Retired cops and firefighters will likely see big changes in their health care coverage but not until January 2019, said Ohio Police & Fire Pension Fund Director John J. Gallagher, Jr., on Wednesday.
“This is all being done in an effort to preserve the fund and extend its solvency to allow members, especially those of a younger age, to prepare to more on their own for retiree health care expenses,” he said.
OP&F trustees reviewed health care and pharmacy costs incurred in 2016 and considered three options for premium changes for 2018 but did not make a decision.
Also looming as a plan to switch from a self-insured system that provides subsidized health care coverage for retirees to issuing stipend checks for them to go purchase coverage on the private market.
“We hope to have some firm decisions by the end of the year, which would give us a full year of lead time to communicate and education whatever changes – if any changes – are determined by the (OP&F) board,” Gallagher said. In the next few weeks, the fund will request proposals from companies to present ideas on how the changes should be structured.
He added that there are no plans to ask the Ohio General Assembly to increase contribution rates or make other changes to plow more money into shoring up the health care fund. Lawmakers revamped the public pension funds in 2012 and emphasized the importance of preserving the pension benefits, which are mandated by law. Health care coverage is not required, though Ohio’s pension funds have provided it to retirees for decades.
“Whether or not we’re going to be able to continue supporting the cost of it, that remains to be seen,” Gallagher said.
OP&F plans to request proposals from companies this summer on how the health care system should be restructured. One option is to require retirees eligible for Medicare to leave the OP&F health care system and purchase coverage on the open market – and provide a stipend to defray those costs, Gallagher said. OP&F would still face the challenge of providing health care coverage to retirees under the age of 65.
Joe Silvati, 58, who retired in November after nearly 40 years with the Cincinnati Fire Department, faces years of buying insurance in the marketplace until he is eligible for Medicare. “I never had to go out and shop for health insurance and I never thought I would have to do it,” he said.
Silvati attended the trustee meeting to get up to speed on the coming changes. “It’s unknown. It’s the uncertainty of the whole thing.”
Police and firefighters often retire in their early 50s – or even earlier if they’re disabled. Currently, OP&F covers 75 percent of premium costs for its retirees and 25 percent of the costs for their spouses.
OP&F has $14.8 billion invested for the benefit of 58,000 police, firefighters, retirees and beneficiaries.