the low income criteria are entitled to? Because if that is the case then I’ll just drop my coverage right now.
JL,
If you are eligible and enroll in Medicaid, and also are enrolled in Medicare Parts A and B, we encourage you to call OneExchange to find out what plan would suit you best. There is no need to drop your current coverage, as it will end on Dec. 31 regardless.
–Ohio PERS
Right on.
Apples and oranges. OPERS pays for their employees’ health care out of their operating budget. The healthcare fund is used to pay for retirees’ healthcare costs. The money can not flow from one fund to the other. OPERS has had to make some tough choices to keep the healthcare fund viable. The healthcare fund belongs to the retirees. Any savings belong to the retirees and strengthen the healthcare fund. OPERS is providing leadership in avoiding the Cadillac tax. The Cadillac tax would weaken the healthcare fund.
Anger, I can understand but as you stated Apple to Oranges. Things happen where do we go from here? As long as we are still in the program/system we all need to work together. It’s sad but true sometimes it may seems that we’re getting a raw deal but what else can we do? If something is better go for it or you can stress yourself out.
Charlotte, I realize that it is hard to keep to keep track of the threads in this blog. My comment was in response to DWR’s linking of retirees’ healthcare and OPERS employees’ healthcare. I am not angry about the changes. It has been tough, but I think that I am done with the process and will, at least in the short term, be better off.
Maybe we need to pay closer attention to nominating and voting for the OPERS Board of Trustees!?! Keep this in mind: They are the governing body of the system, and they are responsible for the administration and management of OEPRS. They review and formulate policies concerning the members, contributors and benefit recipients of OPERS, and the OPERS office staff. They can also authorize the investments made with the system’s funds.
Cheryl,
The board does approve the annual investment plan, but the trustees do not “authorize” individual investments. Those decisions are made by our Investments staff.
–Ohio PERS
my spouse is only 61 and her monthly premium doubled 250. to 500. per month
opers should not pay for spouses who NEVER paid a dime into the system, that’s part of the problem, also the many years of free insurance
The provision in the American Health Care Act penalizing I feel employees and employers for having better health insurance than that required by law is counterproductive and an extremely flawed rule. I don’t recall that the healthcare plans for either Congress or Federal Employees are subject to such a penalty, and I understand they are far superior to what most of US Citizens have. I encourage legislators to stop penalizing taxpayers in such a manner and strike down the so called Cadillac Tax.
HARRY REID AND NANCY PELOSI HAD OBAMA SIGN AN ORDER TO LET THE CONGRESS AND EMPLOYEE BE EXEMPT FROM OBAMACARE.WHAT GOOD THE THE COMMON PEOPLE SHOULD BE GOOD FOR THE FEDERAL EMPLOYEES.
You can all thank all who voted for Obama. The had working people are going to pay this tax
Absolutely agree.
Maybe I can’t add. Let’s see. In 2018 the HRA deposit will be $337.00 per month. That’s $4,044.00 per year. Let’s say that eye and dental is still provided by OPERS in 2018 that costs ~$100.00 per month. The total would cost OPERS ~$5244.00 per year per Medicare Retiree.
Since OPERS is not directly (Except for the HRA donation) providing health-care to retirees, the difference between $11,850.00 and ~$5244.00 is ~$6606.00?? So who is costing OPERS more than $10,200.00 or $11,850 .00 per year??
John,
The Cadillac tax does not apply to the Connector. Actually, it mostly applies to employee-sponsored plans. We have made the argument that retiree-only plans should be exempt because our plans face significant cost increases compared with active-employee plans.
–Ohio PERS
Sound like OPERS should have reduced the unguaranteed health benefits a little more, and should have used the funds instead to retain the “guaranteed” pension benefits like the 3% COLA. I know this was suggested, requested… and ignored. Does the OPERS board have any foresight? This legislation has been in the works and in place for quite awhile now. With the elimination of our spouses from the healthcare and the loss of the COLA, who can afford to retire anyway? The answer is the retire/rehire bandits. Why are we paying for their healthcare anyway? How many OPERS Board mistakes are we supposed to pay for?
Greg,
Retiring and then being rehired is allowed by Ohio law. Our first rule is that they have to take their employer’s health care coverage if it’s offered.
Everyone is entitled to their opinion on the COLA, but it was a necessary step for us to take in order to preserve our defined benefit pension.
–Ohio PERS
Health benefits are not taxed, as long as OPERS avoids the Cadillac tax; but pension benefits are taxed. Having a larger HRA and no COLA means more money in your pocket.
If this “Cadillac Tax” starts in 2018…why are OPERS members getting hit with it in 2016?
