Monday, January 12, 2015

On Retiree Health, UC Will Be Under Pressure to Follow the Leader

In his budget message, the governor - as expected - called for pre-funding of retiree health insurance by state employees. While the proposal is not directly aimed at UC, UC would be under pressure to do something like what the rest of the state does regarding such prefunding and cost-sharing between employer and employee of such costs. Blog readers will know that this proposal was leaked out before the official budget unveiling.  From calpensions:

Gov. Brown wants state workers to begin paying half the cost of their future retiree health care -- a big change for workers making no payments for coverage that can pay 100 percent of the premium for a retiree and 90 percent for their dependents. The governor also wants state workers to be given the option of a lower-cost health insurance plan with higher deductibles. The state would contribute to a tax-deferred savings account to help cover out-of-pocket costs not covered by the plan. More funding and lower premium costs are key parts of a plan to eliminate a growing debt or “unfunded liability” for state worker retiree health care, now estimated to be $72 billion over the next 30 years...
Undoubtedly, this issue would come up in the proposal by the governor to create a joint governor-UC committee to study cost savings. We have noted in a prior post that right now UC takes the position that retiree health is not a required benefit; it's essentially just a nice thing the university does. If UC moves to pre-funding with employee contributions, it would be harder to maintain the position that it is free to cancel the benefit or make any modification it wants to the program.

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