You wanted to know the history of the state health care subsidy for retired teachers, the current amount of the subsidy, and the last time it was increased.

SUMMARY

Health insurance for retired teachers, governed by Connecticut General Statutes § 10-183t, is provided either by the Connecticut Teachers Retirement System (CTRS) or by the retiree’s last employing board of education. Costs are shared by the state General Fund, active teacher contributions via the Health Insurance Premium Account (HIPA), and retiree contributions.

If CTRS members are eligible for Medicare Part A they may participate in the CTRS plan. Up until 2000, this plan was provided at no cost to retirees. The state provided 25% of the premium with the remainder coming from HIPA. Currently, the retirees must pay 25% of the CTRS plan premium, with the state paying the greater of 25% percent of the current premium or 25% of the premium in effect in 1998. The remaining costs are borne by HIPA.

If retirees are ineligible for Medicare Part A, they may seek insurance from their last employing board of education. The law requires local boards to offer retirees the same plan they offer active teachers. In 1989, CTRS began providing a subsidy to local boards to offset the costs to retirees. However, local boards may charge costs above the subsidy. The subsidy was funded entirely by HIPA and was equal to the amount of the CTRS plan premium. In 1998, the state began to contribute to the premium from the General Fund in order to relieve some of the burden on HIPA. For several years, the amount of the subsidy fluctuated with the cost of the CTRS plan premium. It was last increased in July of 1996 from $ 105. 00 to $ 110. In 2000, the subsidy amount was statutorily frozen at $ 110 per person per month (i. e. $ 220 for the retiree and spouse).

HISTORICAL CONTEXT

According to the Connecticut Teachers Retirement Board (CTRB), health insurance benefits for CTRS members began in the 1950’s when CTRS established a group health insurance plan. At this time, the retiree was responsible for the full premium. In 1978, due to the rise in health insurance costs, the legislature passed a law obligating the state to pay 10% of the retiree’s health insurance costs (P. A. 78-228).

Legislation was passed in 1986 to require local boards of education to offer health insurance benefits to retirees and spouses who did not have Medicare Part A in an effort to provide better coverage to retirees at a lower cost. The state did not subsidize such plans at this time (May Sp. Sess. P. A. 78-228). The CTRS plan became a Medicare Supplement Plan. Legislation limited plan participation to those retirees receiving Medicare Part A and increased the CTRS portion of the premium from 10% to 25% generally and from 30% to 45% for disabled members. The funding came from CTRS General Fund appropriation.

HEALTH INSURANCE PREMIUM ACCOUNT

In 1989, legislation was enacted to establish the Health Insurance Premium Account (HIPA) to subsidize health insurance for retired teachers and their spouses (P. A. 89-342). The account was funded with the 1% supplemental contributions that active teachers must contribute from their salary in addition to their pension contribution. These contributions were previously used for CTRS survivor benefits. The law required that $ 500,000 be retained annually from these contributions to maintain funding for survivor benefits and required the state to fund any deficiency in HIPA.

HIPA contributed 75% of the CTRS plan premium, with the state paying the remainder from the General Fund. There was no cost to the retiree. The cost of the CTRS plan premium was $ 87. 51 per retiree per month at this time.

The legislation also required the CTRB to contribute to the local board plans in an amount equal to the CTRS plan premium, with funding coming exclusively from HIPA. The subsidy could not be used to offset the costs to the local boards, only to subsidize retiree contributions. The law gave the local boards the option of paying any additional costs or charging the retiree.

According to the CTRB, the premiums for the CTRS Medicare Plan (and therefore the local board subsidy) progressed as follows:

SUBSEQUENT CHANGES

1998

According to the CTRB, by 1998, HIPA was facing insolvency and state funding was in jeopardy. Legislation was passed to modify the health insurance benefits by:

Public Act 98-155 changed the mandatory General Fund state contribution for the CTRS plan to the greater of 25% of the cost of the basic health plan or 25% of the rate in effect for FY 1998 ($ 110 per month). This meant the General Fund contribution could not fall below its 1997-98 level of $ 27. 50 per month even if plan costs went down. If premiums increased, the board had to pay 25% of the amount from the General Fund. In this way, premium savings were used to reduce the

burden on active teacher contributions. In addition the state began to contribute to the local board subsidy, previously funded entirely by HIPA, in the same amount.

2000

In 2000, the legislature eliminated the relationship between the CTRS plan premium and the local board subsidy by permanently freezing the local board subsidy at the amount paid in 1999, $ 110 (P. A. 00-187).

Additionally, the legislation required retirees covered by the CTRS plan to contribute 25% of the basic plan premium. The state is still required to pay 25% from the General Fund, with the remainder coming from HIPA.

2003

Public Act 03-232 will, effective in 2005, increase the mandatory health contribution for active teachers from 1% to 1. 25% of salary and require the state, the member, and HIPA to contribute equally to premium costs to insure the solvency of HIPA.

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