Vickie,
We are providing for modest increases in deductibles and co-pays next year in response so that there will not be a huge increase in these out-of-pocket expenses and/or coverage limitations in 2018. We are not alone in making this type of adjustment.
–Ohio PERS
What can I do to help?
Barbara,
We ask that you email the people on the list. You can cut and paste the sample letter, or just simply say that you support repeal of the Cadillac tax provision of the Affordable Care Act. Speaker Ryan only gives a phone option for people outside his district.
–Ohio PERS
Once the tax is over turned will OPERS reduce the increase that they did on my health care for 2016? On your site it says the increase was due to preparation for this.
Joseph,
We certainly would take a Cadillac tax repeal into consideration when we re-evaluate our plan design for 2017.
–Ohio PERS
I emailed all reps except it won’t let me email Paul Ryan directly from any link…
Janice,
Thanks for your support, and we noticed the same thing about the House speaker’s website. It requires you to be in his home district. That’s why we wrote in the blog we would appreciate emails or calls to those people on the list. If we discover a way for everyone to reach the House speaker by email, we’ll update the link.
–OhiO PERS
please repeal the cadillac tax this will hurt my retirement …
I’m a little confused on this “Cadillac Tax”. Hope you can explain how this works since retirees healthcare has been revamped already. For retirees 65 and older that are on Medicare and have a HRA from OPERS to use to choose our coverage-how exactly does that effect us? The Medigap insurance I choose has no deductibles or out of pocket – I selected this specific coverage for that reason. As I understand it OPERS is no longer insuring us-only giving us the monthly HRA and we select our own insurance carrier? OPERS will no longer pay for any spouse coverage as of 2018, I believe so that should have cut down on alot of expense, right? Also, why is it the retirees that seem to be getting hit everytime there is the need (which seems to be yearly nowadays)? Why aren’t ALL state employees (unretired) getting to share in the price increase of healthcare?
Will welcome an answer to these questions.
Daisy,
You’re correct in the the Cadillac tax really doesn’t apply to those on the Connector. And you’re right about how the Connector works.
All of our members certainly have had major changes in health care affect them since 2012. One of the biggest changes is that they have to have 20 years of service time and be at least 60 before they can access our coverage. It used to be 10 years.
–Ohio PERS
So , who worried about those of us that were affected by all the past 2 – 3 years of changes in OPERS coverage in healthcare. ? Good luck future retirees? Maybe you should pay more attention to your future retirement with OPERS. Our healthcare is in jeopardy .
wow , we can all look forward to O Bama Care .
I will help by emailing our Federal Congressmen.
You want us to help you repeal the Cadillac Tax? Who is helping retirees and their spouses? We can no longer afford healthcare premiums and in 2018 the spouses will have no coverage. In fact in our case after 2016 we will no longer be able to have OPERS health coverage if we want to have a roof over our head and some food in the fridge! You say you “modestly” increased expenses to retirees and their families in “anticipation” of something that has NOT happened yet? Please tell it like it is. You seriously hurt retirees and their families!! We will never see any savings if this tax is repealed. Now you won’t even cover certain supplies free that other insurances cover such as diabetic supplies. You think this doesn’t hurt diabetics. We worked hard for many years, and our spouses were right there beside us. We thought we were going to receive good retirement benefits and this is what we get?? There should have been a clause written in for older retirees. The changes should have only affected those who would retiree from 2015 or 2016 forward. This is just disgraceful in my opinion.
Amen. You are correct. Unfortunately it falls on deaf ears at OPERS .
I was under the impression that all of these premium/copay increases that we have been seeing are to get ready for the Cadillac tax. Now, it sounds like these may have been for something else, if we are not yet seeing the increases that you are talking about.
Jim,
Co-pays and deductibles did go up some in 2016 solely because of the Cadillac tax provision.
–Ohio PERS
Thank you Obama for all these wonderful changes. The non affordable care act is hurting everyone that is working or retired. They drones of society are still sucking the system dry , and the working stiff is still paying.
Where can I find all the necessary information to email the people on your list?
MJ,
Use the link in the blog to access the Cadillac tax page on our website.
–Ohio PERS
I did its not there
Charney,
We updated the Cadillac tax page last week. Because Congress delayed the tax by two years, it’s not necessary for our members to lobby members of Congress.
–Ohio PERS
I have e-mailed the President and all reps. Now if we could get this repealed and the “Windfall Act” as well. We should be able to collect from OPERS as well as social security. We worked and contributed with plans on receiving those benefits. I know very few people who actually recieve fantastic health care and retirement benefits.
I agree about the Windfall provision also. The government is robbing those of us who contributed our share into SS while working in jobs requiring this deduction. We should be able to collect the full amount; our public pension should have no bearing on our SS pension.
