May 27, 2011
To the Honorable Jeffrey M. Schoenberg
218 Statehouse
Springfield, Illinois 62706
Subject: State Health Insurance –
Retirees
Dear Senator Schoenberg:
This morning, I reviewed the amendments
included in SB 175 and I have several concerns with this proposal.
Overall, the amendment based premium costs on essentially two items:
Income and retirement points. This legislation does not take into account
the differences that exist between the retirement systems and the arbitrary
differences in premium costs detailed in the Mercer Report. Additionally,
we have identified other problems with the legislation, specifically:
1) “Estimated annual
household income” as a marker for the State determining premium payments.
We think estimating income is a vague standard, it will be an administrative
nightmare for the State to enact, is based on erroneous assumptions about
retiree income and ability to pay, and is politically unwise. We
therefore remain opposed to basing retiree premium costs on estimated
income. Pension income is our preferred standard.
2) Currently in the SURS
system, we have approximately 900 retired university employees that retired
prior to 1980. These individuals, generally, are elderly citizens, most
of them are in their 80’s and 90’s, some of them are ineligible for Social
Security and Medicare, and we think they should be totally exempt from this
legislation. These individuals don’t have options. They cannot get second
jobs. They cannot purchase affordable health insurance because of their
age. In SB 175, there is no language to exempt these individuals from
this legislation.
3) There are also
approximately 9,000 SURS members who are ineligible for Medicare. SB 175
does not take into account this vulnerable group of retirees. We believe
that Medicare ineligible retirees should also be exempt from this legislation
as their premium benefits to maintain coverage would be incredibly expensive
and burdensome. SB 175 does not attempt to address these individuals. We
are continuing to look for the number of retirees in the SERS, GARS and JRS
system. As a reminder, these are people
who were hired before 1986.
4) SB 175 also contains an
appeals process in the Department of Insurance. We can envision nightmare
scenarios of retirees who are appealing their estimated annual household income
to the Director. Imagine, if you will, an
individual whose appeal is caught in a bureaucratic web, who is waiting for one
or two years for a decision on his or her case, while having to pay a premium
of $900+ per month. That situation will occur and we are opposed to
subjecting our members to such a process. That needs to be stricken from
this bill.
5) As a general principle,
the State made promises to encourage State Employees to retire early. With
this incentive, the State automatically gave them free healthcare. We
believe in the notion of promises made promises kept. And now it appears
that the State is welching on that promise. Any
proposal to increase the cost of retiree healthcare should be modest, be
gradually increased and be fair to the vast majority of plan participants.
Finally, we believe your introduction of Amendments
to SB 175 in the final days of this legislation session puts us in a
bind. We need more time to inform our members of the need to reform this
system, and to properly identify and notify our members who might be hurt by
these reforms. We want to be thoughtful in how we change this system and
to us, this bill is too much, too soon. We
promise to you, that we will work with you, your able staff, and all interested
stakeholders to craft a better bill this summer and fall. We strongly
encourage you to set this proposal aside for the rest of this session.
Again, on behalf of the State Universities Annuitants Association, myself, Executive Director, John Carr and Dick Lockhart, Contract Lobbyists; the Illinois State Employees Association – Retirees, Rudy Kink, Executive Director, Tom Ryder, Contract Lobbyist; and the Retired State Employees Association, Bill Curry, President and Randy Witter, contract lobbyist; we ask for consideration to assist in the process of legislation that will ultimately affect the 101,000 retirees our organizations represent (SURS, SERS, JRS and GARS).
Sincerely,
Linda Brookhart
Executive Director
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