Retiree Health

1
Retiree Health

• GASB 43/45 Conference
• January 25, 2006

2
Why are we here?
3
Why are we here?

• What are GASB 43 and 45?
• Get a handle on the scale of the problem
• Learn what others are doing/not doing
• Think about options and next steps

4
Projected Payments Toward Retiree Health Premiums
5
Projected Payments Toward Retiree Health Premiums
6
Statewide Retiree Health Benefit Survey

• September 2005

7
Overview

• 49 of 58 counties responded to the survey
• Retirees in 48 of the 49 counties are eligible
  for some form of health benefits
• Two counties have performed the actuarial study
  required by GASB 43
• Six counties have performed the actuarial study
  required by GASB 45

8
Who Administers the Benefit?
43 counties reporting
9
Who Pays for the Benefit?
Percent of Counties
44 counties reporting
10
Who Pays for the Benefit?
Percent of Contribution
Based upon FY 04/05 contributions
Under-reported due to insufficient data
11
Current Funding Situation
49 counties reporting
Other includes Excess Earnings, Retiree Pays,
etc.
12
County Provided Health Care Coverage
Employee-to-Retiree Comparison
39 counties reporting
13
Individuals with Health Care Coverage
Impact of Dependent Coverage
19 counties reporting
14
Years of Service Required for Eligibility
Varies based on employment date
41 counties reporting
15
Eligibility Rates

• 89 combine retiree and active employee risk
  pools
• 70 have the same premium rates for retirees
  active
• 54 participate in CalPERS Program
• 54 administer independent health benefits
• 29 DO NOT require Medicare assignment at age 65
• 9 DO NOT provide health benefits past age 65
• 11 DO NOT offer coverage for survivors of
  retirees
• 4 DO NOT offer coverage for dependents of
  retirees

16
County Operated Hospitals

• 26 (12 counties) operate a County Hospital
• 15 (7 counties) operate their own health plans

47 counties reporting
17
Tiered Benefits
15 counties have tiered benefits or
eligibility, based on one or more of the
following

• Years of service
• Date of hire (e.g., pre-1989 hire)
• Retirement date
• Marital status
• County-specific service
• Bargaining group
• Sick leave banked balances
• Combination

18
Capped Contributions
68 of counties have capped contributions in
one of the following ways

• Maximum per employee (ranging from 16 to 1426
  per month)
• Capped based on years of service and/or hire date
• Average annual increase of all health plans up to
  5
• Specific plan (i.e., Kaiser or Blue Cross)
• Same percentage of contribution for retirees as
  active employees (i.e., 65, 85)
• Percentage of payroll (1 to 1.2)

19
Changes in the Last 10 Years?
87 of counties have made changes in the past
ten years in one or more of the following ways

• Changed funding mix
• Changed benefits
• Changed eligibility
• Changed administration (switched to/from CalPERS)

45 counties reporting
20
Funding Mix Changes as a Cost Containment
Strategy

• Increased co-pays
• Increased deductibles
• Increased retiree contributions
• Decreased premiums through reduced benefits
• Implemented funding based on single health
  benefit rate

21
Benefit Changes as a Cost Containment Strategy

• Reduced overall level of benefits
• Changed/added carriers (added Medicare plans with
  significant savings)
• Eliminated all future retiree health plan
  benefits (added 401(a) plan)
• Implemented a self-insured prescription plan
• Reduced mental health benefits

22
Changes in Eligibility

• Increased required years of service
• Implemented tiered contribution based on years of
  service
• Discontinued contribution based on years of
  service
• Initiated contribution rate based on date of hire

23
Where do we go from here?