Sue Schnars retired from the Pflugerville school district as a special education administrator in December with the understanding that she and her 41-year-old daughter with disabilities could live on her state retirement and health benefits.
Six months later, Texas lawmakers cut health benefits in a way that will hit retirees such as the 59-year-old Schnars the hardest. Come January, her deductible will be $3,000 — 10 times higher than it is now — and her insurance won’t cover nonpreventive visits to the doctor until she hits that ceiling.
“We serve your children, and we do it with love, and we show up every freaking day,” Schnars said. “With all this happening in the Legislature, it’s like, how can you break your promise?”
The state established the retired teacher health care plan in 1986 with enough funding to last through 2000. Since then, the system, which covers 270,000 retirees, has been at risk of going unfunded, requiring legislators almost every biennium to tinker with the system to keep it funded for the short term.
To stave off a $1 billion shortfall earlier this year, the Texas Legislature this session took drastic measures. Lawmakers injected $484 million into the system over the next two years but cut some benefits for retired teachers by paring down the number of health care plans from three to one for each age group, effective in January.
The impact of the coverage changes on retired teachers will depend on various factors, including what kinds of plans they are currently on, their age and whether they share a plan with a spouse. Retirees like Schnars who aren’t eligible for Medicare because they’re younger than 65 — 55,000 of them across the state along with 23,000 of their dependents — are expected to see the biggest impact.
They will no longer have the option of a $0 premium plan, which 4,800 retired teachers currently have. They will be moved to a higher deductible plan. Some teachers who have retired or are eligible to retire who spoke to the American-Statesman said that they are cutting expenses, are putting off retirement or have started working again in part because of the rising health care costs.
Under the new changes, Schnars — who is currently on the highest monthly premium plan, at $295 — expects to pay $95 less, but her deductible will shoot up from $300 to $3,000.
Although Schnars considers herself relatively healthy except for high blood pressure, she worries about being able to afford unexpected medical vists she might have and some of her daughter’s medical expenses that aren’t covered by Medicaid. Schnars’ retirement pays her $2,640 per month, and, like most teachers across the state, she doesn’t receive Social Security benefits because most school districts don’t pay into it.
“I’m getting a double whammy,” Schnars said.
Less coverage, as health costs rise
Brian Guthrie, executive director of the Teacher Retirement System of Texas, said in a statement that the agency will work with retirees on cheaper routine health care services such as seeing a doctor online or switching to generic medication.
“TRS recognizes the challenge that the cost of health care … present to a family’s budget,” he said.
System officials, legislators and teachers know that the state’s retirement program is not keeping pace with the rising costs of health care and prescriptions.
Advocacy groups say that instead of teacher salaries, contributions should be tied to insurance costs, which is more like how the state funds the Employees Retirement System of Texas. But that change would push up costs and so far has not been popular with lawmakers.
“It’s a matter of whether they are willing to commit and how much more expensive it will be,” said Ann Fickel, associate executive director of the Texas Classroom Teachers Association. “Teachers are in this funny position where they are partly funded by the state and partly funded by the school district, so at times they consider themselves state employees but they technically are not.”
The changes that legislators approved this past session are also short term. The $484 million boost in funding comes from increasing the state’s contribution from 1 percent of active teacher payroll to 1.25 percent, increasing school districts’ contribution from 0.55 percent to 0.75 percent and providing a one-time supplemental contribution of $183 million.
The Teacher Retirement System expects at least a $200 million shortfall in 2021.
“Money needs to be restored to this program; a better benefit level needs to be put in place,” said Tim Lee, head of the Texas Retired Teachers Association. “Teachers commit a tremendous amount of their time and energy and effort to the state of Texas, and they’re having to … make real choices between medicine and doctors and just having a quality retirement.”
Donna Haschke, a 70-year-old Buda resident, and her husband, Gerald, also a retired teacher, will see their monthly premiums rise from $205 to $590. Their deductible and maximum out-of-pocket limit will also increase by a few hundred dollars. After spending 20 years out of the classroom, Donna Haschke is going to start substituting next school year.
“The cost of living has not improved, and cost of insurance is going up, and taxes are going up. If it will make life a little easier, why not go back to work?” said Gerald Haschke.
Retired teachers’ health care
New Teacher Retirement System plans will go into effect Jan. 1. Here are the costs for individual retirees:
Premium: $200 monthly for those 65 and under (not eligible for Medicare), $146 for over 65 (eligible for Medicare).
In-network deductible: $3,000 for 65 and under, $500 for Medicare-eligible.
In-network maximum: $7,150 for 65 and under, $3,500 for Medicare-eligible.
Retirees under age 65 will no longer have the option of copayments for nonpreventive visits to the doctor and must hit their deductible before insurance covers 20 percent of the visits.
Retirees over age 65 will still have copayments for nonpreventive visits including $5 to a primary doctor, $10 for a specialist, $65 for the emergency room and $500 for inpatient hospital stay.