During the September meeting of the State Teachers Retirement Board, the board continued its discussion on the solvency of the Health Care Fund and how to provide a meaningful subsidy for plan enrollees. The Health Care Fund has a balance in excess of $3 billion and is currently estimated to remain solvent through 2034. Solvency is largely driven by the subsidy provided to each enrollee — both the initial subsidy level and the growth of the subsidy. The STRS Ohio Health Care Program is currently funded through premiums charged to plan enrollees, government reimbursements and investment earnings on the fund. STRS Ohio no longer allocates a portion of employer contributions to the Health Care Fund, as all of the employer contributions are needed to fund pensions.
Finding solutions for health care funding is challenging for several reasons. The board has already implemented many cost-saving options available through plan design changes, and health care trend projections provided by Segal Consulting show expected cost increases (trend rate) to continue to grow over the next decade. With no dedicated source of income for the Health Care Fund, the board has been reviewing premium subsidy strategies that include a cap to extend the life of the fund. Most of the cost models reviewed are projected to extend the solvency period for the Health Care Fund to 30 years or more. Under these cost models, long-term costs are expected to grow for all enrollees. The cost models under consideration maintain a higher premium subsidy percentage for Medicare enrollees than for non-Medicare enrollees.
The board will continue its discussion on the health care program at its October meeting. The changes being discussed will not impact the 2018 plan design or subsidy level.
The Retirement Board approved 349 active members and 93 inactive members for service retirement benefits.
Other STRS Ohio News
STRS Ohio to Distribute Annual Statement of Account to Members; Paperless Option Grows in Popularity
STRS Ohio is preparing Annual Statements for distribution to members in late September. Members have shown a growing interest in receiving their Annual Statement online through their password-protected Online Personal Account. More than 52,000 members have now opted to view their Annual Statement online rather than receiving a printed Annual Statement through the mail.
Actuary File Provides Interesting Facts About STRS Ohio Members and Retiree Longevity
STRS Ohio completed its actuary file and sent it to Segal Consulting for the fiscal 2017 valuation. This year’s file continues to shed light on STRS Ohio retiree longevity. As of June 30, 2017, STRS Ohio had 190 benefit recipients who are age 100 or older — an increase from 171 last year. The 190 individuals include 172 women and 18 men. Most of these centenarians are service retirees; however, 55 are beneficiaries of retirees or survivors of an active member who died, and one is a disability recipient. The oldest STRS Ohio retiree is now 107 years old, having retired in 1973. She began teaching in 1930.
The retiree who has been receiving benefits the longest is a 104-year-old recipient who retired in 1969 at age 56 after 35 years of service. STRS Ohio has been paying this retired educator for 48 years.
Active members have their own type of longevity in the classroom, with 12 members having 50 or more years of service and 121 members exceeding 40 years of service in the classroom.