And we legimately qualify for Medicare Part A which OPERS now finds necessary for all its Medicare-eligible retirees in order to qualify for the Connector.. As a result, OPERS feels obligated to pick up the cost of Part A for those who did not “earn” it.
Carolyn,
We didn’t just now find it necessary to offer health care coverage for members who don’t qualify for premium-free Medicare Part A coverage. Ohio law states that we have to offer coverage to this group. We’d suggest contacting your state legislators if you object.
–Ohio PERS
Amen Carolyn.
Carolyn , let’s recap. We get penalized by social security for having a government pension. We get no credit from OPERS for saving them the part a premium. We are losing our reimbursement for part b Medicare. We are losing our spouses healthcare . What’s next?
So where is this sample letter and the e-mail addresses for the politicians to be contacted?
Brenda,
Use the link posted within the blog to go to our Cadillac tax website page. You’ll find the sample letter there.
–Ohio PERS
Why doesn’t opers write a patition and have the members sign saqme and opers send this to congress
Anthony,
Thanks for your interest. We might do that in the future if time permits. We need a more-immediate plan right now, before Congress breaks for the holidays.
–Ohio PERS
Sent letter to all listed. Lets hope this helps. I have shared with others hopefully they will act upon this issue.
So who IS costing OPERS more than $10,200.00 or $11,850 .00 per year?? ” You’re correct in the the Cadillac tax really doesn’t apply to those on the Connector”,(Michael Pramik).
Oh, I understand now!! Whippersnappers less than 65 years are not covered by MEDICARE!!
Solution is to fix the whole ACA not just a small part such as the “Cadillac tax”.
John,
You do realize that our insurance coverage for those over 65 is supplemental to Medicare while coverage for those under 65 is not, right? So the under-65 plan naturally would hold a higher value.
–Ohio PERS
Repeal this taxs please
sent letter to every on but I couldn,t get one sent to paul Ryan
Margaret,
We’ve also noticed that, but his website does have a phone number for those who would want to call.
–Ohio PERS
Why didn’t we hear more about this Cadillac Tax before now? The problem is and always will be you had free insurance to all for years and will continue to give some insurance to people who never paid a dime into the system I think until 2018. I did write to everyone you had on the list in my own words to some
To say that my spouse never paid into the system is unfair. That’s what an OPERS rep told me at a seminar! We were married and I paid into the system with the expectation that when I retired ( after over 30 years of paying into the system ) we would have health insurance. We paid into the system. What OPERS did was change the rules in the fourth quarter with two minutes left in the game!
It’s just a matter of time before OPERS discontinues paying health insurance period. Beware ; those paying into OPERS. Listen to their disclaimer .
Dwr,
The health care changes that OPERS made in 2012 have put the health care fund on firmer footing. One of the decisions that was made was to discontinue coverage to those who did not contribute monetarily to the system.
–Ohio PERS
My wife paid into the system. We are married filling jointly on our taxes. Even though we had only one income ( mine) we as a married couple paid into OPERS for healthcare when we retired. ORERS failed to plan and execute a plan years ago to deal with demographics , longer life spans and the baby boomers.
DWR,
With all due respect, spouses of public employees do not pay into OPERS. Premiums do not support the health care fund. They are payments made to cover a portion of health insurance for that year.
Money for the health care fund comes from the employer contribution for public employees. Employers do not remit money to us for spouses of public employees.
No matter which way you try to interpret these facts, it can never result in money coming into our health care fund from the spouse of a public employee.
–Ohio PERS
Good, but she never paid into the system herself,she herself was never part of opers, you are right opers wants out of the health care 100% except maybe to the big shots, the little people can watch it go bye,bye
Hey M Pramik, what about those that never paid into social security. OPERS picked up their part a premium. OPERS is ok with paying that health care premium , yet argues that spouses never paid into the system so they do not deserve health care insurance. Double standard? If it benefits OPERS it’s ok!
DR,
State law mandates — it’s a mandate, not an option — that we provide health care coverage for those members who did not qualify for premium-free Medicare Part A coverage. This is the least-costly, most-efficient way to do it. Unlike spouses, these members contributed to OPERS during their working careers.
–Ohio PERS
the spouses are still using the health care system and putting it under a load which it cant handle never work for opers should not have benefits from it, no matter where the money to pay for health care comes from
Jeff, you obviously do not have a spouse that needs healthcare. Otherwise you would think differently.
“You do realize that our insurance coverage for those over 65 is supplemental to Medicare while coverage for those under 65 is not, right? So the under-65 plan naturally would hold a higher(COST!!) value.”(Michael Pramik). Yes, I understand that.
