Health premium increase for retired teachers unlikely in 2019

Sept. 21--The Teacher Retirement System of Texas appears unlikely to raise health insurance premiums for retired teachers under the age of 65 next year amid pressure from state officials.

A board committee of the pension and health care system on Thursday followed a staff recommendation to keep premiums and deductibles the same. The full board likely will agree to the decision Friday.

The board has been considering raising premiums for retired teachers and their dependents under the age of 65 -- about 68,000 of them -- by $600 a year. Lt. Gov. Dan Patrick last month urged the board to not approve the premium increases, saying that lawmakers next legislative session will try make money available to make up a shortfall. State Sen. Joan Huffman, R-Houston, who has carried bills in the past to address the Teacher Retirement System, also sent a letter.

Brian Guthrie, executive director of the Teacher Retirement System, told the board committee Thursday that his staff took into consideration Patrick's and Huffman's requests in not recommending premium increases. Katrina Daniel, the system's chief health care officer, also said the system has obtained better rates in a contract with Humana and other savings from contracts, putting the retired teacher health insurance system in a better position than expected.

Originally, officials expected the system to suffer a $410 million budget shortfall in 2020-21 if premiums were not increased. Daniel said with the contract savings, the system expects a $238 million shortfall during the two-year budget.

"Based significantly in terms of the better fund projections that we're seeing, it is our recommendation and my recommendation to you that you need to take no action on premiums today," Guthrie said. "We trust the legislative process and see if they will come through for us during the next legislative session."

Patrick, in a statement, said he is confident that the Senate, over which he presides, will support additional funding for the retired teacher health insurance program, known as TRS Care.

"I am glad my recommendation that the TRS Board not raise retired teacher health care premiums now is close to being accepted," Patrick said. "I have been candid in pointing out that the Legislature will need to add significant dollars over the next several years to address the increasing costs of health care for retired teachers and this is a priority issue for the next legislative session."

Board member Chris Moss said the system needs long-term solutions from the Legislature.

"I'm in total agreement with what we're talking about this morning. We just need to be careful because this is two-year bites at the apple from the legislative side of things. If history says anything and we go long term without really evaluating the premium process, it could be bad again," said Moss, who then-Gov. Rick Perry first appointed to the board in 2010.

If the Legislature does not increase funding next session, the board could consider premium increases again next September.

Dropping out

Hours after the board committee passed on raising premiums, a committee of retired teachers with the Texas chapter of the American Federation of Teachers, called on lawmakers to inject $3 billion to bring premiums and deductibles back down to 2017 levels.

To stave off a $1 billion shortfall in the health insurance program, the Legislature last year authorized raising premiums and deductibles in 2018 and pared down the number of plans available to retired teachers, including eliminating a $0 premium high-deductible plan. Shortly after the Legislature's decision, retired teachers flooded lawmakers' phone lines and, during a special legislative session months later, lawmakers approved injecting more money into the health insurance program and lowering premiums and deductibles. Still, many retirees saw higher premiums and deductibles in 2018 than they had in previous years. As a result, 36,000 retirees and their dependents dropped out of the system in 2018.

"The Legislature last session was wrong to change the rules in the middle of our game. Many of us would not have retired had we known the Legislature was going to renege on us. ... They broke the bond of taking care of our retired educators and school employees," said Cheryl Anderson, president of the retired teachers committee.

Skeptical of Patrick's commitment to helping retired teachers, Anderson said her committee will be sending a letter to his office asking for a meeting to discuss his plans on how to fund the Teacher Retirement System.

READ: Retired teachers: Texas lawmakers broke their promise on health care

The individual monthly premium for retired teachers under the age of 65 is $200 and the annual deductible is $1,500.

Annuities stagnant

The average monthly pension annuity for a retired teacher is $2,060 and the last time the state gave a cost-of-living adjustment was in 2013, but that only affected teachers who had retired before September 2004. The last time all retired teachers received an adjustment was in 2004. Also, most teachers can't draw Social Security because most school districts don't pay into it.

Monthly retirement checks for retired school employees like bus drivers and custodians are much lower, but they must pay the same premium and deductible as retired teachers.

Retired Cypress bus driver Charles Runnels' monthly retirement check is $433, so half of it goes to pay for health care costs. He supplements that money with income from a job teaching driver's ed, and disability and Social Security payments -- he is eligible for Social Security because he worked for some time outside of a school district. Runnels needs both his knees replaced and struggles with his cholesterol.

"Our kids are all teachers, too. I'm warning them. It's a rewarding career, but you'll never be rich," Runnels said.

Rosalva Reyna, a 61-year-old breast cancer survivor and diabetic, has stopped seeing her cancer doctor and taking insulin, which costs her $575 every three months. Reyna, a retired physical education teacher in the La Joya school district in South Texas, can't afford it, she said, so she has started exercising more and eating healthier to fend off medical problems.

"We're struggling," Reyna said, adding that she is going to start substitute teaching to supplement her monthly retirement check.

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