Retired teachers face added health costs
Those under 65 must pay for larger part of care in order to prop up fund
Two car crashes in a two-month span left Cherlyn Glanville with debilitating headaches and bouts of vertigo, forcing her into early retirement from the Houston Independent School District in 2011.
Glanville, a former French teacher, now needs 10 medications and regular treatments to ease her pain and stay functional. This year, she expects her health care costs to total about $4,800 out of pocket, a manageable amount for her.
But next year, Glanville will face a maximum outof-pocket cost of $7,150, the result of recent changes to the state’s retired teachers’ benefits fund, a drain on her $21,000 yearly pension.
“I’m going to have to borrow money from my
family,” said Glanville, 54, of Houston. “I’m lucky because I have extra siblings who are willing to help me. There are a lot of other teachers who don’t have that kind of family support.”
As health care costs continue to skyrocket, retired Texas teachers under the age of 65 — who generally aren’t yet eligible for Medicare because they’re too young for the federal program — will be asked to shoulder an increasingly large financial burden for their treatment under plans recently approved by state legislators and officials.
For many of the state’s 55,000 retired teachers under age 65, the additional costs could total thousands of dollars apiece in 2018 — with even higher payments in the years to come.
Without this year’s changes, which were unanimously approved by the GOP-controlled legislative chambers and signed recently by Gov. Greg Abbott, the retired teachers’ fund faced a shortfall of up to $1.5 billion by 2019.
Costs outpace growth
For years, Texas legislators have dealt with rising medical costs in the retired teachers’ fund largely by infusing it with huge amounts of state cash. In 2015, for example, legislators pumped $768 million into the fund, while retired teachers’ contributions rose by about $5.5 million.
But as costs continue to outpace growth in state revenue, legislators now have to find other sources of money. Their solution: increase retired teacher premiums, deductibles and out-of-pocket expenses; bump up recurring contributions from the state and local school districts; and dip into reserves.
Retired teachers will pay about $568 million into the fund in fiscal 2018, roughly $175 million more than they contributed in fiscal 2017, according to state estimates. If projections hold, payments by retired teachers will account for 35 percent of the fund’s revenue over the next four fiscal years, compared to 25 percent in the previous four fiscal years.
‘No easy answer’
The cost to the average retired teacher varies based on the plan and number of beneficiaries. But for an under-65 retired teacher who previously held a no-premium, high-deductible plan with no beneficiaries — the equivalent of catastrophic coverage — the maximum cost will rise about $1,300, to $9,550, in 2018.
“There’s no getting around that there’s an increased cost to the retirees,” said state Sen. Joan Huffman, R-Houston, who authored the Senate version of the bill signed by Abbott. “I can only say that we’ll continue to watch it and continue to hope there’s a solution that will drive down the costs.”
The Texas Retired Teachers Association backed the Legislature’s changes, recognizing the state’s financial conundrum and its past support of educators.
“I’m certainly not dissatisfied with what the Legislature has done,” said Tim Lee, the association’s executive director. “The hard part of this is there’s no easy answer.”
Lee worries that current teachers will have to delay retirement because health insurance for retired teachers will be too costly.
He and his members are also frustrated that legislators didn’t dedicate more recurring state money or dramatically reform the fund, which many of them have demanded. Even with this year’s changes, the fund faces insolvency in the near future. Unless the state makes another one-time cash infusion, projections show the fund will run out of reserves by fiscal 2021.
“That’s what our members fear as much as anything: that (legislators) come back next session with a $500 million shortfall and say, ‘Find out what it takes in raised premiums and deductibles to get to that number,’” Lee said.
Huffman said she’s hopeful the federal government will find solutions to drive down health care costs, and that retiree benefits will be part of larger discussions on school-finance reform. She cited the unanimous approval of this year’s bill — a rarity in Austin — as evidence of legislators’ intent to collaborate on the issue.
“I do believe (the fund) is saved, and that’s very important to the retired teachers,” Huffman said. “It does not solve the problem for the future, but it makes the problem approachable.”
Uncertain future
The uncertainty surrounding TRS’ future has teachers nearing retirement, like Melissa McHargue, reconsidering their plans. McHargue, a counselor in the Goose Creek Consolidated Independent School District, said she and her husband wanted to move off his insurance and onto the retired teachers’ plan. Now, she’s unsure whether that will be a financially sound choice.
She questioned why the state employees’ plan offers lower premiums, lower deductibles and maximum out-of-pocket costs compared to the retired teachers’ plan. Teachers are technically school district employees, though the state contributes money to their health care.
“I understand teachers are under different plans, but they’re still public servants,” she said. “Austin could address that and make the system more equitable across the board.
“There’s no getting around that there’s an increased cost to the retirees. I can only say that we’ll continue to watch it and continue to hope there’s a solution that will drive down the costs.” State Sen. Joan Huffman, R-Houston, author of Senate bill