Despite rumors, price of state retiree insurance still not settled
SPRINGFIELD -- It could be weeks or maybe months before state government retirees learn specifically how much they will have to shell out under a new law requiring them to pay premiums for their health insurance.
“It’s been tough on retirees for the past year, because of the different things they hear going on,” said Rudy Kink, a retired state worker who heads the Illinois State Employees Association Retirees. “The retirees are scared to death. They don’t know who to believe over there.”
Most retirees who had 20 or more years of state government employment have received premium-free retiree health insurance, although they’ve still been responsible for such expenses as co-pays and dependent coverage.
Kelly Kraft, spokeswoman for Gov. Pat Quinn’s budget office, said no information will be released about future premiums while the state is still engaged in contract negotiations with the American Federation of State, County and Municipal Employees, the largest of the unions representing state workers. One subject of those talks is the cost of retiree health insurance.
“The collective bargaining process is continuing, and as soon as that is complete, all of this information will be made clear,” Kraft said.
Linda Brookhart, executive director of the State Universities Annuitants Association, said she understands that a decision on premiums will wait until AFSCME’s contract is negotiated. Still, she’s encountered retirees who believe they’ve seen numbers for their premium charges.
“Nothing says right now what the premium is going to be,” said Brookhart, who along with Kink has been in several meetings with CMS about the insurance issue. “A few people have said they have seen (numbers), but no. I’m sure there are some ideas, but no one has wanted to put any inkling of information out there, because we might have to retract it.”
“I have heard a premium amount from different retirees calling into our organization,” Kink said.
However, she said, “I have been in no less than seven meetings (with CMS and the budget office), and we have yet to get an amount of the premium that’s going to be charged.”
It’s also not clear how long the AFSCME negotiations will take. In late June, AFSCME and the state agreed to continue the terms of the old contract beyond its scheduled expiration June 30 while talks on a new pact continued.
The two sides also agreed then to bring in a mediator. AFSCME said Friday the two sides have not yet agreed on who the mediator will be, but talks were held anyway last week. They are scheduled to resume July 23.
As long as the negotiations continue, the state isn’t collecting health insurance premiums from retirees. Brookhart said many retirees are worried that, once premiums are set, the state will try to retroactively collect premiums back to July 1.
“We’re going to work very hard that that not happen,” she said. “That (late start) was not the fault of any of those who are now going to be paying the premiums.”
Kraft said no decision has been made about whether premiums will be made retroactive.
Under the new law, which was enacted as Senate Bill 1313, the Department of Central Management Services is responsible for determining retiree insurance premiums, although proponents of the bill said that would be done in conjunction with union bargaining.
Kraft said, however, some basic outlines of the premium schedule have already been established. The amount retirees will pay will depend on their age at retirement, their years of service and the amount of their state pensions.
“They’re going to have to pay a percentage of those (health insurance) costs for themselves and their dependents,” Kraft said. “Except for the fact it’s based on their age, years of service and their pension, we haven’t exactly said what percentage-wise.”
Kink, who formerly worked for the State Employees Retirement System, thinks some confusion among retirees about the premium charges may have been generated by a different legislative proposal, Senate Bill 3919.
That proposal, introduced late in the legislative session by Sen. Dale Righter, R-Mattoon, lays out percentages (although not actual dollar amounts) that retirees could pay for health insurance premiums. However, the bill was never called for a vote and consequently is not state law.
“I would say if someone’s using that in trying to get to the cost of their insurance, it’s not going to be correct,” Kink said.
Righter could not be reached for comment.
Although retirees don’t know the cost of their state health insurance yet, they can take steps to prepare for when they do, both Brookhart and Kink said. Although she does not give financial advice to retirees, Brookhart said she has suggested they obtain quotes on private health insurance to compare to the premiums the state will charge.
“I believe state employees have been insulated from the fact they do not realize how much health insurance costs nowadays,” Brookhart said. “Learn how to shop, find out what’s available to you. Then you can do a comparison where your better cost for your money is going to be.”
Doug Finke can be reached at (217) 788-1527.