OPERS and PERI Board Discuss Health Care Funding Issues

Mahoning County Chapter 18 elects officers
January 16, 2019

OPERS and PERI Board Discuss Health Care Funding Issues

(January 25, 2019) Karen Carraher, OPERS Executive Director, met with PERI’s Board of Trustees this week to discuss major challenges facing OPERS’ health care fund.   The fund has been shrinking as a result of a combination of costs associated with coverage for pre-Medicare retirees and the lack of investment directed from a portion of active member’s employer contributions.

OPERS has been and continues to be committed to providing a meaningful health care benefit to retirees although it is not statutorily mandated like the pension fund.  OPERS made a commitment to continue to fund health care and provide for its long term solvency back in 2012.  Their plan included a contribution of four percent of the fourteen percent employer contribution annually and to count on an annual expected return of at least four percent on the health care plan’s investments.

Unfortunately, OPERS has been limited in the amount of the employer contribution they have directed to the health care fund.  Since their adoption of the 2012 health care preservation plan, only a maximum of two percent has ever been allocated to the fund in a given year.  In fact, during the most recent two years, none of the employer contribution has been directed to the healthcare fund.  The full four percent has been used to support the pension fund.

OPERS made a presentation of the fund’s financial challenges to their Health Care Committee and was directed to look at a variety of scenarios to determine next steps.  This will occur over the course of 2019.

PERI agrees that this important benefit deserves to be preserved and that all options should be explored to ensure the best possible outcome.  The first step in this process is for all retirees to be aware of the current situation.  To this end, PERI believes it is important to be properly educated on the issue and has invited OPERS to present on this topic at upcoming PERI District Annual Meetings in the coming months.  We urge every PERI member to attend these meetings and to stay informed on the issue through PERI updates here on the website and through the PERI Perspectives newsletter.

PERI will continue conversations with OPERS to ensure the best possible outcome is achieved for our members.

20 Comments

  1. Jerry M. says:

    I am glad to hear that Opers met with P.E.R.I. pertaining to the retiree healthcare review. Hopefully, Opers will continue to work with retiree advocacy groups on this and other issues as we move forward.

  2. Jim says:

    So, as I understand it, throughout my working career part of the monies that I and my employer paid to OPERS were placed into an OPERS established health fund silo so as to fund health insurance for me throughout my retirement.

    Now, due to poor results from OPERS’ million dollar hedge fund managers, new hires and their employers are not contributing money to secure health insurance for themselves when they retire.

    OPERS solution is to ask me to increase my premium costs and reduce my coverage in order to provide minimal health coverage for those new hires who are not paying into a health fund like the one into which I paid.

    At the same time, OPERS fund managers are not having their spouses eliminated from their plans or being asked to pay what I pay for these truncated policies

    There is a lot of fat that needs to be cut at OPERS before I should be asked to sacrifice more.

  3. Retiree says:

    I would like to see OPERS seriously consider raising the employee contribution and use the increase for healthcare funding. I know the employee contribution was increased during the time I was working and never once did I think it was the wrong thing to do or that they should have asked current retirees take a hit instead of those of us who were working and much more able to handle the changes. Those who are currently working will eventually be retirees themselves. I know I would rather have had an additional 2% taken out of my check while I was working than have to pay huge amounts of money, possibly unaffordable, for my healthcare when retired. Look what’s happening to the Police And Fire retirees. Unaffordable premiums, huge out of pocket costs and in some cases no access to the hospital systems they have been using for years. No one who is of pre-Medicare age will be able to retire anymore. The healthcare burden will make it impossible. I know I would have continued to work had I known all of the cuts OPERS is trying to make to current retirees. It’s frightening.

  4. Ginny says:

    As many PERI members have said previously, OPERS will probably discontinue health care monies for retirees. They tried to reduce retirees COLA, it failed, so now they will try and take the lowest hanging fruit first–health care reimbursement. How many years does it take for the powers that be to recognize there needs to be new leadership at OPERS?

    • Fred says:

      ON 2/4/19, I received an OPERS update letter from the Board of Trustees and Staff of OPERS .

      OPERS is making it clear in that update, that they are evaluating retiree health care coverage, and no longer are able to use employer contributions into the pension fund for the health care fund.

      The letter also makes it clear that OPERS is committed to continue to advocate for changes to retirees Cost of Living Adjustment ( COLA).

      I think retirees need to be committed to the removal of Karen Carraher as the Executive Director of OPERS.

  5. Donna says:

    I just read the OPERS board meeting report. They said they lost money in 2018. I am an amateur investor and I didn’t lose money. So how is it that they did? PERI, can you shed some light on this?

    • Fed up Retiree says:

      Maybe they need to pay more money to their three senior portfolo managers who averaged $300,000.00 each, and Carraher who also earned $300,000.00 probably should be paid more for her great job of running OPERS.

  6. Lee Adams says:

    Carraher has appeared to be ‘going after’ OPERS retiree benefits for quite some time. A frontal assault(legislation to reduce the pension COLA) has not YET been fruitful. Now,it appears she is going to allow certain benefits to ‘die on the vine’ by refusing to adequately fund them. OPERS made the decision to apparently arbitrarily lower its investment return projections. This appears to be a ‘back door’ way to come up with an excuse to lower the COLA without acquiring legislative approval. Now,OPERS has not provided funding to the healthcare fund to level that it could have if it had chosen to do so. I personally hope that retirees and PERI are paying close attention. Otherwise soon retirees will be falling further behind in regard to their standard of living.
    There are numerous ways these situations can be resolved by not placing the burden on current retirees. LETS USE THEM!

