The Ohio Public Employees Retirement System Board of Trustees has taken action to help retirees who do not qualify for Medicare Part A at no cost to join the upcoming OPERS Medicare Connector.
The Board 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 were never given the opportunity to pay into Medicare Part A hospitalization coverage throughout their careers. Under the new plan, OPERS could reimburse the Medicare Part A premiums for retirees who cannot participate in Medicare Part A for free. These retirees would then be eligible to select health coverage through the Connector and receive an applicable allowance.
You can click here to watch a video in which OPERS Health Care Director Marianne Steger explains the proposal.
The Board took this action after an overwhelming demand from our retirees who do not have Medicare Part A that they somehow be allowed to participate in the Connector. 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.
Because Ohio law requires us to provide a health care plan to the approximately 6,500 affected retirees, state legislators would have to amend the applicable statute for the plan to take effect. OPERS will seek input from these members and retirees before approaching legislators to change the law.
Under the new plan, OPERS would reimburse 100 percent of the retirees’ Medicare Part A premium as well as any surcharges for late enrollment when the retiree enrolls in Medicare Part A and selects a plan through the Connector. OPERS also would reimburse a portion of the premium for retirees’ spouses, as well as any applicable surcharges.
Spouses also would receive an allowance in 2016 and 2017 after selecting a plan through the Connector and no Connector allowance beginning in 2018, just like all OPERS spouses. They would continue to receive the portion for reimbursement for the Medicare Part A premium and surcharge.
We project that creating an avenue for these retirees to use the Connector will create $1 million in savings for OPERS from 2016-2028 based on the current plan compared with the proposed plan.
The reason for the change is that retirees who don’t qualify for Medicare Part A at no cost would have the highest increased health care costs of all OPERS retirees without the Connector – about $300 per month. That’s because by 2018, when the allowance transition is completed under the new health care plan, these retirees would be paying $203 more monthly in health care premium. They also will lose the Medicare B reimbursement, currently at $96.40.
The average OPERS monthly allowance under the Connector will be $337, which we’ve stated could cover the most-popular Medigap plan, drug coverage and the Medicare Part B premium.
The plan also would benefit OPERS. This covered group will gradually decrease in size. As that happens, their premiums likely will rise. That could result in adverse selection – with healthier retirees dropping out of the plan, making it more likely that the claims risk would increase, a risk that OPERS would have to bear.