SD13 - Study of the Costs of Insurance Premiums for Certain Retired Career State Employees
Executive Summary: SJR No. 74 requested that the Virginia Supplemental Retirement System (VSRS) study the cost of insurance premiums for retired State employees who have 20 or more years of service and whose retirement benefits are less than $10,000 annually, less than $5,000, and less than each $1,000 increment between $10,000 and $5,000. Subject to certain assumptions and limitations enumerated in the study, the annual costs ranged from $1.6 million to $3.9 million. The annual premium for providing health care for all State retirees regardless of benefit level would be approximately $13.1 million. Upon review of the results on the study requested by the legislature and observations of trends related to health care coverage for retirees, the VSRS is suggesting two alternatives to the General Assembly to assist retirees with the cost of health insurance premiums. The first alternative is a "leveling option" which will allow a retiree to elect a higher benefit than he would normally receive prior to age 65. After age 65, when the cost of health care decreases for most retirees, the benefit would be reduced actuarially. This option can now be provided under the provisions of Section 51-111.60(a)(4) of the Code without legislative action and has no cost. The second alternative is a monthly supplement to the retiree based on longevity. A retiree could receive a monthly benefit supplement based on years of service. For instance, assuming that a $1 per year of service supplement is provided, an employee with 25 years of service credit would receive $25 per month, in addition to regular VSRS benefits, to offset the cost of health care premiums. This provision requires legislation and can be provided to all employers as an option. The projected annual cost for State employees and teachers for current retirees would be approximately $10.8 million. |
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