NCPERS and Health Care:
Promoting Secure Retirement
Hank Kim, Esq.
National Conference on Public
Employee Retirement Systems
Presentation Overview
• Introduction to National Conference on
Public Employee Retirement Systems
• Why Health Care?
• NCPERS Reactions & Initiatives
• The Road Ahead
• Wrap up and Q & As
NCPERS
• Largest nonprofit trade association
representing 500 public sector DB plans
• Who we ARE:
– Advocacy
– Research
– Education
• Chairing the DB Coalition
NCPERS Position
• All workers (public and private) have
the right to a secure retirement.
• A traditional pension plan (DB plan)
and a good retiree health care plan are
significant contributors to a secure
retirement.
Why Health Care?
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Medicare Part D
More people are losing coverage
Health care costs = 16% of nation’s GDP
Unsustainable health inflation
Quality of care uneven
Why Health Care?
• Retirees are
suffering!
• Average pension
benefit is FL is $850/
month.
• Average HI premium
for retirees is $900+/
month.
Why Health Care?
• Governmental Accounting Standards Board
• In June 2004, the GASB approved the final set of
accounting standards applicable to “Other Postemployment Benefits” (OPEB)
– Statement No. 43, Financial Reporting for
Postemployment Benefit Plans Other Than Pension
Plans and,
– Statement No. 45, Accounting and Financial Reporting
by Employers for Postemployment Benefits Other Than
Pensions
Why Health Care?
• When promised in the form of a defined benefit,
OPEB includes:
– Postemployment Health Care Benefits
• Medical, dental, vision, hearing, and other health-related
benefits whether provided separately or through the pension
plan
– Other Benefits
• Life insurance, disability, long-term care, etc., when provided
separately from a defined benefit pension plan
• Largest component of OPEB is health care
GASB Forum
• www.NCPERS.org
• Experts from GASB,
credit rating agency,
consulting and law
firms.
• Help understand what
GASB statements are
and what they
encourage.
• Offer advantages ways
to pre-fund for retiree
health care.
GASB Forum
• www.NCPERS.org
• Experts from GASB,
credit rating agency,
consulting and law
firms.
• Help understand what
GASB statements are
and what they
encourage.
• Offer advantages ways
to pre-fund for retiree
health care.
NCPERS Reactions & Initiatives
• 2002 formed our Task Force on Health Care
Benefits.
• Issued 25 specific recommendations.
• All 25 recommendations have been either
completed or are near completion.
First Task Force Report
• Survey NCPERS
members about retiree
health care.
• Explore DB-style
pre-funding options.
• Introduce legislation
to help retirees
purchase health
insurance.
Second Task Force Report
• NCPERS survey
revealed that:
– 93% of respondents
reported their
beneficiaries had
access to group health
insurance.
– 78% of respondents
reported some-level of
retiree co-insurance.
Third Task Force Report
• Currently available
tool that helps to save
for health care needs
in retirement.
• DB features.
• Employers &
employees can
contribute into RMT.
• All tax free!
Legislative Activities
• NCPERS Healthcare
Enhancement for
Local Public Safety
(HELPS) Retirees
• HELPS Retirees bill
allows public safety
retirees to use up to
$3,000 of pre-tax
money for health
insurance premiums.
Healthcare Enhancement for
Local Public Safety
(HELPS) Retirees
• Allows retired public safety officers to
use up to $3,000 on a tax-free basis to
purchase health insurance.
• Begins on January 1, 2007.
HELPS Retirees Applies to:
• Public safety officers.
• Who separated due to disability or
attainment of normal retirement age.
• Purchase of health insurance or longterm care insurance.
• Can use DB, 403(b), or 457 plan
distributions.
HELPS Implementation
• www.NCPERS.org
• IRS guidance &
NCPERS response
• Legal memo
• FAQs for pensions
• FAQs for public safety
officers
• Model enrollment
forms
• Text of HELPS
Retirees
HELPS Retirees History
• 108th Congress
– 2003 Portman-Cardin bill
– Provision to allow all retirees to use pre-tax $
for health insurance premiums
– Provision and H.R. 1776 died
– 2004 NCPERS tried for public sector only
– No bill introduced because of cost and equity
argument
HELPS Retirees Bill
• 109th Congress
– 2005 Rep. Chocola introduces H.R. 2177,
Healthcare Enhancement for Local Public
Safety (HELPS) Retirees bill.
– Over 104 cosponsors
– Sec. 845 of Pension Protection Act (H.R. 4)
– Signed into law August 17, 2006 (PL 109-280)
– Took effect January 1, 2007
HELPS–2
2007
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Healthcare
Enhancement
Local
Public
Servants
Round 2
Latest Task Force Recommendation
• Public Sector Health
Care Symposium
• September 2006
• Nearly 200 attendees
learned about:
– GASB OPEB
– GASB responses
– Universal health
insurance laws in
Massachusetts and
Vermont
NCPERS Second Annual
Health Care Symposium
• Public Sector Health Care Symposium –
October 1-3, 2007 in Chicago.
• Visit www.NCPERS.org in the coming months
for more information on the Symposium and
other health care news.
NCPERS
2007 Educational Programs
Legislative Conference
February 5-7 in Washington, DC
Trustee Educational Conference
May 18-19 in Honolulu, HI
Annual Conference
May 20-24 in Honolulu, HI
Public Sector Health Care Symposium
October 1-3 in Chicago
NCPERS Resources
Questions
NCPERS
444 North Capitol Street, NW, Suite 221
Washington, DC 20001
202-624-1456
[email protected]
www.NCPERS.org