Due to the recent changes to health-care benefits and the cost-of-living adjustment under the Ohio Public Employees Retirement System (OPERS), I wanted to take the time to explain the current state of these proposals.
As you may know, the OPERS Board of Trustees recently voted to make significant changes to the state employee retirement plans. First, in late 2019, the OPERS Board of Trustees approved a two-year suspension of the cost-of-living adjustment (COLA), beginning in 2022. Second, the OPERS Board of Trustees approved changes to health care coverage for Medicare and pre-Medicare retirees.
Cost of Living Adjustment Freeze
OPERS is currently pursuing a change in statute that would freeze cost-of-living adjustments for two calendar years (2022 and 2023). After the two-year freeze, the COLA will return to current conditions (fixed 3 percent for those who retired prior to January 2013 and a CPI based COLA for those who retired after January 2013). This proposal was approved by the OPERS Board of Trustees and has been endorsed by PERI, the largest advocacy group for OPERS retirees.
The COLA freeze is expected to have a positive impact on the long-term funding of the retirement system. Freezing the cost-of-living adjustment for 2022 and 2023 will reduce OPERS’ unfunded liability of $24 billion by $3.44 billion. In summary, the changes would reduce the unfunded liability and would positively impact the amortization period, the time it will take to pay off those unfunded liabilities, reducing it from 27 years to 21 years.
While I understand the importance of maintaining the long-term fiscal health and stability of the Ohio Public Employees Retirement System, I recognize the barriers that the COLA freeze creates for many of my constituents. I plan to continue advocating to protect retiree’s COLA. Thus, I am opposed to the proposed two-year suspension of the cost-of-living adjustment.
This change is statutory, therefore legislative approval is needed for the COLA freeze to take effect. At this time, OPERS has not yet found a member to sponsor their proposed legislation to freeze the cost-of-living adjustment, so there has not been legislation introduced on this topic. However, should any legislation regarding changes to OPERS be introduced in the Ohio General Assembly, please know that before I vote on the matter, I will take your thoughts into consideration.
OPERS Health Care Benefits Changes
In addition to the proposed COLA freeze, the OPERS Board of Trustees also approved changes to their health care program, set to take effect January 1, 2022. These changes are expected to extend the life of the health care trust fund from 11 years to nearly 19 years.
One of these major changes is the discontinuation of the OPERS-sponsored Medical Mutual PPO plan. Beginning in 2022, eligible pre-Medicare retirees will move to the open market with an OPERS provided monthly allowance to purchase health care coverage.
Additionally, the OPERS Board of Trustees approved to lower the base amount for monthly health care subsidies from $450 to $350 for qualifying Medicare-eligible retirees. Unlike the COLA freeze, health care is a discretionary benefit and is not statutory, therefore OPERS does not need legislative approval to enact these changes to their health care program.
I will continue to share updates as needed. If you have any questions, please do not hesitate to contact my office at 614-644-7928 or [email protected]
Gary Scherer is the State Representative for the 92nd Ohio House District.