TCCTA Blog

Health Plan Changes Updated

The Employees Retirement System of Texas, the agency that administers health benefits for higher education in Texas, has updated its Q&A on forthcoming changes. As reported earlier, of paramount concern to most members is the switch from HealthSelect (the most popular option for participants) to United Health as the official third party administrator.

It's possible your primary care physician or specialist will not be in the new program. Members are allowed to go "out of network," but it costs more.

Here is a very valuable link from ERS, detailing the changes and responding to questions that have been asked recently. You will note that premiums may rise soon (if you have dependent coverage), but co-pays, deductibles, and basic elements of the plan design are slated to stay the same for the near future.

Here's their exact wording:

Copays, deductibles, and out-of-pocket maximums are not changing due to this transition; however, the ERS Board of Trustees re-evaluates the plan’s expenses and funding to determine if plan design changes are necessary at the May board meeting. At this point, we do not anticipate plan design changes for Plan Year 2013 that starts September 1, 2012. We will provide information on any changes after the May board meeting.

The ERS board will meet on May 22. Please check this site periodically for updates.

ERS Posts Update on Health Plan

The Employees Retirement System, which administers health benefits for community and technical college educators, has posted an update regarding plans to replace Blue Cross Blue Shield with United Health Care Services as its third party administrator. As reported earlier, Blue Cross has asked for an explanation why it lost the contract, but right now it looks like the agency intends to proceed with the switch.

The new plan will take effect September 1.

In practical terms, it means that HealthSelect (the most popular plan) members will no longer receive these services from Blue Cross Blue Shield. Members will receive official notification and new membership cards. The open enrollment period is during July.

By far the most pressing concern for affected individuals is the possibility that their primary care physician will not be on the United list. The link provided below includes details on how to find out and what you may be able to do about it.

Importantly, the prescription drug plan will remain the same and continue to be administered by Caremark. Furthermore, members of the Humana Medicare Advantage Plan, Scott and White Health Plans, or Community First HMO will not be affected by this change, an official press release says.

The ERS site also discusses the likelihood of premium rate increases for the next plan year.

Please read this Q&A carefully, as it contains information not included in previous posts on this subject.

ERS Responds to Health Plan Questions

It started as a kerfuffle (one step beyond a stir), but then advanced quickly to a brouhaha. You know an agency is in Full Brouhaha Mode when officials post a long list of responses. This means the phones have been ringing.

The Employers Retirement System of Texas (ERS) has released answers to "frequently asked questions" regarding the agency's decision to switch from Blue Cross to United Health as the plan administrator for Health Select, the most popular health insurance program for higher education employees.

Not surprisingly, people want to know why. And, since there is a lot of money involved, some are connecting a few dots, creating a larger picture. Here's Paul Burka of Texas Monthly, for instance.

As reported earlier, the new contract is set to take effect Sept. 1. Blue Cross has filed an official protest.

Here's the ERS response. If the situation deteriorates from brouhaha to imbroglio, you can expect a further report.

Blue Cross Protests Decision

Blue Cross Blue Shield of Texas has filed a formal protest with the Employees Retirement System (ERS) for a review of the competitive process used to award a new contract to United Health Care. ERS executives will examine the protest and decide on its merits, according to an article in the Austin American-Statesman by Kate Alexander.

The ERS board voted recently to award United a four-year, $204.8 million contract to administrate the plan, replacing Blue Cross. For background, please see this previous post.

Many community college educators are concerned that the new contract will require them to change their primary care physician, or will result in a denial of medical tests or services. The ERS decision applies to HealthSelect, the most popular health insurance program for Texas higher education employees. Other plans, such as HMOs, will not be affected, nor will the current contract with Caremark for prescription drugs by mail.

From the AAS article:

The United proposal came in $25 million less than Blue Cross' and, the company also estimated it could save the state an additional $14 million on health care.

Blue Cross maintains that the new contract will actually drive up costs by $450 million because Blue Cross offers better discounts to members of the state plan than United would, and also has a larger network of doctors, hospitals and other providers.

"Because of our experience with ERS and its participants, providers and others over the last three decades, we are deeply concerned with the impact ERS' decision will have on the state of Texas and ERS participants," Blue Cross said in a statement released Monday afternoon.

