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* AFSCME Council 31 Executive Director Henry Bayer outlines the newly negotiated health insurance premiums for retirees…
The tentative agreement that was reached with the Quinn Administration locks in much lower premiums for retirees than those the Administration wanted to impose.
Under the terms of the AFSCME tentative agreement, retiree premium costs would be limited as follows:
* Non-Medicare Individual Premium:
o 2% of pension annuity, effective 7/1/13
o An additional 2% of pension annuity effective 7/1/14* Medicare-Eligible Retiree Individual Premium
o 1% of pension annuity, effective 7/1/13
o An additional 1% of pension annuity, effective 7/1/14* Non-Medicare Retiree Dependent Premium
o Managed Care Premium (blended rate)/ One Dependent –$113/month (effective 7/1/13)
o Quality Care Premium/ One Dependent — $249/month (effective 7/1/13)* Medicare-Eligible Retiree Dependent Premium – No increase over current cost
* In addition, if a non-Medicare retiree wishes to opt out of the state plan and join another health
care plan (e.g. a spouse’s plan), the state will provide that individual with a subsidy of $500
each month.Under these provisions, a non-Medicare retiree with a pension annuity of $35,000 would pay $58/month toward premiums beginning on 7/1/13, then $117/month beginning 7/1/14.
A Medicare-eligible retiree in that pension range would pay $29/month in the first year and $58 month in the second year of the contract.
The premium for a Medicare eligible dependent would be $89/month in Managed Care and $142/month in QCHP, the same amount paid today.
The new AFSCME contract also includes increases in co-pays and deductibles for both active employees and retirees at well below the level that the Quinn Administration was seeking. We are preparing a chart to indicate all of these changes in plan design and will send it to you as soon as it is available. […]
I know very well that any increase in health care costs will be burdensome to retirees living on fixed
incomes, especially those with smaller pensions. That’s why the union fought so hard against efforts
to drastically increase retiree health care costs. And thanks to the long, tough battle waged by the
AFSCME Bargaining Committee, those costs will now be dramatically lower than the amounts that
the state was planning to impose.
* Also from AFSCME…
* Contract ratification vote begins
* Temporary reprieve on benefit cuts
posted by Rich Miller
Monday, Mar 4, 13 @ 12:15 pm
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Will Maag be able to stay the imposition of these premiums? And, as others will undoubtedly ask, am I as a retiree that was never in a union, bound by their negotiations with the Quinn administration?
Comment by PublicServant Monday, Mar 4, 13 @ 12:20 pm
What about retirees that were already paying more than this due to having less than 20 years of service?
Comment by mythoughtis Monday, Mar 4, 13 @ 12:26 pm
PS,
Without the union you’d be a lot worse off. There are non-union plaintiffs so even with this tentative agreement the court case may go on. Take the smaller hit now or take a much bigger one later.
Comment by Bill Monday, Mar 4, 13 @ 12:28 pm
I’m in the same boat as ‘PublicServant’… Never was in the union, don’t have a vote. Still wondering whatever happened to that sticky old constitutional thingy about ’shall not be diminished’. Premium-free healthcare was guaranteed to me upon retirement, and now there’s going to be a charge. If I’m not paying for it from my pension benefit, just where is that money to come from?
Comment by BehindTheScenes Monday, Mar 4, 13 @ 12:31 pm
@PublicServant, read the document Rich posted: “AFSCME continues to believe that the new retiree health care law is unconstitutional and will
continue to advance the legal challenge to the law filed on behalf of AFSCME retiree plaintiffs.”
Comment by Reality Check Monday, Mar 4, 13 @ 12:32 pm
Bill while that may be the case, my question still stands regarding Maag and my being bound to union negotiations. There is also no question that these charges will continually be revisited and increased, probably annually, in the future. I’ve got alternatives, and I’ll pursue them, if needed.
Comment by PublicServant Monday, Mar 4, 13 @ 12:34 pm
PublicServant
I haven’t seen the actual language, just been told a summary. It’s my understanding that the actual retiree rates only apply if the State wins Maag. Adding my own spin, I think the State is hoping Maag gets tossed in a couple of weeks on their “unfounded” motion.
