January 20, 2011

Senator Lisa Brown, 3rd District, Spokane, and Senate Majority Leader, introduced Senate Bill 5846 to help educators who are interested in retiring, but who are unable to, due to high medical costs, to  do so.

If this bill passes, retirees could receive $250 per month toward their medical premiums for three years. Some members are a bit disappointed in this bill because it doesn’t go far enough. They see a direct advantage to Plan 2 and 3 members to also have the options listed in the bill. Read over the following information, and if you agree that Plans 2 and 3 members should also have this option, email your legislators, and also Sen. Brown at Brown.Lisa@leg.wa.gov.

Tell Senator Brown that you appreciate her effort to make retirement more affordable for some of our members, but there are others who should be  considered in an expansion of the proposal. And as usual, follow legislative updates to this and other bills through Our Voice. www.ourvoicewashingtonea.org.

Here are the details:

Plan 1:
  • Per the latest Actuarial Valuation (for 2009, published on 10/2010) there remain only 5,204 members of TRS 1 and 10,354 members of PERS 1

o The average age for RS 1 members is 60 and the average age for PERS 1 is 59.5.

o The average years of service for TRS 1 members is 27.4 years, and the average years of service for PERS 1 members is 23.1 years.

o The average monthly benefit for “new service retirees” in RS 1 is $2,590 and the average monthly benefit for “new service retirees” in PERS 1 is $2,456.

  • The Actuarial Valuation goes on to point out in the appendices that every Plan 1 member is already eligible to retire and would therefore not benefit from any “early retirement option.”
  • Instead, what we (anecdotally) hear from those eligible, but not retiring are concerns over the cost of continuing their health benefit coverage.
  • A simple solution could be to offer a voucher at a certain dollar amount that can only be spent towards payment for post-retirement PEBB coverage. The typical retiree spends around $12,000 per year currently for their benefits (subscriber and spouse). A bonus somewhere around $5,000 to $10,000 may be enough to induce retirements from this cohort of workers. Or, the bonus could be structured as a certain dollar amount for each year of age below Medicare eligibility.
  • On the other hand, most remaining Plan 1 members have demonstrated through their actions their continued interest in staying on the job.

 

SB 5846 Proposes

  • Directs the Health Care Authority to provide $250/month subsidy for medical premiums for Medicare-ineligible members of TRS 1 who apply for retirement between June 1, 2011 and August 31, 2011 and receive their first retirement allowance payment by October 31, 2011.
  • The subsidy is available for up to three years, from Sept. 1, 2011 through August 2014.
  • This choice forfeits eligibility to work in a TRS eligible position while receiving retirement while also getting the subsidy (no retire-rehire).