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Office of Administration Announces Plan to Preserve Health Care Benefits for Current, Future Retired Commonwealth Employees
Date:9/28/2007

with less than 20 years of service who are enrolled in the largest plan experienced increases in annual health insurance premiums from $72 to $120 between 2005 and 2007. Ohio created three tiers of retirement coverage, phasing in increased retiree contributions and reducing coverage for retirees with fewer years of service. In West Virginia, retirees now contribute approximately 30 percent of the cost of premiums.

Currently, 37 states require non-Medicare retirees to pay an average of $3,152 per year for coverage and 32 states require Medicare retirees to pay an average of $1,980 per year for coverage. By contrast, the majority of commonwealth retirees will continue to have no medical premium cost sharing after these changes take effect.

Under the new plan, the commonwealth will continue to provide comprehensive health and prescription benefits while reducing projected cost increases by $94 million annually. Even with these changes, the cost for retiree health care benefits is projected to increase by $970 million over the next five years.

Effective February 2008, prescription plan changes will include changing the current 30-day supply co-payment from $7 per prescription to a three- tiered plan with per-prescription co-payments of $10 for generic drugs, $18 for preferred brand-name drugs and $36 for non-preferred brand-name drugs.

In addition, the prescription benefit vendor will better manage retirees' use of prescription drugs to ensure that members are not over-prescribed, under-prescribed or taking multiple medications that can cause serious side effects or counteract each other.

Using the prescription benefits as designed in a cost-effective manner, many retirees will have a minimal increase in prescription costs and some may experience lower out-of pocket costs.

Traditional Medicare coverage for eligible retirees will be replaced with a Medicare Private Fee-For-Service plan. This is primarily an administrative change which,
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SOURCE Pennsylvania Office of Administration
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