The Texas Legislature faced a major problem at the beginning of the most recent session that began in January 2017.  Regarding TRS Care retiree healthcare:

  • Brian Guthrie, Executive Director of TRS, stated a Legislative hearing on this subject that if the Legislature did not provide a solution or fund the system as requested, that TRS Care would have to be shut down in two years.
  • To sustain current benefits the Legislature was asked to fund $1.35 billion for the next biennium.  That is on top of (1) all the TRS retiree premiums, (2) .65% of every active educator paycheck in the state every pay period and (3) contributions to TRS Care by local school districts (.55%).
  • The primary problem was the retirement of educators under age 65.  The average annual TRS Care cost of each of these members is $14,000.  The average annual cost of those over age 65, due to Medicare, is $3,000.
  • To cover the extra cost of retirees under 65 without the funding would mean either quadrupling the TRS 2 and 3 premiums (the regular PPO plans) or putting everyone in TRS Care 1, a catastrophic coverage plan.

Both the Senate and the House tried to tackle this issue.  The Texas Retired Teachers Association (TRTA) was the champion of retirees.  They tried very hard to prevent major changes in current TRS Care premiums and coverage.  Despite their fine efforts, as the Legislative session progressed it became apparent that the choice was going to be between a much worse TRS Care plan, particularly for those under age 65, or no plan at all.  Thus, TRTA had to put its efforts toward saving TRS Care even if would not be as good as it had been.

Ultimately, most of the changes in TRS Care were incorporated into HB 3976 sponsored by Rep. Ashby.  This went through the House, moved to the Senate where there were additional changes, and was ultimately passed by both houses and signed by the Governor.  The TRS Board of Trustees then approved changes in TRS Care needed to implement the new law.  SB 1 also contained funding items related to TRS Care to make sure that the new benefits are adequately funded.

The chart below provides a high-level summary of the changes that will take place in TRS Care on January 1, 2018.

v2 TRS graphic medicare vs HDP
  Excellent summary provided by Texas Retired Teachers Association here.

 

So, what will you need to do to prepare for these changes?

First, go to the TRS website and review the changes that will occur.  Here is a link:

https://www.trs.texas.gov/Pages/healthcare_news_trscare_update_2018.aspx

 

Next, follow the steps below.

 

  1. If you will be under age 65 on January 1, 2018 you will need to do the following:

  • Review your current medical expenses and determine what your estimated out of pocket costs of medical care will be under the new plan. Be sure to review the new prescription drug coverage in making this estimate.
  • Determine how much your premiums for TRS Care will increase. This should include your spouse and any family members covered.
  • Change your monthly budget for 2018 and beyond to accommodate these new costs. Be sure to project these costs to increase with inflation each year. It is wise to use an increase rate of at least 3.00%.
  1. If you will be age 65 or older on January 1, 2018 you will need to do the following:

a. If you are currently under the TRS Medicare Advantage Plan:

  • Determine how much your premiums for TRS Care will increase. This should include your spouse and any family members covered.
  • Change your monthly budget for 2018 and beyond to accommodate these new costs. Be sure to project these costs to increase with inflation each year. It is wise to use an increase rate of at least 3.00%.

b. If you are currently not under the TRS Medicare Advantage Plan:

  • Review your current medical expenses and determine what your estimated out of pocket costs of medical care will be under the Medicare Advantage Plan. We have found the TRS Medicare Advantage Plan to offer excellent benefits so there may not be much of a change.  You will have to compare your current TRS Care to the Advantage Plan to make this determination.
  • If you are not currently enrolled in Medicare A and B you will have to do this. You can estimate your premiums for this, if any, by going to the Medicare website at:   https://www.medicare.gov/your-medicare-costs/costs-at-a-glance/costs-at-glance.html. A Medicare Advantage Plan requires that you be enrolled in Medicare A and B, then the Advantage Plan takes over your medical plan needs in place of traditional Medicare.
  • Contact your medical providers (e.g., doctors, pharmacy, etc.) to see if they accept Medicare. If they do not you will need to find a provider that does accept Medicare. The TRS Medicare Advantage Plan does not have a network – it should be accepted by any provider that accepts Medicare. If you have difficulty with any of your providers who do accept Medicare and do not want to accept the TRS plan, contact TRS Care for assistance.
  • Determine how much your premiums for TRS Care will increase. This should include your spouse and any family members covered.
  • Determine how much to add to your budget for the cost of Medicare A and B, if any.
  • Change your monthly budget for 2018 and beyond to accommodate these new costs. Be sure to project these costs to increase with inflation each year. It is wise to use an increase rate of at least 3.00%.

We would be happy to help you with these issues.  Please contact the advisor(s) who assist you, emailing advisors@tcgservices.com, or by calling (512) 600-5200 and asking for Mason Moses/Blake Rhodes.

 

Written by Mike Cochran
TCG Advisors, LP


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