And:

A whisper campaign that lobbyists connected to Gov. Rick Perry, particularly former aide Mike Toomey, had unduly influenced the decision to award the contract to United emerged in the wake of the board vote on Feb. 21. Toomey is a lobbyist for United.

But Perry wields limited influence over the ERS board because the governor appoints only one of the six board members. House Speaker Joe Straus and Texas Supreme Court Chief Justice Wallace Jefferson each fill a spot, while ERS members elect the remaining three board members. The current chairwoman, Yolanda Griego, is an employee of the Health and Human Services Commission.

United Health to Replace Blue Cross

The ERS Board of Trustees recently "entered into contract negotiations with United HealthCare Services, Inc. to serve as the third party administrator (TPA) for the self-funded HealthSelect of Texas health plan," starting September 1, 2012, according to an official press release.

This probably affects you, as HealthSelect is by far the most popular program for Texas higher education employees. In practical terms, it means HealthSelect members will no longer get these services from Blue Cross Blue Shield. You will receive official notification and new membership cards before the system kicks in.

The United call center and claims processing unit is located in San Antonio.

Members of the Humana Medicare Advantage Plan, Scott and White Health Plans, or Community First HMO will not be affected by this change, the press release says.

Despite the lead sentence above, it sounds like it's a done deal, according to subsequent language in the official ERS statement:

ERS rebids Texas Employees Group Benefits Program (GBP) contracts regularly to ensure members get quality benefits at a reasonable cost. United was selected after a rigorous eight-month selection process. “We made a careful decision considering the importance of the health plan to the 438,570 employees, retirees, and their dependents who are members of the plan. United was selected for their winning combination of programs, services, and low administrative fee.” said Ann Bishop, Executive Director of ERS. “The program savings benefit members by offsetting ever increasing medical costs.”

The savings reportedly will be $41 million. Please read the entire statement for details.

Importantly, the prescription drug plan will remain the same and continue to be administered by Caremark.

However, it's possible your primary care physician will elect not to participate in the new arrangement. When this sort of thing occurs, it invariably produces consternation for individuals who don't want to switch doctors. The statement continues (you may activate the United link below to see if your doc is on the list currently, but the roster is likely to grow in the coming months):

Network disruption is expected to be minimal as well. ERS projects that about 2% of HealthSelect members might want to choose a new primary care physician (PCP) if their current PCP decides not to join. HealthSelect members can link to the online search tool for the United HealthCare Choice Plus network to find out if their doctor is in the network.

Paul Burka of Texas Monthly has a take on the ERS decision. Here's the link.

Crowdsourcing and Adjuncts

Most who are knowledgeable about the situation agree that part-time instructors are generally underpaid and should have access to health and retirement benefits. Naturally the facts on the ground depend on how many courses an adjunct employee teaches, with benefits kicking in only after stipulated thresholds. Incidentally, it will be interesting to see how adjuncts might gain from the new federal health care legislation, assuming it survives the Supreme Court.

As their ranks have grown, more and more part-timers are commuting school-to-school with their textbooks and other supplies in the trunks of their cars. Obviously this is not a good situation, particularly in light of various studies indicating that students need more personal engagement while on campus. That's hard to do from the freeway.

Full-timers tend to sympathize, but also realize that, in tight budget situations (arguably the New Normal of higher education), institutions can save lots of revenue by using adjuncts instead of full-time faculty members. Also, there are certain teachers who don't really care about compensation—perhaps those with other jobs, retired educators, and persons who have health and pension benefits already. But these individuals are probably a minority at most locations, if we are honest about it.

A recent blog post by Josh Boldt is attracting a lot of attention lately. He is attempting to crowdsource (there's a term that lights up your spell-checker) as much data as possible regarding the working conditions of part-time college and university faculty members. Many teachers from around the country have participated, and it's instructive to look at the responses on his Google Doc (a link is provided at the site above). If you have never heard of a Google Doc, all the more reason to check it out.

There is a definite paucity of Texas schools in the collection so far. And, characteristically, universities are represented more prominently than two-year schools. We can help fix that. There is no claim of scientific validity, but large participation adds credence to the effort.

Caveat: Mr. Boldt has definite opinions. For example, in response to those who argue that the market alone should determine compensation, he says that's the same rationale used once to justify a host of horrible and unjust working conditions. You can read it for yourself.