“Solution is to fix the whole ACA not just a small part such as the “Cadillac tax”. Everyone pays their fair share. Appropriate withholding during working years would finance future retirement health-care. MEDICAREACA withholding during working years should include ALL INCOME. A credit balance would be maintained for each worker. If a retiree dies before exhausting his balance, the remaining moneys return to MEDICARE to fund those who need care. OPERS has a similar rule. If a retiree dies before using all of his HRA funds and doesn’t have a beneficiary to use those funds (within 24 months) they fall back to OPERS. I believe that OPERS uses that fiduciary calculation to help with their future health-care costs.
BTW, MEDICARE should be allowed to bargain for medications. Which it can’t do now.
John,
Thanks for the reply. It might be better directed to your Congressional representatives, who have the power to act on the ACA. If you read our latest website update, we are now hoping that we can at least delay the Cadillac tax by two years because the president has indicated he would veto an outright repeal.
–Ohio PERS
So congress delays the Cadillac tax as I suggested to you that they would, asking you three times not to harm those pers retirees who are not yet at Medicare age. So, ARE YOU GOING TO FIX WHAT YOU HAVE DONE AND RETURN BENEFITS TO THE LEVEL THEY WERE IN 2015? Tom
Thomas,
As we already have said, we certainly will take the delay into consideration when we set our health care rates for 2017.
–Ohio PERS
It looks like the Cadillac Tax was put on a two-year hold in the budget bill!
I don’t remember your exact words (several years ago) about the Windfall provision which I wanted you to take a stand in favor of the feds repealing. But you were afraid if it were repealed it would hurt other retirees or OPERS’ ability to adequately offer them affordable health care in the years to come?
Like I said, I don’t remember exactly how you put it, only that you were not in favor of eliminating it.
Can you tell me again why, please? It’s been a few years. I think others might want to know, too since we are going to band together to protest the Cadillac tax. Thanks. JA
JA,
We have never said that we were not in favor of eliminating the Windfall Elimination Provision (or the Government Pension Offset, which affects spouses). What we mentioned in the past is that we were not actively campaigning for their elimination but rather concentrating on keeping Ohio a non-Social Security state.
By that, I mean that when our government relations staff members speak with members of Congress and the subject of Social Security comes up, our focus is on retaining that status for Ohio.
–Ohio PERS
Please explain to me exactly what the Government Pension Offset is-I’m familiar with the Windfall Tax. Thanks
Daisy,
It’s like the WEP, only it applies to spouses of public workers who also have time in the Social Security system.
–Ohio PERS
This tax has been pushed back two years. opers is a little late in letting us know. Some people think it may be repeled with a Obama gone ,others do not, and others think when it comes up again it will be pushed back again
Jeff,
Actually, we updated our website a week ago (Dec. 11) with the news that some members of Congress were pushing for a two-year delay in the tax. Congress proposed the delay yesterday, and it was passed just this morning.
But thanks for the reminder. We’ll update our blog next week.
–Ohio PERS
What health care benefits would the under-65’s have to give up to reduce the costs below the Cadillac Tax level? Maybe we don’t need such a Rolls-Royce program. The over-65 group no longer has it.
Those types of comments remind me of the old guys I use to work with. They would say ” why should I vote for the school levy, all my kids graduated”. Hey as long as I got mine, right.
Now OPERS is saying it’s not the Cadillac tax that increased premiums !!!! So why in July did they blame it ?????
Michael Pramik says:
July 15, 2015 at 9:24 am
Thomas,
It’s not ludicrous to say that our system faces millions of dollars in fines through the Cadillac tax. We have more than 167,000 retirees and primary beneficiaries participating in our health care coverage. Like you say, the law might be amended, and we are actively trying to make that happen. On the other hand, it might not be amended so we’re making these changes in 2016.
Michael Pramik says:
July 16, 2015 at 12:06 pm
David,
The money we “won’t be spending” will ensure that we don’t exceed the Cadillac tax threshold and subject our system to millions of dollars in taxes, which could put a severe crimp in your health care coverage.
–Ohio PERS
https://www.youtube.com/watch?v=gBFC0msyIJQ Please pay attention from 1:20 on and the reason why rehired retirees premiums are raised CADILLAC TAX !!!!!!
Tom,
We’ll address these comments in order.
In the first one, the response was that “we’re making these changes in 2016.” “These changes” refer to increases in out-of-pocket expenses such as deductibles and co-pays, but NOT premiums.
The second comment was in response to a question of whether OPERS was “shaving costs” to avoid the Cadillac tax. That’s not the case regarding premiums. We did not increase premiums because of the Cadillac tax.
Finally, the video excerpt you pointed to does not indicate in any way that we raised premiums because of the Cadillac tax. The response from the health care director was “we’re going to start getting ready for that,” referring to the tax. She did not say we’re going to start getting ready for the Cadillac tax by raising premiums.
–Ohio PERS