NCPERS and Health Care: Promoting Secure Retirement

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NCPERS and Health CarePromoting Secure
Retirement

• Hank Kim, Esq.
• National Conference on Public Employee Retirement
  Systems

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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

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NCPERS

• Largest nonprofit trade association representing
  500 public sector DB plans
• Who we ARE
• Advocacy
• Research
• Education
• Chairing the DB Coalition

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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.

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Why Health Care?

• Medicare Part D
• More people are losing coverage
• Health care costs 16 of nations GDP
• Unsustainable health inflation
• Quality of care uneven

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Why Health Care?

• Retirees are suffering!
• Average pension benefit is FL is 850/ month.
• Average HI premium for retirees is 900/ month.

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Why Health Care?

• Governmental Accounting Standards Board
• In June 2004, the GASB approved the final set of
  accounting standards applicable to Other
  Post-employment 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

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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

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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.

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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.

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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.

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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.

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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.

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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!

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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.

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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.

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HELPS Retirees Applies to

• Public safety officers.
• Who separated due to disability or attainment of
  normal retirement age.
• Purchase of health insurance or long-term care
  insurance.
• Can use DB, 403(b), or 457 plan distributions.

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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

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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

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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

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H E L P S 22007

• Healthcare
• Enhancement
• Local
• Public
• Servants
• Round 2

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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

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NCPERS Second AnnualHealth 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.

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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

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NCPERS Resources
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Questions

• NCPERS
• 444 North Capitol Street, NW, Suite 221
• Washington, DC 20001
• 202-624-1456
• info_at_NCPERS.org
• www.NCPERS.org