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 108 th 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 109 th 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 – 2 2007 H ealthcare E nhancement L ocal P ublic S ervants 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 Annual Health 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.www.NCPERS.org

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