To expedite the information flow, here is the TCCTA 2011 Annual Salary Survey. Just click on the link "Part Time Faculty Compensation" for a document in Excel format.

Salary and Benefits Survey Now Online

For the fifth consecutive year, the annual TCCTA Survey of Faculty Salaries is offered totally online, allowing more features and information than printed previously in the Messenger.

The survey includes the same important data as always, plus responses to many new questions. Most importantly, the 2011-12 survey asked colleges to report supplemental benefits such as release time, sabbatical leave, on-site child care, and paid dependent insurance coverage. College officials had requested this opportunity, allowing their schools to explain benefits that do not lend themselves to quantification and ranking.

The components of the survey can be downloaded and printed conveniently. Be sure to click on the "Plus" sign beside each school for additional benefits that may be offered.

TCCTA began conducting the annual Survey of Faculty Salaries in 1976. Since 2002, the association has collected and tabulated salary figures from Texas community colleges using four distinct “ranges,” from “lowest quarter” to “highest quarter” paid. The lowest and highest actual salaries for bachelor’s, master’s, and doctoral degrees are presented for each range.

Ranges were based on the total salary range for each degree, subtracting the lowest salary from the highest, then dividing the result into four equal monetary quarters.

Here's the link.

ERS to Lose Long-Term Care with Hancock

The Texas Employees Retirement System (which administers health benefits for community and technical college educators) will lose its long-term care provider soon. Here's the official announcement. If you already have a contract with John Hancock, your coverage will not be affected, but the company is terminating the arrangement in the future. Later this year, ERS will issue a request for a new provider.

Many individuals choose to purchase long-term coverage to help pay for costs associated with nursing care. There are arguments pro and con about such coverage, and a wise decision may depend upon an individual's financial situation. Those who apply for such a plan can be denied based on health issues. Premium rates should also be examined carefully and are dependent upon age.

Here is a "Shopper's Guide" from the Texas Department of Insurance.

The key points from ERS:

Our group Long-Term Care Insurance provider John Hancock Life Insurance Company recently informed ERS that enrollment for this coverage will be discontinued effective January 1, 2012. John Hancock will not accept new enrollments after December 31, 2011. If you wish to apply for Long-Term Care Insurance through John Hancock, your application must be postmarked by December 31. If you apply for coverage before December 31, and you are accepted for coverage, your premiums may increase in the future.

Closing enrollment to new enrollees does not in any way affect employees or dependents who already have Long-Term Care Insurance coverage through John Hancock. If you have questions about this decision or your Long-Term Care Insurance coverage, please call John Hancock at (800) 400-9396.

ERS will issue a Request for Proposal for a new Long-Term Care Insurance provider later in the year.

Financial Seminars Include Social Security

The highly popular Financial Planning Seminars at the TCCTA annual convention will include a presentation from the Social Security Administration on the Government Pension Offset (GPO) and Windfall Elimination Provision (WEP). These two aspects of federal law can greatly affect those who plan to retire from colleges that do not participate in the Social Security system.

The Social Security session is planned for Friday morning, March 2, during the TCCTA annual convention in Frisco.

Here is more information on the WEP and GPO. Please note the separate link for each program as well as the broad overview provided by the Social Security Administration.

System representatives will present an overview of the two policies and respond to questions. Those who have been urging Congress to repeal one or both provisions have been disappointed in recent years, as the current budget deficit and partisan gridlock have completely frozen such efforts in House and Senate committees.

Other aspects of Social Security law pertaining to all prospective retirees will be featured in the presentation.

A separate seminar will feature “Personal Finance,” with Lloyd Lowe Sr., founder and owner of LD Lowe Sr. Wealth Advisory. The session is designed for members of the Texas Teacher Retirement System and participants in the Optional Retirement Program. This session is planned for Saturday morning, March 3.

Group Sounds Alarm on TRS

This post will likely be of more interest to members of the Texas Teacher Retirement System (TRS) than those who are Optional Retirement Program (ORP) participants. However, the two programs tend to track each other closely in terms of the state's contribution.

Tim Lee, executive director of the Texas Retired Teachers Association, has written a front page article in the group's quarterly publication, The Voice (membership may be required), sounding the alarm about current efforts to end TRS as we know it for some current and prospective employees. Mr. Lee's language is somewhat stronger than usual, using  "Greed. Fear. Ignorance" in the subtitle of "Breaking the Bank: Who's Threatening Your Pension."

