The draft version of the state budget in both House and Senate would cut in half the state’s contribution to the TRS-Care health plan for retirees. The state currently contributes the equivalent of 1 percent of active employees’ payroll. (Active employees themselves contribute 0.65 percent, their employers 0.55 percent.) Cutting the state’s share to half of 1 percent would have serious ramifications for TRS retirees.
By our estimate, the potential cost to TRS retirees, on average, would be about $800 per retiree per year for the 2012-2013 biennium. On Friday, at a meeting of the TRS Retiree Advisory Committee, TRS officials presented a scenario that showed TRS retiree premiums rising sharply in the fiscal year starting September 1. A low-end estimate of those increases is 19.3 percent for the coming fiscal year, if the state goes through with cutting its contribution in half.
TRS retirees have not seen a cost-of-living increase in the past ten years. During that decade, they also have absorbed a significant increase in their premiums and out-of-pocket costs for TRS-Care health benefits. The draft state budget would cut not only the state’s TRS-Care share but also the state contribution rate to the TRS pension fund, rendering any cost-of-living adjustment an even more distant prospect than it is now.
This may be the starting point for discussion of TRS-Care costs at the state capitol, but it is not the last word. The harm to TRS retirees from these proposals is yet one more reason for lawmakers to abandon the destructive, cuts-only approach to the 2012-2013 budget. For more on that topic, see the next item.