2020 SEHBP rates set Retiree Dental Expense Plan (DEP)
In September, the School Employees’ Health Benefits Commission (SEHBC) approved rates for the School Employ- ees’ Health Benefits Program (SEHBP), from which many of our retired members received their benefits, for Plan Year 2020.
Rates will take effect January 1. To view the rates for 2020, visit https://www. state.nj.us/treasury/pensions
The SEHBC acted on rates that reflect no changes in benefit levels for the health plans this year. However, there will be a change in the carrier for all non-Medicare retirees. Aetna will no longer be offered as an option. Horizon Blue Cross
Blue Shield (BCBS) will be the only carrier for these plans. How- ever, Aetna will continue to carry their current dental plans.
For those retirees who pay for their medical benefits out-of- pocket, the overall renewal rate decreased by 4.8 percent for all non-Medicare retirees. Retirees who contribute toward the cost of post-retirement medical benefits will see this decrease.
There will be no change in the levels of either medical or OptumRx prescription benefits.
Aetna will continue to be the only carrier for Medicare-eligible retirees in the Aetna Educators Medicare Advan- tage plan. The Aetna Educators Medicare Advantage plan will continue to use Medi-
care providers and still require members to use a Medicare-eligible doctor. However, there are three additional benefits that are enhancements to the original Medicare offerings:
NJWELL – Previously, retirees enrolled in SEHBP were not permitted to partic- ipate. Now, retirees and their spouses/ partners will be able to take advantage of the incentives offered to all members who strive to stay healthy.
Copay Reimbursement – Members and their covered spouses/partners will be reimbursed their $10 copay for up to 25 physician visits each year. This unique ben- efit can provide each with an additional
$250 in returned out-of-pocket expenses. Optional care – Members and their covered spouses/partners may have an
optional home visit by a nurse practitioner to set up a personal care plan. The plans will include access to a 24/7 registered nurse helpline to assist members with their healthcare needs and questions.
Members who wish to use traditional
Medicare and Hori- zon BCBS as a supple- ment may choose from NJ Direct 15/25 or the other
options available. If you want to make this switch, you must fill out the health insurance change form found on the Divi- sion’s website: https://www.state.nj.us/ treasury/pensions/documents/forms/ hr0984.pdf
Prescription drug plans
The prescription plans will also see rate changes. Non-Medicare retirees will see a rate increase of 9.6 percent, one of the largest in recent years. These changes also will take effect Jan. 1. How-
ever, non-Medicare retirees who receive the state-paid, post-retire- ment medical benefits will not be impacted. Even with this increase in prescription costs, the overall cost of retirees’ medical and pre- scription coverage will decrease by 4.8 percent.
Optum Rx continues to be the SEHBP prescription benefit manager (PBM) in 2020.
Retirees who elect dental coverage through the state in the dental expense plan will see a slight increase in their pre- miums beginning Jan. 1.
The State of New Jersey will con- tinue to offer additional dental options for retirees through the Dental Provider Organization (DPO) plans. The 2020 rates for the retiree DPO plans can be found by visiting the Division of Pensions website. Retirees who wish to switch their current plans can do so at any time, as long as they have been in their current dental plan for at least 12 months. Please contact the NJ Division of Pensions and Benefits directly if you would like to make a change in your plan.
NJREA Newsletter • December 2019 • njea.org/njrea
2020 Medicare Pt. B Premiums 2020 Medicare Pt. D Premiums
The Centers for Medicare & Medicaid Services (CMS) announced in November the 2020 premiums for Medicare Part B.
For most Medicare benefi- ciaries, premiums, deductibles and surcharges will increase. Premiums will rise to $144.60 per month, an increase of
$9.10. Medicare Part B deduct- ibles will increase by $13 to
$198. Retirees will also pay a different premium amount in 2020 if they fall into a different income-related cat- egory. This change happens once individual filers reach
$87,001, or a joint-filer reaches
$174,001, for income earned in 2018.
