Retirement fund change brings uncertainty

Update to story
On Sept. 1, the TRS-board met to approve changes to the proposed TRS-Care plans set to be implemented Jan. 1, 2018. The board approved plans that reduced deductibles from $3,000 to $1,500 and maximum out of pocket expenses from $71,50 to $5,650 for non-Medicare retirees. 

These changes come from an additional infusion of money approved by lawmakers in the special session. Legislators appropriated an additional $212 million in the summer special legislative session to TRS-Care.

Original story
Randy Reese said he started his career in Lubbock as an elementary school teacher, transitioned to a physical education teacher at Hill Elementary School in Austin ISD and ultimately ended his official time as an instructor in Pflugerville ISD after 34 years of work. He worked in elementary schools, at administrative levels and eventually on an executive team as an assistant superintendent. Even now, Reese still returns to PfISD for long-term subbing stints for teachers taking leaves of absence.

As Reese put in his time as an educator, he always paid into the state retirement fund. Tim Lee, Director of the Texas Retired Teachers Association, said the state has promised a steady retirement, and, until recently, has delivered on its promise since the 1980s when TRS-Care was formed.

But in the 1980s health care costs were not as high as they are now, and it has been challenging for the state to maintain its standard of benefits at its initial level when there is a growing population of retirees, Lee said.

Reese said with recent legislative changes to the program, he will pay $80 less per month in premiums, but his deductible will spike from $400 to $3,000.

Under his new plan that comes with the changes, Reese will see an increase in his average medication payments of approximately $15 per medication to first paying out his deductible, and then paying 20 percent of the cost.

Monty Exter, a lobbyist for the Association of Texas Professional Educators, said TRS-Care covers a population that cashes in on retirement benefits more than others.

“[TRS-Care] has somewhat of a disadvantageous population for costing out health care,” Exter said. “The population is uniformly older, they have had a fairly hard work life over the years and they have greater utilization rates. But if you were to take the same population and look at [costs] in the private market, it wouldn’t cost any less.”

Legislative action

At the beginning of this year’s regular legislative session, TRS-Care came to the Legislature with a $1.1 billion shortfall, asking for supplemental funding to help maintain benefits for retirees.

Without it, TRS Executive Director Brandon Guthrie said the fund could shut down or change drastically for its enrollees.

“We’re talking quadrupling [premiums] or more,” Guthrie said.

Just two years prior TRS-Care had asked for even more supplemental funding. The Legislature appropriated $768 million but did not make any concrete changes to the structure of the benefit system.

Just two years later, in the 85th regular session, lawmakers knew they needed to act differently and made drastic updates to TRS-Care. They cut the plans offered for those age 65 and younger from three options—one of which was free to retirees each month —to one option that would cost an enrollee $200 in monthly premiums.

Lee said the biggest change for retirees over the age 65, and therefore those eligible for Medicare, is that the cost to insure dependents has risen drastically. Lee said the cost to insure a spouse is rising several hundreds of dollars in some instances.