For Many STRS Ohio Members, Projecting Future Health Care Costs Is a Key Component in Determining Their Financial Needs in Retirement
Members can review a complete list of 2020 premiums for all STRS Ohio health care plans on the STRS Ohio website. You may also request a copy by calling the Member Services Center toll-fee at 888‑227‑7877. Health care plan features for 2020 are also available on the website.
Health Care Valuation Report Shows Funding Remains in Solid Position Despite No New Funding
At its October meeting, the Retirement Board’s actuarial consultant, Cheiron, presented the results of its valuation report for the Health Care Fund. Good claims experience kept the fund on solid footing during fiscal year 2019. The fund balance increased to $3.87 billion as of June 30, 2019, up from $3.72 billion last year. Benefit payouts for the fiscal year totaled about $489 million, an average of about $1.3 million per day.
Costs for the health care program are paid from the Health Care Fund, which is currently funded through premiums charged to enrollees, government reimbursements and investment earnings on these funds. No employer contributions are used to help fund health care since these contributions are needed for the pension fund.
Under current conditions, it is estimated that if the fund earns 7.45% in all future years and all other plan experience matches assumptions, the fund is projected to remain solvent for all current members. The positive news for the Health Care Fund is tempered somewhat by two important factors:
- There is no dedicated revenue stream for the fund, since all employer contributions are being directed to the pension fund. Without a dedicated revenue stream, the fund is more vulnerable to investment market volatility.
- The various components that affect funding for the health care program — plan enrollment and utilization, government subsidies and rebates, investment returns — are not predictable and may not be positive for the current fiscal year or in the future.
These factors can result in greater volatility in a fund of this size with benefit payments of nearly half a billion dollars per year.