At the end of the memo Rich linked to, AFSCME states it is continuing the (implied Maag) lawsuit; they are one of many parties to the combined suit.
It’s also my understanding that CMS (or at least their lawyers) had previously agreed to notify the court before they would attempt to impose any retriee healthj insurance payments resulting from SB-1313/PA97-0695. Not sure if they would consider the union contract as applying but we might want to keep an eye on paperwork there.
As far as retirees being bound, that’s whole issue and other lawsuit if someone decides to persue it … At this juncture, taking the AFSCME deal may be the best couse of action for the moment; at least it is predictable for the next two years and the “premium” portion is less than the COLA.
Comment by RNUG Monday, Mar 4, 13 @ 12:39 pm
If the Maag case fails for retirees then I, with a modest income will gladly accept the rates stated above for insurance, as long as they don’t mess with the COLA. The law is already on the books and I can’t see doing any better then this in the event of retirees’ failing to prevail in the Maag case. Yes, it’s a little haircut but it leaves the scalp….
Comment by Mouthy Monday, Mar 4, 13 @ 12:40 pm
If a retiree opts out of the state offered health care plan — recieves $500 per month, would you have an option each “choice period” to reavaluate the decision? No mention, at this time, of the cost of more then 1 dependend.
Comment by facts are stubborn things Monday, Mar 4, 13 @ 12:46 pm
So what happens when this contract expires in July 2015? Will new insurance rates be negotiated in the next contract, and every one there after?
Comment by rusty618 Monday, Mar 4, 13 @ 12:46 pm
First, I believe that 1313 is an unconstitutional diminishment of benefits. Second, AFSCME doesn’t represent me. That being said, if this is accurate I think retirees could have faired worse.
So folks, keep things in perspective before teeing off on AFSCME.
Comment by Norseman Monday, Mar 4, 13 @ 12:51 pm
AFSCME deserves a big thank you from all of us, union or not. They fought back draconian cuts, insane montly premiums for retirees, the taking away of several paid holidays and somehow ended up with a raise. Houdini couldn’t have pulled that off.
Comment by Raising Kane Monday, Mar 4, 13 @ 12:58 pm
rusty618
I beleive, if AFSCME pervails in the law suit, it will not matter. However; if the state prevails I would suspect it would continue to be a part of every negotiations for the forseeable future.
Comment by facts are stubborn things Monday, Mar 4, 13 @ 1:00 pm
Would it be strange if the State wins Maag and the health care premiums on retirees increase yearly just about the same amount as the yearly COLA increase in pensions?
Comment by mid-level Monday, Mar 4, 13 @ 1:04 pm
Is Illinois the only state with a constitutional non-diminishment clause? If so why did we get stuck with such a turkey? That and the prohibition on graduated income taxes are just befuddling to me.
Comment by Chicago Cynic Monday, Mar 4, 13 @ 1:16 pm
@- Chicago Cynic -
Turkey to you, Saint Jude to me….
Comment by Mouthy Monday, Mar 4, 13 @ 1:19 pm
Why is the premium tied to a percentage and not a flat fee? Everyone is purchasing the same product. Why does the retiree with a 60k pension have to pay twice as much as a retiree with a 30k pension for the exact same service?
Comment by Anon Monday, Mar 4, 13 @ 1:41 pm
@Chicago Cynic - one of a handful, NY being the closest in language.
Comment by Six Degrees of Separation Monday, Mar 4, 13 @ 1:44 pm
So, does this mean that retirees that are barely vested get the same subsidy as folks that put in 35 years???
Comment by kimocat Monday, Mar 4, 13 @ 2:02 pm
I think it is important to keep in mind that it is the GA and Quinn that took premium free healh care away from those with 20 years of service. AFSCME has joined a law suite to overturn that law and negotiated this rate which is much much better then what the state first proposed. I don’t understand exactly how AFSCME is negotiating for those retired, other then to say the state and afscme have agree to include it in negotiations and I certainly have no way of doing it myself. The alternative would be for CMS to set the rate period.
