About 7,800 retired Texas teachers are abandoning the health insurance program the state has created for them — long one of the top benefits for Texas public school teachers — a troubling development for a health care system that faces a $700 million funding shortfall.
The abnormally large wave of requests to leave the health insurance program, which is housed under the Teacher Retirement System of Texas, threatens to exacerbate the program’s budget woes and signals possible higher costs to retired teachers down the road.
“Before if somebody called and told me they were leaving TRS-Care, I would have said, ‘Why would you do that,’ and advise against it,” said Tim Lee, executive director of the Texas Retired Teachers Association. “But this plan has become far more expensive and there are real reasons that somebody may choose to leave … and most of it has been, can they afford it.”
In previous years, the number of requests from retirees to opt out of TRS, which covers 270,000 retirees, has been about 1,500 or less per year. This year’s bloated count comes as officials with TRS — in an attempt to “ensure its long-term sustainability for current and future retirees” — replaced four plans for Medicare-eligible retirees, those who are over 65, with a new Medicare Advantage plan that will go into effect Jan. 1. The plan, which is administered by a private insurer instead of through the federal government, has created higher premium costs and deductibles and limited networks of doctors and services for many retirees and their families.
Additionally, in November, the Centers for Medicare and Medicaid Services, the federal agency that runs the government programs, did not receive from TRS or its vendors certain information about the thousands of teachers who want out of TRS. As a result, many of those teachers weren’t able to buy health insurance elsewhere by the program’s open enrollment deadline Thursday.
“These people have been put through the wringer, and some of them think that it’s just being done just to keep the (TRS) plan intact,” Lee said.
TRS has since given the required information to the federal agency, and most retirees who don’t want TRS insurance will be offered a special enrollment period that starts Friday and ends Feb. 28 to buy health insurance in the open market.
“TRS is committed to helping our members obtain the coverage they need and want and will do everything within our power to meet this commitment,” TRS Executive Director Brian Guthrie said. “TRS is closely monitoring the situation to ensure that the terminations are processed.”
TRS is asking retirees who want to confirm they’re dropping TRS insurance coverage to call TRS Health & Insurance Benefits at 1-888-237-6762.
Eve Raine, a 65-year-old former Crockett High School teacher who now lives in Temple, said her Medicare account as of Thursday still shows she doesn’t have insurance for next year.
Raine, whose pension is about $2,200 a month, opted out of TRS health insurance because the monthly costs were expected to rise at least 31 percent to $271, not counting increases to copays and her deductible, she said. She said she fears the new TRS Medicare Advantage plan won’t cover certain services anymore.
“I can see myself or someone else trying to do their due diligence and what if I miss a step? What if I accidentally don’t check … those picky little rules?” said Raine, whose teaching career spanned three decades.
The state established the retired teacher health care plan in 1986 with enough funding to last through 2000. Since then, the system has been at risk of going unfunded, requiring lawmakers almost every biennium to keep it funded for the short term.
To stave off a $1 billion shortfall earlier this year, the Legislature injected $484 million into the system over the next two years, but it cut some benefits for retired teachers by paring down the number of health care plans.
After retirees inundated lawmakers’ phone lines with concerns about the changes during the summer, the Legislature during the special legislative session infused $212 million more into the system to lower premiums and deductibles, but it wasn’t enough to keep retirees from leaving the TRS health insurance program.
Once a retiree opts out, he or she can’t buy health insurance from the system again.
Lee is concerned that if too many retirees, especially those who are healthy, opt out of TRS health insurance, its unfunded liability will continue to balloon, which could translate to even higher costs for those retirees remaining in the system.
Lee wants lawmakers next session to consider creating a provision that allows retirees to return to TRS for their health insurance if they opt out and to restructure the way the TRS health insurance program is funded.
Instead of teacher salaries, funding should be based on rising insurance costs, which is more like how the state funds the Employees Retirement System of Texas, Lee and other advocates have said.
What we reported
The American-Statesman reported in July how the Legislature had approved changes to the Teacher Retirement System of Texas that will drive up premiums and deductibles for many of the 270,000 retired teachers by January. The newspaper highlighted the impact of rising health costs on some Central Texas retired teachers, including married couples and those still caring for children with disabilities. Shortly after the story was published, the Legislature during a summer special session approved $212 million more for the retirement system to drive down health insurance costs for retired teachers.
Current Teacher Retirement System plans have monthly premiums as low as $0 a month and deductibles as low as $150. All those plans will go away next year, leaving higher costs for many retirees:
• Premium for retiree only: $200 a month for those 65 and under (not eligible for Medicare), $135 for over 65 (eligible for Medicare). With coverage of a spouse, premiums go up to $689 and $529 per month, respectively.
• In-network deductible for retiree only: $1,500 for 65 and under, $500 for Medicare-eligible.