JBC REPORT ON UNIVERSITY OF CALIFORNIA RETIREE HEALTH CARE

CUCEA25 OCTOBER 2017

Projection of Retiree Costs:1. Total costs paid by Retirees2. Costs paid for specific plans

Introduction to University of California BenefitsNumber of retirees and pensions

Group Number of members

Average Pension / month

Faculty 6,380 $6,900Management 5,769 $5,000

Professional staff

44,029 $2,800

Total annuitants

56,178 $3,500

# of policies and covered peoplea

Group # of

policies

# of covered

people

Medicare 31,997 47,684

OneExchange 3,609 4,806

Non-Medicare 8,740 13,322

Total 44,346 65,812a2017 data

Explicit UC Expenditures for Health Plans

Explicit UC Expenditures for Health Plans

Some reasons for rescinding the 70% floor:• GASB 75 reporting requirement• 1% of payroll increase in campus

contributions to UCRS• Belief that money could be better used

elsewhere

Sources of funds for Retiree Health Care1. UC Explicit funds(~$307M)2. UC Implicit funds (~$88M)

Used to “blend” premiums for non-Medicare Retirees and beneficiaries with those for Active employees.

3. Medicare Part B funds (~$122 paid by each member)4. Retiree funds (remainder of costs)

Projection of future costs

70% 4% Budget Target 3% Budget Target

Effect of rescinding 70% floor on total Explicit costs

Goals: For 70% floor, 3% budget target, 4% budget target1. Determine all plans average for Retiree and UC costs over 10 years2. Determine Retiree costs for specific plans projected over 10 years

Needed data:a. Growth rate of total costs (slide 4)

b. Retiree contribution in first year (from total UC + Retiree explicit costs and # of covered people, and % from c.)

c. Retiree share of total costs as a percentage in first year (30 %)

Plans U Retiree % UA UC

Active1 $73 $218 $132

Non-Medicare < 65 $226 $515 $407

Non-Medicare 65 $73 10% $218 $132

Medicare Plans M MM MA MC

Retiree cost $64 $128 $353 $245

Medicare Part B $122 $244 $122 $122

Total Medicare cost $186 36 % $372 $475 $367

2017 Monthly Health Net Rates paid by Retirees and Active Employees

³

1Pay Band 2, and here “U” refers to Employee

Plans U Retiree % U Year over Year Increase %

Active1 $73 $76 4%

Non-Medicare < 65 $226 $241 7%

Non-Medicare 65 $73 10% $76 4%

Medicare Plans M M

Retiree cost $64 $77

Medicare Part B $122 $134

Total Medicare cost $186 36% $211 13%

³

1Pay Band 2, and here “U” refers to Employee

2017 2018Health Net Retiree Rates

CONCLUSION FOR INDIVIDUAL HEALTH PLAN COST PROJECTIONS

• It is not possible to project the Retiree cost of individual plans without knowing the policy for allocation.

• In 2010 UC Retirees paid on average about 10% of total costs.

• In 2017 Older Non-Medicare Retirees continue to pay 10% of costs for some plans, but Medicare Retirees now pay 36% of Costs for some plans. However total Retiree costs are 30% of the total.

• Presently UC is too generous with Non-Medicare plans. Why is this? Is there an agreement?

MORE ISSUES FROM JBC REPORT

• Medicare Part B premiums are paid with after tax dollars, Retiree payments that are not Part B costs are paid by pretax dollars. This makes Medicare plans more expensive for Retirees.

• Medicare Part B premiums increase with household income, while UC Non-Medicare premiums do not.

• Check consistency of numbers in this and UC reports.

• Eligibility for Retiree health insurance

• Carefully read documents carefully and seek consultation

• Follow bond ratings to see if GASB reporting has an effect.

Questions?