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LANSING UPDATE

From: Ellen Hoekstra
Legislative Update
October 19, 2010

RETIREE HEALTH CARE COSTS LIKELY NOT TO INCREASE NEXT YEAR

Good news, for once! AFT Michigan is pleased to let you know that your retiree health care costs are unlikely to increase during 2011. AFT Michigan is among the regular participants in the Health Initiative Review Committee (HIRC), and we recently met with the staff of the Office of Retirement Systems and their actuaries from Gabriel Roeder Smith & Company. At that meeting, we had an opportunity to review and comment upon some proposed changes. The bottom line is that your costs for your retiree health care--your premiums, co-payments, and deductibles-- are highly unlikely to increase next year.

How can this be so, when we all know that health care costs continue to rise? Essentially, the new federal health care law, the Patient Protection and Affordable Care Act of 2010, has some provisions that will help pay for your retiree health care. Yes, this is the new federal law that has drawn so much political fire! Two things were helpful:

• A program that reimburses health benefits to employers for each retiree between ages 55-64 and his/her spouse, surviving spouse and dependents will enable your plan to get up to 80% of costs (minus negotiated price concessions) for health benefits between the cost points of $15,000 and $90,000. This one-time savings was put into the federal law to keep employers and retiree plans from dropping their health care coverage; and
  
  
• Part D (prescription drug) changes will gradually close the "donut hole" gap from 100% to 25% by 2020, starting in 2011 on brand name drugs. Essentially, what you will see on your Explanation of Benefits (EOB) forms is that the feds will be paying part of your costs. Your cost share will remain the same, and pharmacies will process the prescriptions as usual. So, the paperwork will look different, but you will not pay more.

The MPSERS Board is expected to take action on these proposed changes on October 28, and AFT Michigan will be supporting these changes. The changes not only keep your costs from rising but will also provide a small reduction in what school districts and community colleges have to pay. Of course, these changes have not yet been adopted, and if there are any modifications, we will let you know.

You will be receiving more information on any changes approved by MPSERS through various means, including The Best of Health.

By:
Ellen Hoekstra, Capitol Services, Inc.
October 19, 2010