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.

Marc Tubbs

Manager - Education

12 thoughts on “Answers from our education road shows

  • January 8, 2020 at 9:18 am
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    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

    Reply
  • January 8, 2020 at 10:19 am
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    What are the chances of the windfall provision law being changed or eliminated and what would the timeline be?

    Reply
    • January 9, 2020 at 10:38 am
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      Congress has until the end of 2020 to pass WEP reform. If WEP reform does not pass in 2020, the process starts over.

      Reply
  • January 9, 2020 at 3:52 am
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    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.

    Reply
    • January 10, 2020 at 3:26 pm
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      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.

      Reply
  • January 13, 2020 at 10:02 am
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    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?

    Reply
    • January 16, 2020 at 2:24 pm
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      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

      Reply
  • January 14, 2020 at 3:31 pm
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    Non Medicare retirees – those who were hired when Medicare deduction was not made – how is this being handled

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    • January 16, 2020 at 2:26 pm
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      Teresa,

      The Board voted to keep the current Medicare A premium reimbursement policy. There is no change.

      Julie, OPERS

      Reply
  • January 14, 2020 at 4:41 pm
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    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?

    Reply
  • January 16, 2020 at 11:11 am
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    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?

    Reply
    • January 17, 2020 at 3:18 pm
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      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

      Reply

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