Health insurance hikes causing about 2000 education employees to ...

The latest numbers from the Retirement Systems of Alabama show that about 2,000 education employees will retire on Dec. 1, up from just a few hundred the year before. The increase in mid-school year retirements is being caused by changes to retirees? contribution to their health plan, which they can duck by retiring before Dec. 1.

Marc Reynolds, deputy director for the Retirement Systems of Alabama, said 1,660 educators and 480 support employees are set to retire on Dec. 1.

The increases, part of a plan to bolster the finances of the Public Education Employees Health Insurance Plan, require substantially higher monthly premiums from education employees.

According to the Retirement Systems of Alabama website, current education employees pay $7 per month for single coverage and $177 per month for family coverage. This excludes a $28 per month fee charged to smokers. The actual cost of insurance is $729 for single coverage and $891 for family coverage. The difference is made up by employer contributions.

Employees? contributions to their health plans increase substantially once they retire. Retirees who are too young to receive Medicare are required to contribute more because their employers are no longer making contributions to the plan.

Contributions are assessed based on employees? age and years of service. The Retirement Systems of Alabama website provides a calculator that allows visitors to see how much the increases cost employees next year.

For example, a 60-year-old retiree with 30 years of service currently pays $100 per month for single coverage and $340 per month for family coverage. Under the new rules, next year that retiree would pay $124 per month for single coverage and $364 per month for family coverage. The premiums will continue to increase at about the same rate until 2016, when 60-year-old retirees with 30 years of service would be paying $220 for single coverage and $460 per month for family coverage.

A 55-year-old employee with 25 years of service currently pays $151 per month for single coverage and $391 per month for family coverage. Under the new rules, that retiree would pay $180 per month for single coverage and $420 per month for family coverage. The premiums will continue to increase at about the same rate until 2016, when 55-year-old retirees with 25 years of service would be paying $296 for single coverage and $536 per month.

Reynolds said the increases were phased in over five years to help education employees who had already been planning to retire adjust to the changes.

Once retirees and/or their dependents are eligible for Medicare, the rates decrease as Medicare becomes the retirees? primary insurer.

The PEEHIP program does offer premium assistance to active and retired members whose family income is less than 300 percent of the federal poverty level. The federal poverty level in 2011 was $22,350 for a family of four, and $10,890 for a single person. Members eligible for assistance can receive discounts on their premiums.

Source: http://www2.dothaneagle.com/news/2011/nov/04/health-insurance-hikes-causing-about-2000-educatio-ar-2655188/

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