State retirees anxious about health benefit changes
Court challenge over constitutionality is pending
Hundreds of state retirees packed a meeting in Springfield on Friday to get information on pending changes to retiree health care benefits. The cost-saving measure faces a court challenge that could invalidate the agreement, but substantial work has already gone into rolling out the complex changes.
An estimated 520 people filled the main theater of the Hoogland Center for the Arts in Springfield last week for a meeting of the Citizens Club of Springfield, with at least 70 people standing after seating filled up. The crowd of mostly state retirees sought answers about what will happen when the state rolls out changes to retiree health care benefits under a 2012 state law.
Historically, state retirees have paid deductibles and other costs for their state-provided health insurance, but they haven’t had to pay the premium cost for those policies. A 2012 state law allowed the Department of Central Management Services (CMS) to split the cost of premiums with retirees.
With the new law came a renegotiation between the state and unions over health insurance plans. They settled on offering retirees a choice between two Medicare Advantage plans. The first is a PPO plan offered by United Healthcare, and the second is an HMO plan offered by Aetna. The PPO plan will be available to all eligible retirees, while the HMO plan will only be offered to those retirees who still live in Illinois.
Janice Bonneville, deputy director of CMS’ Bureau of Benefits, explained the benefits to the crowd, answering questions during and after the presentation. She said the changes only apply to retirees who are on Medicare Parts A or B, or who have dependents who are on the same.
She explained that the new plans come with a $1,300 yearly deductible for state retirees and a $1,000 yearly deductible for retirees in the college and teacher retirement systems. State retirees will pay 10 percent of their premiums, while college and teacher retirees will pay 20 percent.
Unlike normal PPO plans, which charge patients more for using “out-of-network” providers, Bonneville said retirees with the state’s new PPO plan can use “any willing provider” who accepts Medicare. Both the HMO and PPO plans also cover the infamous Medicare “donut hole” that usually leaves patients uncovered from $2,500 to $4,500 in prescription drug costs.
Rick Carlson, who moderated the event and is former executive director of the Illinois Comprehensive Health Insurance Program (ICHIP), said retirees need to be aware that the plans offered by the state are group plans, which have substantially different – and often superior – benefits compared with individual Medicare Advantage plans offered by companies that aren’t contracting with the state.
“Believe me, if you don’t like the state’s plan, you’re not going to like the individual plans,” Carlson said.
All of the preparations made so far could become moot, however. When the state law passed in 2012, a handful of state retirees filed lawsuits against Gov. Pat Quinn and CMS director Malcolm Weems, seeking to stop the health benefit changes on the grounds that they violate the state constitution’s prohibition on diminishing state retirement benefits, among other claims. The lawsuits have been consolidated into a class-action lawsuit that was heard by the Illinois Supreme Court last month.
David Amerson, retiree coordinator with AFSCME Council 31, the largest union of state employees, said the union negotiated with Quinn’s administration despite being part of the lawsuit.
“We maintain through all of this that (the law) was an unconstitutional diminishment of our members’ retirement benefits,” Amerson said to applause. “At AFSCME, we’re kind of old-fashioned. We still think union contracts mean something.”
If the Supreme Court strikes down the law, lawmakers will likely have to come up with different cost-saving measures for retiree health care. Depending on how the high court rules, the case could also serve as precedent in the larger battle over state retiree pensions, which also hinges on disagreement over what constitutes a diminishment of benefits.
Bonneville said CMS is contacting retirees with an explanatory letter, then a reminder postcard, and finally an enrollment packet with necessary forms and a schedule of seminars around the state. The seminars will feature representatives from the insurance companies to answer questions about specific situations, Bonneville said.
She stressed that any retirees who don’t take action during the open enrollment period that runs from Nov. 12 to Dec. 13 will be automatically opted out of coverage. Once someone opts out, either by default or by choice, he or she cannot return to the system under state law, Bonneville said, adding that CMS supports changing the law.
“At least take a moment to look at what we’re sending you,” she said.
For more information, visit www.benefitschoice.il.gov.
For a list of seminar locations and dates, visit: http://www2.illinois.gov/cms/Employees/benefits/trail/state/Documents/Trail_Seminar_Schedule.PDF