Comment by facts are stubborn things Monday, Mar 4, 13 @ 2:04 pm
=Why is the premium tied to a percentage and not a flat fee? Everyone is purchasing the same product. Why does the retiree with a 60k pension have to pay twice as much as a retiree with a 30k pension for the exact same service?=
I couldn’t agree more. Is the price any other product or service based on your income?
Comment by Leave a Light on George Monday, Mar 4, 13 @ 2:06 pm
FDR stated, ” … The very nature and purposes of Government make it impossible for … officials … to bind the employer … The employer is the whole people, who speak by means of laws enacted by their representatives …”
Whether you agree or disagree with the rights of public employees to unionize, it is difficult to disagree with the prophetic 1937 reasoning of FDR.
Comment by Endangered Moderate Species Monday, Mar 4, 13 @ 2:12 pm
==Is Illinois the only state with a constitutional non-diminishment clause?==
I know that Arizona and New York has such a clause in their constitutions. In other states public employees have occasionally been able to have pension reduction law thrown out by the courts because of general contract law. Most states have a contract enforcement clause in their constitution or statutes.
The U.S. Constitution also has a clause that says that no state shall pass a law which impairs the obligation of contracts.
Although some jurisdictions still hold the view that a pension granted by public authorities is not a contractual obligation but is a gratuity, a majority of jurisdictions take the view that public employees have certain contractual rights in a public pension where a pension is part of the terms of employment.
Comment by Joe M Monday, Mar 4, 13 @ 2:12 pm
kimocat
Your point is taken. As you know, the law indicated that those with 20 years or more would have free health care premiums. So prvious law did not distinguish between someone with 20 years of service and someone with 35 years of service. Once that law was changed — ending free health care premiums — then the rate was set by negotiations tied strickly to size of pension which would be effected to some degree by years of service etc. I certainly understand your thinking.
Comment by facts are stubborn things Monday, Mar 4, 13 @ 2:20 pm
Chicago Cynic
Short version … IL copied the NY language
Comment by RNUG Monday, Mar 4, 13 @ 2:41 pm
RNUG
What is your take on the future of retiree premiums if the State prevails in the current law suite. Will AFSCME continue to negotiate the retiree premium each contract? How was the premium set for retirees before the 20 year free premium was established?
Comment by facts are stubborn things Monday, Mar 4, 13 @ 2:48 pm
If Maag wins, Current retirees are safe. But if ratified current AFSCME members, will have vote to Voluntarily to pay health insurance when they retiree. Current AFSCME members will have a choice if they want to pay health care cost after retirement! They have a choice, the state didn’t take anything!!!
Comment by Bob Monday, Mar 4, 13 @ 2:57 pm
anon, George-go back and re-read the Mayflower Compact for your answer
Comment by steve schnorf Monday, Mar 4, 13 @ 2:58 pm
Bob
Is it your position — help me to understand what you are trying to explain — that those current AFSCME members that vote to accept the contract are giving up their right to free premiums even if the state looses the law suit?
Comment by facts are stubborn things Monday, Mar 4, 13 @ 3:05 pm
Bob
Should add assuming the contract is approved
Comment by facts are stubborn things Monday, Mar 4, 13 @ 3:06 pm
facts are stubborn things — Before the 20 year requirement was instituted, all retirees got their health insurance premiums covered. And when the 20 year deal was struck, those already retired were grandfathered in even if they had less than 20 years. Wish they would treat this the same way.
Comment by kimocat Monday, Mar 4, 13 @ 3:06 pm
So a retiree dependent non-medicare age on MC as of July 2013, is to be $113…is this per each dependent the retiree may have? Or is this $113 first dependent and X? second dependent?
Comment by Anonymous Monday, Mar 4, 13 @ 3:19 pm
@kimocat-before the 20 year vestment was adopted you had to have eight years to be vested in the retirement system and have your health insurance premium paid. I don’t know when the eight years were started. That was before my state employment.
Comment by boat captain Monday, Mar 4, 13 @ 3:24 pm
kimocat
Thanks, so it seems like we are in rather unchartered waters when it comes to retiree health premiums being set. Do we know for sure how these premiums will be set after the end of this contract…assuming the law remains as it is.