The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary’s premium. Thus, the income reported on a ben- eficiary’s 2018 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2020. If a beneficiary’s income decreased significantly in the past two years, he/she may request that information from more recent years be used to calculate the premium.
Important note: For Medicare beneficiaries who have Medicare Part B premi- ums automatically deducted from Social Security benefits, the Social Security Cost of Living Adjustment (COLA) must be large enough to cover the change in premium. Since many beneficiaries were already paying lower-than-stan-
dard premiums because of this rule, the 1.6 percent of the 2020 cost-of-living adjustment won’t be enough to cover the increase to $144.60 per month. So, beneficiaries to whom this applies will pay a lower premium.
For those members receiv- ing post-retirement medical benefits paid for by the State of New Jersey, the standard Medicare Part B premium is reimbursed in the member’s pension check. Any income-re- lated adjustment that a mem- ber or his/her dependent pays
– or that new enrollees pay – is reimbursed at the end of the year in which the adjustment is paid, only after the proper paperwork is filed with the Division of Pensions and Ben- efits. Notice on how to file for any income-related adjustment reimbursement will be sent to retirees, as well as be posted on the Division of Pensions and Benefits website, by early February.
Additional details can be found by visiting the NJREA webpage at njea.org/njrea and will be in the January issue of the NJEA Review. If you have questions about your Medicare Part B premium, call 800-MEDICARE (800-
633-4227). Any questions regarding the reimbursement process should be directed to the Division of Pensions and Benefits at 609-292-7524. Members also can visit “Let- ters to Retirees” at https:// www.state.nj.us/treasury/ pensions/pension-retirees. shtml for any updates.
Since January 1, 2012, all Medicare-eligible retirees enrolled in the School Employ- ees’ Health Benefits Program (SEHBP) are automatically enrolled in the state-selected Medicare prescription plan, which is currently OptumRx. This program includes the Medicare-eligible retiree to be enrolled automatically in Medicare Part D.
For 2020, most retirees will see a decrease in their Medicare Part D premiums to $30 per month. While there is no standard Medi- care Part D cost associated with the program, enrollees whose incomes exceeded the legislated threshold amounts
– $87,000 in 2018 for a ben- eficiary filing an individual income tax return or married and filing a separate return, and $174,000 for a beneficiary filing a joint tax return – will pay a monthly, income-re- lated payment. Those sur- charges will be generally lower, except for the highest-income participants.
The Social Security Administration uses the income reported two years ago to determine the Part D ben- eficiary’s payment. In other words, the income reported on a beneficiary’s 2018 tax return is used to determine whether the beneficiary must
pay a monthly, income-related payment in 2020. If a bene- ficiary’s income decreased significantly in the past two years, he/she may request that information from more recent years be used to calculate the payment.
For those members receiv- ing post-retirement medical benefits paid for by the State of New Jersey, the monthly, income-related payment for them and their dependents is reimbursed at the end of the year in which the payment is paid – after the proper paper- work is filed with the Division of Pensions and Benefits. Notice on how to file for any income-related adjustment reimbursement is sent to retir- ees, as well as will be posted on the Division of Pensions and Benefits website, by early February.
Additional details can be found by visiting the NJREA webpage at njea.org/njrea and will be in the January issue of the NJEA Review. If you have questions about your Medicare Part D monthly income-related payment, call 800-MEDICARE (800-633-
4227). Any questions regard- ing the reimbursement process should be directed to the Divi- sion of Pensions and Benefits at 609-292-7524.
NJREA Newsletter • December 2019 • njea.org/njrea
In the know
Benefits alert for non-Medicare retirees
If you are a non-Medicare retiree and currently have benefits cov- erage via Aetna, please take note: The School Employees Health Benefits Program (SEHBP) will be eliminating all non-Medicare Aetna medical plans on January 1, 2020. The Aetna Medicare Advantage plans and Dental Expense Plan (DEP) are unaf- fected by the change.
