Ohio PERS Members Could Take Health Care Hit

June 30, 2004 (PLANSPONSOR.com) - Certain Ohio public employees will have to work 30 years before being eligible for 100% retirement medical coverage under changes now being debated at one of the state's pension funds.

The stepped-up work requirement from the current 10 years is part of retiree health changes being batted around at The Ohio Public Employee Retirement System (PERS), according to a news report in the Mount Vernon News.

Under the new system, workers would have to put in 15 years before gaining any retirement medical coverage; even then it would be at 50%. Current retirees will not be affected by the changes, but future hires – defined as anyone hired after January 1, 2003 – fall under a new system entirely.

The proposed changes would be phased in over a five-year period after taking effect in January 2007. New retirees after 2007 would be required to pay 20% more of their own medical care each year for five years until all of the changes are accomplished. However, this could still leave a segment of workers who may have been planning to retire in the next eight to 10 years, stuck with medical retirement costs for which they had not planned.

The future retirees won’t be very happy about a revamped setup if the proposals go through. Bill Winegarner, administrator for Public Employee Retirees Inc., a retiree rights group that has worked with the PERS to come up with the proposed changes, said that although health care is not a guaranteed benefit, many workers may have been led to believe it would always be there.

“So much depends on the individuals who hired them. It’s certainly well documented that health care is not a vested retirement benefit, even though it was always there,” Winegarner told the newspaper. “But from what I have heard, many employees were told ‘you’ll be covered forever.’ The forms they signed don’t say that, but the individual who hired them might have.”

Future retirees, some of whom switched over from careers in the private sector in order to put in 10 years of service and receive their benefits, seem to be out of luck under the new plan. “(The changes) are very clear to anybody who started after January 1 2003,” said Winegarner. “But the ones that came a few years prior to that are the ones who are going to get squeezed.”