OPERS and...'in the interest of fairness'

From John Curry, April 21, 2012

Note from John...some (because they were unaware) have asked about OPERS 3-tiered plan of health insurance premiums for their retirees that takes into consideration ("in the interest of fairness") the difference between their retirees'  pension incomes...something that STRS did not do. Here is that 2004 article from the Toledo Blade. Yes, OPERS DID institute this 3-tiered plan.

Toledo Blade
Article published August 9, 2004

OPERS recognizes a problem

Howls of protest can be expected from some quarters, but the Ohio Public Employees Retirement System is to be commended for taking steps to reform the pension fund’s beleaguered medical insurance benefit structure before it is overwhelmed by rising health-care costs.

OPERS is the pension fund for most state, county, municipal, and township employees, excluding schools, police, and fire. It has some 370,000 active members and about 140,000 retirees, a major part of Ohio’s workforce.

With health-care spending rising at double-digit levels for at least five years, and with its retiree ranks expected to double in number in 20 years, OPERS decided it could not afford to provide retiree health benefits indefinitely at current levels.

Those benefits are extremely generous, even though OPERS is not required by state law to provide them. Currently, a worker with as little as 10 years’ service can retire and receive health insurance fully paid by the state fund. It’s a benefit that most private-sector workers can only dream about, but it won’t last for long. 

OPERS is considering changes, beginning in 2007, under which retirees with fewer years of service would pay substantially more for their insurance than those with greater longevity.

The proposal has different provisions for three groups in question: current retirees and those eligible to retire before Jan. 1, 2007; those eligible to retire after Jan. 1, 2007, and recent and future hires, specifically those who came to their jobs on or after Jan. 1, 2003.

 In general, current and near retirees would feel the least of the benefit pinch, while those hired recently would have to plan to pay more for health coverage when they retire in the future. OPERS officials say the plan was set up that way in the interest of fairness, because current and near retirees have less time to “plan and save and adapt” to higher costs. 

Coverage for spouses of retirees would cost more for everyone although the increase would be phased in over five years. To help pay for the changes, contributions by state and local governments will be increased, and employees will contribute 1.5 percent more of their salaries, from 8.5 percent to 10 percent, over three years.

Although complaints about the fairness of the plan inevitably will arise, it appears that OPERS has made every effort to make it equitable. Explanatory hearings, including one in Toledo, were conducted across the state in July.