February Board News

Staff Presents Considerations for 2017 STRS Ohio Health Care Program Changes; Board Discussion Expected to Continue in March

During the February meeting of the State Teachers Retirement Board, STRS Ohio staff presented a number of items for the board to evaluate as it considers potential health care program changes for 2017. The presentation follows discussion that took place at the board’s annual retreat in January regarding the funding challenges facing the health care program.

Staff’s primary objective is to consider plan adjustments that remain consistent and competitive with the health care marketplace. The items submitted for consideration fall into three general categories: plan design, plan eligibility and plan subsidy. The board did not take action on any of the proposed changes and is expected to continue to discuss the items at its March meeting.

Plan design changes for consideration include:

  • Discontinue Alere disease management program for non-Medicare enrollees.
  • Increase emergency room copays to $75 from $65 for Medicare plan enrollees.
  • Increase in-network and out-of-network deductibles for Health Care Assistance Plan enrollees.
  • Move Medical Mutual non-Medicare enrollees residing outside of Ohio to a Basic Plan administered by Aetna.
  • Increase urgent care copay to $40 from $35 in all plans.
  • Discontinue health care plans offered by HealthSpan.
  • Discontinue coverage for proton pump inhibitors (all are available over the counter).
  • Adopt preferred network for retail pharmacies and increase copays at non-preferred network pharmacies by $10; narrow retail network for Medicare plan enrollees.
  • Discontinue the one-half copay program for diabetic prescriptions.
  • Increase coinsurance percentage for specialty drugs to 15% from 10% and the per-prescription maximum to $600 from $500.

Plan eligibility changes for consideration include:

  • Discontinue Medicare Part B reimbursements for survivors and beneficiaries who were age 65 by 2008.
  • Discontinue offering coverage to sponsored dependents of unmarried retired teachers (does not include incapacitated adult children).
  • Change dependent children premium to a per child premium.

Plan subsidy changes for consideration include:

  • Reduce STRS Ohio subsidy multiplier to 1.9% from 2.1% for non-Medicare enrollees.
  • Phase-out Medicare Part B reimbursement over three years.
  • Add $50 surcharge to enrollees who have Medicare Part B-only coverage.

The proposed changes focus on reducing STRS Ohio’s long-term plan costs and extending the solvency of the health care fund.

Board Receives 2015 Member Survey Results

At the February board meeting, Dr. Marty Saperstein presented the findings of the 2015 membership survey. Phone surveys were conducted in November and December with active members and retirees. Notable findings from the survey results included:

  • Despite pension plan changes, most members have positive overall impressions of STRS Ohio.
  • Trust and confidence in STRS Ohio increased significantly for actives, while retiree’s feelings remained positive.
  • Compared with last year, more actives and retirees feel the pension system is financially sound.
  • Most members — actives and retirees — still consider their pension an excellent or good value.
  • Members clearly distinguish between their pension benefits and health care coverage; more consider their pension benefits an excellent or good value.
  • Most members are satisfied with communications and most believe STRS Ohio is open and honest in its communications. There continues to be growing interest in electronic and online communications.
  • Three out of five active members plan to teach longer than they originally thought, and the most common reason cited is the pension plan changes.

Board Considers Updates to Funding Policy, Strategic Goals

The Retirement Board and staff continued their work on refining the board’s funding policy. Executive Director Michael Nehf reviewed with the board a draft of a revised funding policy that includes the stated goal of managing “the risk of unanticipated benefit changes and to safeguard members’ benefits in the long term.” The draft policy lays out clear criteria for making decisions regarding changes to funding and benefits, as well as when those changes should be considered by the board.

The board also reviewed proposed changes to STRS Ohio’s strategic goals for 2016, including a new goal to address STRS Ohio’s health care funding challenges. Staff also recommended an addition to one of the current strategic goals that would address strengthening STRS Ohio’s business continuity capabilities. Board action on these updates could be considered at its March meeting.

Retirements Approved

The Retirement Board approved 176 active members and 173 inactive members for service retirement benefits.

Other STRS Ohio News

Health Care Fund Drops by $196 Million in 2015

Year-end analysis shows the health care fund net position was $3.258 billion as of Dec. 31, 2015, a decrease of $196 million from the prior calendar year net position of $3.454 billion. Premiums received from health care recipients in calendar 2015 increased to $331 million from $286 million in calendar 2014. Payments from the health care fund in calendar 2015 increased to $693 million from $658 million in 2014, a 5.3% increase. Effective July 1, 2014, the allocation of 1% of employer contributions to the health care fund was discontinued and directed to the pension fund, resulting in no employer contributions to the health care fund for 2015. Financial and claim information from the health care fund were provided to actuaries at Segal Consulting, who will present the health care valuation report to the board in March.