The change is the result of the public bidding process for the state’s prescription and non-Medicare medical plans that was recently completed. In August, Horizon Blue Cross Blue Shield of NJ (BCBSNJ) was awarded the contract to adminis-
ter the SHBP/SEHBP’s medical plans for plan years 2020 to 2023.
What non-Medicare Aetna plan members need to know:
- Horizon medical plans and Aetna medical plans have equivalent levels of bene- fits.
- You will be moved automat- ically to the Horizon equiv- alent of your Aetna plan on Jan. 1,
- Horizon’s network of doc- tors and hospitals overlap significantly with Aetna’s network, but it is not identical. Contact Horizon BCBSNJ Member Services at 800-414-7427 or go to
shbp.horizonblue.com to confirm the network status of your current providers.
- If you have an Aetna HMO plan, you will need to select a new primary care physi- cian within the Horizon net- work after Jan. 1,
- If you are currently under- going treatment such as chemotherapy or dialysis, contact Horizon BCBSNJ Member Services at 800- 414-7427 and ask to speak with someone about “tran- sitioning from Aetna to Horizon with active treat- ment for a complex condi- tion.”
- If you have a surgery cur- rently scheduled after
1, 2020, contact Horizon BCBSNJ Member Services at 800-414-7427 and ask to speak with someone about “transitioning from Aetna to Horizon with active treat- ment for a complex condi- tion.”
- If you have an Aetna HD (high deductible) plan, call 800-414-7427 and ask for an “HSA transfer form.” This form is needed to move your HSA funds over into your Horizon HD
- While Aetna Medicare Advantage holders won’t be affected by the change, it will affect any dependents who don’t have Aetna’s Medicare Advantage
As many retirees know, a section of PL 2011, Ch.78 suspended the cost-of-living adjustment (COLA) for retirees going for- ward. The legislation states that the COLA for each of the state pension systems will remain sus- pended until the funds reach a “targeted funded ratio” directly connected to the plan’s funded status, or the ratio of assets to liabilities. The funded status of each pension fund is calculated separately and is reported in the fund’s actuarial report.
For the COLA to be rein- stated within a pension fund, the funded status must reach 80 percent.1 Once a fund reaches the required 80 percent, a committee then will convene and decide whether the COLA
should be reinstated. The com- mittee will consist of eight mem- bers, half appointed by the gov- ernor and half appointed by the unions covered by the pension system.
For the last two years, Gov. Murphy’s administration has been ramping up the state’s pension payment, currently at 70 percent – the equivalent of
$3.8 billion – for the current fiscal year for all state-funded pension systems. Local PERS is funded via local employers, who are putting in 12.99 percent of salary costs for all their employ- ees enrolled in Local PERS.
Even with the increased funding over the last eight years, the overall funded sta- tus of the state-funded pension
systems, including the Teachers’ Pension Annuity Fund (TPAF), has continued to decrease. This is, in part, due to the increase in liabilities when the state fails to contribute 100 percent of the actuarially required contri- bution. For example, TPAF’s funded status decreased from
53.21 percent in 2010 to 40.74 percent in the 2018 valuation while liabilities increased by over 25 percent between 2010 and 2018. Strong investment returns alone are not enough to get the funds to the level of funding required for the COLA reinstatement. Only when the state makes its full pension payment for many years, likely decades, will the funds begin to reach the required 80 percent.
Since school districts fund Local PERS differently, the funded status of Local PERS has increased from 61.6 per- cent in 2010 to 68.4 percent in 2018. Even with the consid- erably higher funded status, liabilities have grown by nearly 40 percent between 2010 and 2018. However, Local PERS also is not projected to achieve 80 percent funding for many years, perhaps decades.
NJEA and NJREA will con- tinue to fight for full funding of the pension systems.
1 Per PL 2011, ch78, the targeted funded ratio was initially set at 75 percent funded and increased incrementally to 80 percent for fiscal year 2019 forward.
NJREA Newsletter • December 2019 • njea.org/njrea