Comment by facts are stubborn things Monday, Mar 4, 13 @ 3:38 pm
facts are stubborn things
My guess would be that AFSCME would continue that trend unless / until some retiree sued over their representation.
I don’t know what they based the pre-8/20 year premium calculations on. I never had to deal with that situation because all the people I know stayed long enough for the “free” insurance.
As far as the future of the retiree premiums / how high might they go, it’s anybody’s guess. But to give you an idea of where CMS seemed to want to go (I may be off a bit since this is from memory), the last “proposal” for the SERS retiree with a $40K - $75K income and 20+ years of service (somewhat above average for current retirees but close to the low end for a new retiree these days) was 55% of the State cost and for their spouse / dependent it was 95% of State cost. Translating that to dollars, for the Medicare eligible it was about $190 retiree and $330 (note, you were already paying about $90 for one dependent). For non-Medicare, that was $330 for the retiree and $570 for the dependent. For this year’s non-Medicare 2% to reach the same dollar amount, your pension would have to be about $114K.
I’ll note that for lower pension ranges, the propsoed percentages were lower but they were still looking to get 20% - 25% minimum out of the long service retiree.
Do I think the premiums will end up real high real quickly? Probably not. Do I think they will go up from the current 1%/2% 2%/4% ranges? Probably, especially since this translates straight to current budget year savings in GRF.
Whatever you think about ACA/Obamacare, health insurance costs keep going up and, in my opinion, the ACA with all of it’s new non-paperwork reporting and mandates actually is making it more costly. So we’re all going to pay more, either in higher premiums, reduced coverage, much higher co-pays or a combination.
To answer your “how high” question a bit differently, based on the current FY State budgeting only one-half of health insurance premiums, I’m going to guess it will be the State’s goal to eventually get the retirees, on average, up to paying one-half of the State’s health insurance cost. If this takes place over a gradual period of time with the increases lower than the 3% AAI, then it will be relatively painless to the retiree.
Doesn’t mean I necessarily agree with it, but that’s my slant on it. And just remember my opinion is worth about the same cost as the electricity for the pixels displaying it.
Comment by RNUG Monday, Mar 4, 13 @ 3:39 pm
boat captain
When it took 8 years to be vested and obtain free premium healh care, was there formula (5% per year) such as it was when it was 20 years. What I am getting at is, did it use to be 8 years or more free premium and less then 8 years no health care? Trying to understand if retiree health care has ever been negotiated. Was it negotiated this time because the law required it, or more because the parties just agreed.
Comment by facts are stubborn things Monday, Mar 4, 13 @ 3:42 pm
AFSMCE fought back insane monthly premiums? Who do you think pays the real costs of those premiums?
A percentage of annuity is nice vague number that says nothing. At our place monthly non-Medicare
PPO = $1,209emp/$2,296spouse
HMO = $981emp/$1,864spouse
HSA = $776emp/$1,474spouse
Company pays about $450 toward emp. I pay 100% of the rest. I have no doubt the state gets good rates by shear size alone.
Still $58-$117 a month, what a deal! And they’re complaining its too high?
Comment by zatoichi Monday, Mar 4, 13 @ 3:44 pm
Just an FYI AFSCME negotiates the cost of healthcare for the whole state. So it doesn’t matter if you were a union employee or not the AFSCME contract sets the cost for all state employees.
Comment by Onlooker72 Monday, Mar 4, 13 @ 3:44 pm
RNUG
Thanks so much for the information. This certainly points to the absolute importance of keeping the 3% compounded COLA!
Comment by facts are stubborn things Monday, Mar 4, 13 @ 3:45 pm
In the beginning i questioned AFSCME’s right to negotiate for any retiree. The state agreed to negotiate with AFSCME to set the rates as a result of the new law. If the state hadn’t agreed to this, then all retirees would be at the mercy, every year, to CMS. Get your head out of the sand and understand that this is the fairest game in town. Sue… And win proving that AFSCME doesn’t represent you… Now you have no one but the state. And I am sure they would negotiate with u to set a fair rate. Henry Bayer deserves praise and support for this…. And the state finally showed some common sense in doing this.
