Chuck Trader decided to become a middle-school math teacher in 2007 after years in corporate finance, in part because he believed that as an educator, he’d be able to retire in his early 60s with good, affordable, state-subsidized health insurance.
When he retired 10 years later he found out he was wrong. Very wrong.
His family’s State Health Benefit Plan coverage nearly tripled, and his $1,678 a month premium is almost double the $870 pension check he receives for his decade in the classroom.
He and other newly retired school employees have spent the past few months trying to find out why their coverage shot up, and they are pointing the finger at a little-noted Department of Community Health board resolution approved a few weeks before Christmas 2011.
The resolution created a system that gave retirees — teachers, school staffers, state employees — insurance subsidies based on their years of service. Anyone with less than five years of service with the state or a school system on Jan. 1, 2012, would get relatively little subsidy after 10 years. But the subsidy would increase with more time working for the state or school system.
While DCH officials sent out a memo in February 2012 to districts and agencies about the decision — aimed at saving the state plan money — retirees and teachers contacted by The Atlanta Journal-Constitution said they didn’t know about what they called the “retroactive effect.”
The issue has come to a head this fall because teachers, school staffers and employees hired in the 2007-2008 school year became vested in the state retirement systems after 10 years over the summer.
They began retiring, expecting to continue receiving state health insurance for the same premiums they were paying while they were working.
They say they found out after they retired that they’d have to pay nearly the full freight on the health care plan because they didn’t have five full years in the system as of January 2012.
“I would have reassessed my (career) options if I had known about this,” said Trader, who taught in Camden County schools in southeast Georgia. “I could have made a hell of a lot more money doing something else. It doesn’t seem ethical or moral, since we earned those benefits prior to the policy change.”
Department of Community Health officials declined a request for an interview on the issue, which has been the talk of social media pages posted by TRAGIC, a teacher, state employee and retiree advocacy group. However, DCH agreed to answer written questions.
DCH said the policy was approved “as a proactive step toward plan sustainability for current and future retirees.”
The “plan” that the DCH statement refers to is the $3 billion-a-year State Health Benefit Plan, which covers about 650,000 teachers, state employees, retirees and their dependents.
DCH officials have often projected massive deficits in the program and have made several changes to it over the years to keep it solvent. But such projections are typically met with eye rolls from teacher groups.
For instance, in 2015, the agency predicted a $301 million shortfall in the program for this year. With relatively modest rate increases and larger cost-cutting efforts, the agency now projects the program will be $276 million in the black this year.
Earlier this year, DCH predicted the program will have a surplus this fiscal year and next, which begins July 1. But they predict that for the budget year 2020, the State Health Benefit Plan will run a $242 million shortfall if no changes are made.
Georgians on the plan typically say they fear such projections are a precursor to reducing benefits and raising premiums, but cost increases for many teachers and state employees have been fairly modest in recent years.
In its written response to the AJC’s questions, the agency said it didn’t know how many teachers and state employees would be affected by the policy adopted in 2011. It didn’t answer a question asking how much the plan is projected to save.
Besides the earlier memo, DCH said the agency sent out a letter in December 2016 to State Health Benefit Plan members who had not been part of the plan as of Jan. 1, 2012, notifying them of the policy.
Teachers and employees who retired when they reached 10 years in the system this year said they weren’t told about the issue when they talked with benefits managers and retirement staffers this spring prior to leaving.
“I was promised that my premium would be $50 for my husband and myself, and it’s $180 per month,” said Judy Kelly, who retired this year as a paraprofessional in the Rockdale County system and is on a Medicare Advantage plan. “Nobody knew about this.”
She said officials in her system sent her a rate sheet in March showing her premium at $50. Her pension is less than her new health premium.
“It’s just a mess. I just had hip surgery, my husband has health issues, we need insurance,” Kelly said.
Lorrie Pardee, who worked in Gwinnett County schools, and her husband moved to Atlantic Beach, Fla., expecting to continue getting relatively low-cost health coverage under the Georgia plan.
“In the last four years, I had gone to at least one retirement meeting per year,” she said. “Nothing was ever mentioned about the price changing.”
She signed her retirement paperwork in March, and her premium, when she was working, was $51 a month for the least expensive, high-deductible plan. On July 1, when her retirement began, that shot up to nearly $451 a month, a little more than her pension. She said she also has to pay a $9 monthly service charge.
“The whole thing is just not right,” she said. “And this is probably just the beginning of this. I was probably one of the first ones to get hit. There are all of those people behind me in the system that have no idea about it.”
Those affected by the plan have been contacting DCH and state lawmakers, hoping to get a reprieve from the high rates, and are warning those still in the system what’s coming. They say it could put a damper on the plans of second-career teachers, those wanting to teach 10 to 12 years after successful careers in other fields with the incentive that they’ll be able to retire with affordable health insurance.
John Palmer, a Cobb County educator and spokesman for TRAGIC, said DCH essentially adopted a policy in 2011 that would take effect in 2017 and didn’t do enough to notify teachers and state employees.
“The DCH just waited silently for five years and then implemented the policy,” Palmer said. “Now, thousands of teachers and non-certified staff will end up without the insurance benefits they were promised.
“To allow these folks to work for 10 years with the promise of insurance benefits, and then change the rules retroactively, is unconscionable,” he said. “This change will bring minimal savings to the state, but will be a huge financial burden to individuals.”