Dennis Leone: Clarification Regarding "Age Rating" and Re-enrollment for Health Care

From Dennis Leone, September 26, 2006

Subject: Clarification Regarding "Age Rating" and Re-enrollment for Health Care

Molly, John, and Kathie -- Please share the following update with your readers regarding questions that are being asked about: (1) "Age Rating" and (2) Eligibility for Enrolling and/or Re-enrolling in STRS Health Insurance.

(1) At the STRS Board meeting in April or May -- during a general discussion on what types of things might help mitigate "Adverse Selection" by younger retirees -- a board member (I don't remember whom) asked the staff if it had looked at whether "age rating" should be an option to discuss in the future. "Age Rating," as I understand it, would mean that the older a person is, the more that he/she would have to pay per month for health insurance. There was no discussion on this topic, and -- as I recall -- it was about the same as Steve Buser asking for data about the 88% rule. The question was raised from the standpoint of whether the Board should consider such as an option in the future. The staff promised to react to the question, which occurred at the August Board meeting. During that meeting, the staff stated its opposition to "Age Rating" and expressed its preference that it is not be put on the plate for discussion. As I understand it now, the matter is off the table for additional discussion for the immediate future. Whether this will change, I do not know.

(2) First Health Care Scenario: If a retiree utilized STRS health insurance in the past, and chose to leave the plan (to seek a cheaper plan on the open market, to use a plan from another employer, or to use a spouse's plan), he/she STILL can re-enroll in the future if he/she chooses voluntarily to drop his/her plan. If said retiree suddenly wishes to re-enroll in the STRS plan, there would be a 6-month "pre-existing condition" waiting period. If said retiree, however, chooses to re-enroll during the open enrollment period, he/she will not have to worry about the 6-month waiting period.

Second Health Care Scenario: If a retiree has health insurance through another employer or through a spouse's plan -- then loses this insurance due to circumstances beyond his/her control -- this is defined as a "qualifying event" and makes said retiree immediately eligible to sign up for STRS health insurance (without the 6-month waiting period). One final point: If a retiree has a "qualifying event" and loses his/her insurance (from another employer or from a spouse's plan), said retiree must notify STRS within 30 days of his/her desire to sign up for STRS insurance. Of course, another example of a "qualifying event" will occur on 1-1-09 when full-time rehired retirees will no longer be able to utilize STRS as their primary health insurance carrier. Said retiree, upon leaving re-employment, will be able to sign up for STRS health insurance if he/she has no other health insurance.

Hope the above helps clarify things.

Dennis Leone