As reported here frequently, during the last Regular Session, some lawmakers pushed for converting TRS into a "defined contribution" retirement plan, along the lines of the 401(k) portfolios now popular among private employers. ORP is such a plan.

Most proposals would "grandfather" individuals presently in the system. However, as Mr. Lee and others point out, all current and prospective retirees could be affected, to the degree that the giant TRS fund would be less capable of paying out promised benefits in the future. Also the move could jeopardize efforts to enhance the program or to provide cost-of-living adjustments (which TRS retirees have not received in many years).

The backdrop of this controversy is national, as many states wrestle with daunting shortfalls, and budget writers focus on pensions in their hunt for revenue. Some think tanks and policy advocates are ideologically opposed to all traditional public pensions.

It is important to note that the TRS fund has recovered to a large degree from the global decline in markets, and is far less expensive proportionately than plans in many other states. The "multiplier," which determines the level of benefits, is more modest than similar plans elsewhere, and early retirement options were trimmed in recent Sessions of the Legislature.

Mr. Lee gets specific about at least one organization involved in the effort to transform TRS:

Several groups in Texas are leading this effort. One is the Texas Public Policy Foundation. Their web site calls on the Texas Legislature to implement a three step plan: 1) freeze participation of unvested or new public sector workers from participating in the state’s traditional retirement plans; 2) transfer all new or current unvested employees to a defined contribution (DC) plan; and 3) implement either a hard or soft freeze of the system for current vested employees.

This plan does not take into account that 80% of all Texas public education employees do not participate in Social Security. With no traditional retirement plan and no Social Security, a purely market–driven solution for school employees may be the best model for future retirement insecurity that TRTA has ever heard of.

Of course, most community colleges in Texas do not participate in Social Security either. The current vesting period for TRS is five years. Here's an overview of TRS and ORP from the Coordinating Board, which explains vesting and other issues.

During the last Regular Session, TCCTA lobbyist Beaman Floyd testified against a bill by Rep. Warren Chisum (R-Pampa) that would have mandated the conversion of TRS from a defined benefit plan to a defined contribution plan. While the bill failed to pass the House, it is clear that such efforts will continue over the next several months.

More from Mr. Lee:

“Greed. Fear. Ignorance.”

These three sentiments describe a new, fierce attack on the traditional defined benefit pension plan. There is skepticism that this new threat may harm existing public pensioners. Certainly, advocates for the elimination of traditional plans for public education retirees want you to believe that their efforts are not designed to hurt current annuitants and will impact active or future employees only. The same advocates want you to believe that current and future employees want and even demand these reforms. Please know these attempts to obfuscate this issue are false. Any and all work designed to alter and destroy traditional retirement benefits for active and future public employees will impact their retirement security and destabilize the existing traditional retirement plan for all current retirees.

The Texas Retired Teachers Association (TRTA) is not an alarmist organization. We are alarmed, however, that this effort has grown with such magnitude and is gaining favor among some public service representatives.

The individuals and organizations promoting the elimination of the traditional retirement plan for public education employees and other public workers have worked to find like–minded legislative leaders in the Texas Legislature. This past session, two plans were put forward to eliminate the traditional retirement benefit plan for current and future public employees including active school personnel. While TRTA is not being alarmist, we are raising the alert level. You must know that these forces are growing in number, influence and resources and are ready to go to war.

Why the Attack, Why in Texas

There are some organizations that want to capitalize on national and world economic struggles, blaming this adversity on the funding of public pension plans. There are other reasons that public pension plans are under attack today, and some of those attacks are levied for good reason. In some instances, public pension plan leaders misjudged benefit levels versus long–term costs. Funding authorities, such as state legislatures, have grossly underfunded (or simply not funded) benefits they promised to workers.

By and large, though, public pension funds around the country are experiencing difficult times due to unfavorable and unpredictable market returns. While the Teacher Retirement System of Texas (TRS) has experienced good and bad years in the last decade, the system’s average investment return since its inception in 1937 exceeds 10%. Investment returns and poor decisions by policymakers are not the only reasons that opponents to traditional retirement plans are on the attack.

As the political season approaches (primaries are in March), it is crucial to ask candidates for the House and Senate where they stand on this issue.