1. JBC Report on University of California Retiree Health Care
Projection of Retiree Costs: 1. Total costs paid by Retirees 2. Costs paid for specific plans
CUCEA 25 October 2017

2. Introduction to University of California Benefits
# of policies and covered peoplea
Number of retirees and pensions
Group
Number of members
Average Pension / month
Faculty
6,380
$6,900
Management
5,769
$5,000
Professional staff
44,029
$2,800
Total annuitants
56,178
$3,500
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
65,812
a2017 data

3. Explicit UC Expenditures for Health Plans

4. 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

5. Sources of funds for Retiree Health Care
UC Explicit funds(~$307M)
UC Implicit funds (~$88M) Used to “blend” premiums for non-Medicare Retirees and beneficiaries with those for Active employees.
Medicare Part B funds (~$122 paid by each member)
Retiree funds (remainder of costs)
Projection of future costs
4% Budget Target
3% Budget Target
70%

6. Goals: For 70% floor, 3% budget target, 4% budget target 1
Goals: For 70% floor, 3% budget target, 4% budget target 1. Determine all plans average for Retiree and UC costs over 10 years 2. 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 %)
Effect of rescinding 70% floor on total Explicit costs

7. 2017 Monthly Health Net Rates paid by Retirees and Active Employees
Plans U
Retiree % UA UC
Active1
$73
$218
$132
Non-Medicare < 65
$226
$515
$407
Non-Medicare
10%
Medicare Plans M MM MA MC
Retiree cost
$64
$128
$353
$245
Medicare Part B
$122
$244
Total Medicare cost
$186
36 %
$372
$475
$367
1Pay Band 2, and here “U” refers to Employee

9. Health Net Retiree Rates
2017
2018
Plans U
Retiree %
Year over Year Increase %
Active1
$73
$76
 4%
Non-Medicare < 65
$226
$241
 7%
Non-Medicare
10% 4%
Medicare Plans M
Retiree cost
$64
$77
Medicare Part B
$122
$134
Total Medicare cost
$186
36%
$211
13%
1Pay Band 2, and here “U” refers to Employee

10. 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?

11. 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.

12. Questions?