Comment by I know labor Monday, Mar 4, 13 @ 3:58 pm
@facts-Don’t know how they calculated it or when the eight year thing took effect. I remember when they changed it to 20 years. I think around 1985 but am not sure of that. That was the first I know of it to be negotiated. If you quit state employment before you had your eight years in you could draw your retirement money out of the system but had no health insurance. Many people I knew then just worked for the state for eight years to get the free health insurance benefit.
Comment by boat captain Monday, Mar 4, 13 @ 4:07 pm
Another question, if a “Medicare” retiree wishes to opt out of the state plan and join another health care plan, do they get a subsidy? I know it wouldn’t be $500.00 but it should be something. That would allow Medicare retirees to look for a Medicare supplement for them and their spouse elsewhere and not use the State supplement - which is what QCHP becomes after one gets on Medicare.
Comment by Jechislo Monday, Mar 4, 13 @ 4:13 pm
Jechislo
Once you are on Medicare you don’t have to be on QCHP. You can chose any of the PPO’s and HMO’s. And guess what, most those pesky PPO / HMO rules don’t apply because they are the secondary carrier.
Comment by RNUG Monday, Mar 4, 13 @ 4:20 pm
Why is healthcare premiums based on a retirees’ pension amount? Medical providers do not ask how much you make before they bill you for an MRI or any other medical test. Employees that have continued their education,have taken on more responsibility and risks at work, have given up salary increases to be supervisors,are going to get penalized by having to pay more for insurance. Pension income should have nothing to do with how much we pay for healthcare. Here is just another disincentive for trying to better yourself in life. Hopefully the Maag lawsuit will make these premiums irrelevant.
Comment by Kathryn Monday, Mar 4, 13 @ 4:24 pm
==Why is the premium tied to a percentage and not a flat fee? Everyone is purchasing the same product. Why does the retiree with a 60k pension have to pay twice as much as a retiree with a 30k pension for the exact same service?=
I couldn’t agree more. Is the price any other product or service based on your income?==
Medicare premiums are flat, but then go up for higher benefit levels. So yes, price is based on income.
Comment by OldIllini Monday, Mar 4, 13 @ 4:30 pm
“Why is healthcare premiums based on a retirees’ pension amount?” Kathryn @ 4:24 pm
It is because of the extremely high cost of health care insurance that we must consider a sliding scale for insurance premiums. There is nothing fair about outrageous medical costs that the American people must pay.
Comment by Ruby Monday, Mar 4, 13 @ 4:33 pm
“Once you are on Medicare you don’t have to be on QCHP. You can chose any of the PPO’s and HMO’s. And guess what, most those pesky PPO / HMO rules don’t apply because they are the secondary carrier.”
I understand that. But if I choose to remove myself as a retiree from the health system (and they are paying a $500 subsidy to a non-Medicare retiree), I would expect a similar subsidy if the State is no longer providing insurance for me or my spouse.
Comment by Jechislo Monday, Mar 4, 13 @ 4:41 pm
Some of the pension proposals under consideration would change the COLA. This retiree health insurance deal doesn’t mean the GA couldn’t also reduce/eliminate the COLA through a pension fix.
As a recently retired, formerly non-union State employee, I was looking forward to my first raise in years - my annual pension COLA increase. Now that meager hope may be dashed and I’ll have to pay for health insurance.
Only in Illinois.
Comment by Sir Reel Monday, Mar 4, 13 @ 4:49 pm
So a retiree dependent non-medicare age on MC as of July 2013, is to be $113…is this per each dependent
Comment by Anonymous Monday, Mar 4, 13 @ 4:49 pm
OK so it looks like if my wife is SURS at 30K and I am SERS at 60K, I drop my coverage go on hers and make an extra $190.00 per month!
Comment by vitaman Monday, Mar 4, 13 @ 4:52 pm
Vitaman - Right, and get a $500 subsidy for doing it?
