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On Friday, February 8, the TRS Board of Directors considered and approved premium rates for state-provided health insurance for school employees and retirees. The Board also adopted rules to ensure compliance with TCTA-initiated legislation passed in the 2007 legislative session, and discussed the actuarial assumptions that are used to determine the financial status of the fund.

The Board readopted the current premium rates for TRS-Care and TRS-ActiveCare for the 2008-09 school year. No changes were made in plan design or benefit levels. However, some revisions were adopted in the HMO plans that are offered by five approved companies. Complete details of the plan changes will be available on the TRS website.

  • FirstCare - Premium rates will increase by approximately 10% for FIRSTCARE HMO participants beginning with the next school year. Several benefit changes were adopted, including a new per member annual deductible of $400, and a decrease in the out-of-pocket maximum per member from 200% of the premium to $3,500.
  • Scott & White - Premiums will increase by approximately 9%. The only benefit change will increase the prescription drug annual maximum per member from $2,000 to $3,000.
  • Legacy Health Solutions - Premium rates will rise approximately 5% next year. Benefit changes include an increase in hospital per-day copays from $150 to $300, an increase in the hospital per-day maximum from $750 to $1,500, an increase in the out-of-pocket maximum per member from $2,000 to $3,000, and an increase in the family out-of-pocket maximum from $6,000 to $9,000. Pharmacy co-pays will increase from $20 to $35 for retail brand drugs (30-day supply) and from $40 to $70 for mail brand drugs (90-day supply).
  • Mercy Health Plans - Premiums will increase by nearly 10%. The office visit co-pay will increase from $10 to $20, a new inpatient/outpatient coinsurance rate of 10% will be implemented, and Drug co-pays will increase from $5/$20/$35 to $10/$25/$45.
  • Valley Baptist Health Plan - Premium rates will rise by over 8%. No changes were made to benefits.

Staff noted that TRS-Care now has a reserve fund of nearly $130 million, which will help keep the fund solvent for several years and should help keep premium rates stable. However, projections foresee a significant deficit in the fund by 2013 if changes in costs, funding or benefit levels do not occur.

Recommended actuarial changes would negatively impact fund’s fiscal status

The Board was briefed by its actuarial firm on the assumptions that are used to determine the fund’s financial health during its actuarial valuation each year. The board periodically adopts assumptions on economic and demographic factors (inflation, payroll growth, investment returns, mortality rates, retirement rates, etc.) that affect the funds assets and liabilities from year to year, and those assumptions can be adjusted based on actual experience.

Though no decisions were made at this meeting, the actuaries have recommended some adjustments to assumptions, primarily with regard to mortality rates, that would change the current financial status of the fund by increasing its liabilities. School employees are living longer than expected, so that mortality rates in the early years after retirement are lower than expected, and are higher in the later years. The recommended adjustment and corresponding liability increase, though relatively small, could be significant in the upcoming legislative session as the level of the pension fund’s liabilities is a crucial determinant in whether benefit increases can be approved.

The board will consider the recommended changes to the actuarial assumptions in a meeting this spring.

New rules reflect TCTA’s legislative successes in 2007 session

Among rule changes adopted by the Board were two that were needed to allow TRS to adjust to two successful proposals initiated by TCTA in the 2007 legislative session.

The first, HB 973, ensures that employees who resign after the end of the instructional year will still receive health insurance benefits through the summer months. The second, included in the TRS Sunset legislation, requires districts not participating in TRS-ActiveCare to provide comprehensive information on their local health insurance plans to ensure comparability with state employee health insurance coverage as required by law.

Posted: 02/08/08