 The state is conducting a study to look at moving from the current
tiered system of contribution levels to one based on income.
Janice Bonneville, deputy director for the state's Central
Management Services' bureau of benefits, said Wednesday that she
knows of no other state that takes the income-based approach.
Retirees in the top tier who make more than $74,901 now pay $59
monthly for health insurance if they are in managed care or $84
monthly if they are in the state's preferred-provider program.
Only 6,900 of the 84,000 people in the system pay a premium,
according to Julie Hamos, director of the Illinois Department of
Healthcare and Family Services. Contributions from those retirees
brought in $11.9 million for fiscal 2010 -- well short of the $473
million in costs Hamos said the state encountered that year.
However, there are factors contributing to the disparity between
contributions and costs beyond the relatively small number of people
paying into the system.
For example, the state currently makes up the difference of
approximately $550 per retiree for those not eligible for Medicare.
Also, dependents of retirees paid only $40 million of the $150
million it cost to insure them in fiscal 2010.
No changes could be made before 2012, when the current collective
bargaining agreements between the state and unions end, according to
Bonneville. Gov. Pat Quinn's administration and the employee unions
will negotiate new collective bargaining agreements during the
second half of this year.
"Their argument is that the health insurance portion of the
retirement benefit is not covered by the Illinois state
Constitution, and if employees want health insurance after
retirement, they should pay the cost of it," said Christine
Boardman, president of the Illinois and northwest Indiana branch of
Service Employees International Union, in a written statement. "The
argument will be that state government cannot afford to pay it. We
need to be ready to call our legislators in the House and the Senate
and tell them 'Hands off our retiree health insurance.'"
Going to the new system, however, would affect all state
retirees, not just union members, according to Bonneville.
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Implementing a revised contribution schedule could be tricky,
according to Brian Hamer, director of the Illinois Department of
Revenue.
"There is at least one other significant issue that has occurred
to me, and that is that there are many retirees currently who don't
file an income tax return," he said.
People who move to another state after retiring don't have to
file an income tax return in Illinois. Many who stay in Illinois
might not have to file a return, either, because the state doesn't
collect income tax on pension benefits, Hamer said.
The state would need to figure out a different way to verify
annual income, which will be examined in the study. Also included
will be comparisons with the other states and the private sector.
State Sen. Dave Syverson, R-Rockford, said that performing a
study is well and good, but in the end it comes down to the will of
the Legislature and governor.
"The reality is every state does it totally different. You could
put together for us a snapshot of what other states have done so we
could have that information, but because each state does it
different, it's really a political decision each state has made," he
said.
[Illinois
Statehouse News; By ANDREW THOMASON]
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