Comment by Jechislo Monday, Mar 4, 13 @ 4:59 pm
500 - 249 = 251
251- 60 = 191
Comment by vitaman Monday, Mar 4, 13 @ 5:05 pm
Hate to rain on y’all’s parades, but:
1. By what right does AFSCME “bargain” on behalf of retirees who aren’t part of the bargaining unit? And, by what rule of law does the State have to keep such a bargain? According to the Attorny General at the arguments a couple weeks ago in the Maag case (I was there), AFSCME has NO right to represent retirees. Does the AG talk to Quinn?
2. In any event, how can AFSCME, even in principle, bargain away a constitutional right of people who aren’t even members of the bargaining unit?
3. Once ASFCME admits that it’s OK for retirees to pay 2% of their pensions in violation of the Contracts Clause, what’s to stop the State from making it 20% in the next negotiation, and 50% in the negotiation after that?
Comment by Themistocles Monday, Mar 4, 13 @ 5:15 pm
“Is the price any other product or service based on your income?”
Only if it is provided by some level of government. Probably shouldn’t means test this premium, however,- it might have bad effects on the self esteem of those who don’t have to pay as much. That’s the reason given for not means testing Social Security and Medicare Part A benefits.
Comment by capncrunch Monday, Mar 4, 13 @ 5:20 pm
SERS Retirees ONLY
(Public Act 94-0109)
Effective January 1, 2006, Non-Medicare SERS Retirees who provide proof of other comprehensive medical coverage will be allowed to Opt Out of the health, dental and vision coverage provided by the State of Illinois Insurance Program and receive financial incentive payment of $150.00 per month (you will continue to have your basic life coverage, as well as any optional life coverage in which you are currently enrolled).
To qualify for this Financial Incentive Program, a retiree must be non-Medicare and able to provide proof of enrollment in another health benefit plan, either comprehensive major medical or comprehensive managed care, from a source other than the Illinois Department of Central Management Services (DCMS). Other health programs under DCMS include the Local Government Health Plan, Teachers’ Retirement Insurance Program and the College Insurance Program. If you choose to Opt Out and receive the financial incentive, you cannot enroll as a dependent of a state employed or retired spouse under the State of Illinois Group Insurance Program.
Comment by Tsavo Monday, Mar 4, 13 @ 5:21 pm
Q: If my spouse and I are both members, can one of us become a dependent on the other’s state insurance plan?
A: You can remain a dependent at the time of retirement if you have been a dependent on your state retired or state employed spouse s insurance for one year. If you are an active employee and retire immediately from active employment with the state, you cannot becomea dependent of your spouse.
Comment by Tsavo Monday, Mar 4, 13 @ 5:23 pm
Tsavo,
Thanks and I remembered that PA but the question remains will the PA apply to the new contract?
Comment by vitaman Monday, Mar 4, 13 @ 5:25 pm
According to Steve Schnorf the answers to all our questions are in the Magna Carta.
Comment by Leave a Light on George Monday, Mar 4, 13 @ 6:18 pm
Such a case was settled by the California Supreme Court:
http://www.calpersresponds.com/issues.php/supreme-court-health
Comment by Mix_It_Up Monday, Mar 4, 13 @ 6:19 pm
vitaman,
there’s already a rule against that if you are both state retirees …
Comment by RNUG Monday, Mar 4, 13 @ 6:47 pm
Sir Reel,
Changing the COLA is going to be a much higher constitutional hurdle, especially because there are IL cases already saying it is protected. And if you read the 1970 Con-Con debates, it is clear it was the intention of the diminishment clause authors to protect not only the pension but also any COLA. Some of those authors have testified in previous courts cases as to that intent, so it is a factual matter of record.
Comment by RNUG Tuesday, Mar 5, 13 @ 12:30 am
What about Public Act 91-0395?
Comment by Ano Tuesday, Mar 5, 13 @ 5:22 pm
I’m an IL state retiree and feel that this agreement is a tribute to the union that negotiated it. I don’t think a lot of the commentors know how reasonable this is compared to the private sector or compared to other states’ retirees. So be glad for what you have.
Comment by Anne Friday, Mar 8, 13 @ 9:12 am