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NCPERS and Health Care: Promoting Secure Retirement

NCPERS and Health Care: Promoting Secure Retirement. Hank Kim, Esq. National Conference on Public Employee Retirement Systems. Presentation Overview. Introduction to National Conference on Public Employee Retirement Systems Why Health Care? NCPERS Reactions & Initiatives The Road Ahead

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NCPERS and Health Care: Promoting Secure Retirement

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  1. NCPERS and Health Care:Promoting Secure Retirement Hank Kim, Esq. National Conference on Public Employee Retirement Systems

  2. Presentation Overview • Introduction to National Conference on Public Employee Retirement Systems • Why Health Care? • NCPERS Reactions & Initiatives • The Road Ahead • Wrap up and Q & As

  3. NCPERS • Largest nonprofit trade association representing 500 public sector DB plans • Who we ARE: • Advocacy • Research • Education • Chairing the DB Coalition

  4. NCPERS Position • All workers (public and private) have the right to a secure retirement. • A traditional pension plan (DB plan) and a good retiree health care plan are significant contributors to a secure retirement.

  5. Why Health Care? • Medicare Part D • More people are losing coverage • Health care costs = 16% of nation’s GDP • Unsustainable health inflation • Quality of care uneven

  6. Why Health Care? • Retirees are suffering! • Average pension benefit is FL is $850/ month. • Average HI premium for retirees is $900+/ month.

  7. Why Health Care? • Governmental Accounting Standards Board • In June 2004, the GASB approved the final set of accounting standards applicable to “Other Post-employment Benefits” (OPEB) • Statement No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans and, • Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions

  8. Why Health Care? • When promised in the form of a defined benefit, OPEB includes: • Postemployment Health Care Benefits • Medical, dental, vision, hearing, and other health-related benefits whether provided separately or through the pension plan • Other Benefits • Life insurance, disability, long-term care, etc., when provided separately from a defined benefit pension plan • Largest component of OPEB is health care

  9. GASB Forum • www.NCPERS.org • Experts from GASB, credit rating agency, consulting and law firms. • Help understand what GASB statements are and what they encourage. • Offer advantages ways to pre-fund for retiree health care.

  10. GASB Forum • www.NCPERS.org • Experts from GASB, credit rating agency, consulting and law firms. • Help understand what GASB statements are and what they encourage. • Offer advantages ways to pre-fund for retiree health care.

  11. NCPERS Reactions & Initiatives • 2002 formed our Task Force on Health Care Benefits. • Issued 25 specific recommendations. • All 25 recommendations have been either completed or are near completion.

  12. First Task Force Report • Survey NCPERS members about retiree health care. • Explore DB-style pre-funding options. • Introduce legislation to help retirees purchase health insurance.

  13. Second Task Force Report • NCPERS survey revealed that: • 93% of respondents reported their beneficiaries had access to group health insurance. • 78% of respondents reported some-level of retiree co-insurance.

  14. Third Task Force Report • Currently available tool that helps to save for health care needs in retirement. • DB features. • Employers & employees can contribute into RMT. • All tax free!

  15. Legislative Activities • NCPERS Healthcare Enhancement for Local Public Safety (HELPS) Retirees • HELPS Retirees bill allows public safety retirees to use up to $3,000 of pre-tax money for health insurance premiums.

  16. Healthcare Enhancement for Local Public Safety (HELPS) Retirees • Allows retired public safety officers to use up to $3,000 on a tax-free basis to purchase health insurance. • Begins on January 1, 2007.

  17. HELPS Retirees Applies to: • Public safety officers. • Who separated due to disability or attainment of normal retirement age. • Purchase of health insurance or long-term care insurance. • Can use DB, 403(b), or 457 plan distributions.

  18. HELPS Implementation • www.NCPERS.org • IRS guidance & NCPERS response • Legal memo • FAQs for pensions • FAQs for public safety officers • Model enrollment forms • Text of HELPS Retirees

  19. HELPS Retirees History • 108th Congress • 2003 Portman-Cardin bill • Provision to allow all retirees to use pre-tax $ for health insurance premiums • Provision and H.R. 1776 died • 2004 NCPERS tried for public sector only • No bill introduced because of cost and equity argument

  20. HELPS Retirees Bill • 109th Congress • 2005 Rep. Chocola introduces H.R. 2177, Healthcare Enhancement for Local Public Safety (HELPS) Retirees bill. • Over 104 cosponsors • Sec. 845 of Pension Protection Act (H.R. 4) • Signed into law August 17, 2006 (PL 109-280) • Took effect January 1, 2007

  21. H E L P S – 22007 • Healthcare • Enhancement • Local • Public • Servants Round 2

  22. Latest Task Force Recommendation • Public Sector Health Care Symposium • September 2006 • Nearly 200 attendees learned about: • GASB OPEB • GASB responses • Universal health insurance laws in Massachusetts and Vermont

  23. NCPERS Second AnnualHealth Care Symposium • Public Sector Health Care Symposium – October 1-3, 2007 in Chicago. • Visit www.NCPERS.org in the coming months for more information on the Symposium and other health care news.

  24. NCPERS 2007 Educational Programs Legislative Conference February 5-7 in Washington, DC Trustee Educational Conference May 18-19 in Honolulu, HI Annual Conference May 20-24 in Honolulu, HI Public Sector Health Care Symposium October 1-3 in Chicago

  25. NCPERS Resources

  26. Questions NCPERS 444 North Capitol Street, NW, Suite 221 Washington, DC 20001 202-624-1456 info@NCPERS.org www.NCPERS.org

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