  7. Jerry M. says:

    I just checked my email and there was an Opers email with the January 2019 board report. I must say it is about time that Opers sends out the board report to members.

  8. Douglas E Duckett says:

    I am very concerned about the implication that OPERS will particularly target the health insurance benefits for those who are not Medicare-qualified. As a 61-year-old retiree with a 59-year-old spouse (for whom I already pay 100% of the premium), we are four and six years away from Medicare eligibility, and being dumped from our coverage before that time would have enormous consequences. Yes, it is a matter of whose ox is being gored — I get that — but this has FAR more economic consequence on some retirees than the COLA fight did, and I am not minimizing that, but this could have huge impact on the value of my pension.

    In my view, OPERS may be exacting punishment for blocking the COLA change, but in any event, this needs to be STRONGLY resisted.

    • Retiree says:

      Whatever happens, don’t get lured into any talk about revisiting the COLA reduction in exchange for healthcare. Remember, our 3% annual COLA is a guaranteed benefit, healthcare is not. There is nothing to stop them from saying a COLA reduction will save healthcare and then next year turn around and take it away anyhow.

  9. Daniel says:

    Back in 2010 – 2011 OPERS gave presentations about the proposed rule Change to preserve healthcare and the retirement fund. They indicated if you retire before before the change you would recieve a 3% COLA.

    Fact this compelled working members to retire that had 30 years of service to maintain their Benifits.

    Fact most of those retires were between 50-60 years old.

    Fact 5 years later after those retires have already retired and can’t go back to work OPERS attempts to take back the retirees COLA.

    OPERS is now targeting Healthcare for the same group of people.

    How many retirees think that this wasn’t planned way back in 2008, I lost confidence especially because the retirement fund is there for retirees and I still see 0PERS employees getting better healthcare benefits then the retirees who paid many years into the fund.

  10. Donna says:

    I agree with Douglas’ comment, “OPERS may be exacting punishment for blocking the COLA change”. Something seems to be very wrong at OPERS. Employee contributions have risen, spouses have been dropped, medical premiums have skyrocketed, benefits have been reduced, yet OPERS claims they cannot fund healthcare.

    We must continue to resist any changes to COLA. OPERS can cut medical benefits at will, but they have to get legislation to make any cuts to COLA. If they are allowed to cut COLA benefits, there is nothing to say they won’t go after our medical benefits as well. And in this current climate, I’m guessing they will.

    We must continue to be vigilant. Thank you, PERI, for your advocacy.

  11. Daniel says:

    When I read articals that refer to “employer contributions” when it comes to our Benifits like it wasn’t earned by the person while they were working concerns me. The fact is yes we earned it ! It’s part of our income from our work .Unfortunately that income is not calculated in our FAS go figure. And yes if you retired before 2012 you put 4% of your contributions into the healthcare fund. And yes it was used to pay healthcare for retirees and their spouse entil they turned 65.And now it’s your turn it may not be there for you. At all.

    Can anyone tell me if the 400 or so OPERS employees have the same health plan as us . What are their contributions. After all isn’t the main goal to protect the retirement of public workers FIRST!

    OPERS group their talks into two funds the pension fund and the healthcare fund. You will never hear them talk about the employee fund that comes out of our checks when we’re working.

    It makes sense to educate yourself but make sure you educate yourself with all the facts not just what someone wants you to hear , so they can complete their goals. remember you have to be concerned that not everything you hear is the truth . I would be concerned that they’re more concerned with their pay checks and healthcare before the retirees . I hope I’m wrong .

  12. Donna says:

    I just received my letter from OPERS yesterday. They made it very clear they are going after our COLA again.

    We do not get 3% per year. It is simple interest and the percentage we receive goes down every year. It does not keep up with inflation. People like Carrahar and other high wage earners can absorb the hit but most of us cannot.

    We must remain firm and resist this change. Thank you, PERI, for all you do.

  13. Jerry M. says:

    It seems that it is time to start contacting members of the general assembly and bring the Opers healthcare review to their attention. Opers has not been funding the healthcare fund accordingly. Opers questionable financial and investment mindset needs to be under close scrutiny.

  14. Donna says:

    I just read the Plain Dealer article on the lawsuit filed to require OPERS to release details on their investments with Glouston Capital Partners. PERI, can you start a new thread on this? It sounded suspicious from the beginning. The premise was to invest our money in Ohio firms to help support local businesses. Yes, that is nice, but it is our money and I think we can all agree that we want our money invested where it will grow, and not limited to a geographic region.

    Now we learn from this lawsuit that there are political connections involved with this fund (no surprise there) and there are comparisons to the Coingate scandal. Something very suspicious is going on at OPERS. PERI, can you shed some light on this?

    • PERI says:

      Donna, there is no need to start a thread on this issue at this time. The case was just filed and these issues are alleged at this very early point. Unfortunately, we tend to rush to judgment before all the facts are presented. We should let this run its course in the courts before we convict in the court of public opinion. The truth will come out soon enough.

      As a side note, OPERS invests both in and outside of Ohio. The in-state investments in particular provides substantial economic benefit to all Ohioans including OPERS retirees.

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