AFT: Publications: American Teacher: May/June 2003: Retirement News

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American Teacher
May/June 2003--Retirement News

Retirees face a looming healthcare crisis

The explanation for why retirees are paying more for healthcare these days makes sense to Ray Variakojias.

"Healthcare costs are going up, and the retirement system has lost money," he says matter-of-factly. The logic of the situation, however, still doesn't ease the retired English teacher's anxiety. "The reality is that as retirees our pensions are etched in stone, but our healthcare benefits are penciled in."

In Ohio, where Variakojias is a member of the retiree chapter of the Cleveland Teachers Union, the State Teachers Retirement System (STRS) is searching for ways to finance retiree health coverage, but it has taken drastic measures to do so.

The system's Healthcare Stabilization Fund, decimated by increasing costs and the economic downturn, is facing a $200 million shortfall. The result has brought moderate changes to the program that took effect in January of this year. Next year's cuts could be even more extreme. In addition to higher co-pays and deductibles, new retirees will be required to pay 100 percent of their own and dependents' premiums until age 60, and the retirees will face the gradual elimination of coverage for their spouses and dependents.

"There will be less coverage for retirees, and it will be more expensive," says Herschel Grim, a health and retirement consultant for the Ohio Federation of Teachers (OFT). "We're trying to wash out the deficit and maintain healthcare benefits without driving retirees into bankruptcy."

In an effort to fight the proposed changes, the OFT--with the help of benefits experts at the AFT national office, the Ohio Education Association (OEA), and Ohio State University--created the Health Care Advocates for STRS, a coalition that includes the OEA, the American Association of University Professors and other interested organizations.

When the OFT looked into the retirement system board's policy changes, it found that the level of change proposed was unnecessary, says Tom Mooney, president of the OFT and an AFT vice president. "The changes are an overreaction to short-term phenomena," he says, referring to the rising cost of healthcare coverage and the drop in stock market returns.

In March, the group met with the STRS and offered several alternatives to the proposals its staff has advanced.

"The current idea is to modify the plan to reduce the drain on the program until the economic picture changes," says Grim.

The group's long-term goal is to come up with a permanent funding program that would guarantee healthcare benefits for retirees.

"Active members have said that they are willing to pay more toward future healthcare benefits if those benefits are guaranteed to be there when they retire," says Grim.

You've earned your retirement

By Walter Dunn

If the end of this school year spells retirement, then welcome to the ranks of AFT retirees. Your membership in the AFT while you were working has secured you a lifelong retiree membership in the national union. (Just make certain that your local union updates your status from "working" to "retired" on its membership report to the AFT.)

While there are definite benefits attached to being a lifelong national AFT member, you can get even more out of your membership by becoming involved in your local's retiree activities. First, find out if your local already has a retiree chapter or a specific retirement program--there are 90 chartered AFT retiree chapters. If not, why not start a retiree chapter? The national AFT office can assist you and can provide a booklet entitled "Building to Last: A Practical Guide to Forming and Strengthening Retiree Chapters." If you're interested in starting a retiree chapter, ask your local or state federation president to contact the AFT retiree program for more information.

Once you're a part of a retiree chapter, you'll find you're in good company with more than 180,000 AFT retirees nationwide. There's much that all of us can do as retirees. Our issues are great: We must guarantee that retirees can get an affordable, comprehensive Medicare prescription drug benefit whether they choose to stay in traditional Medicare or join a PPO or HMO. We also must protect Social Security against privatization and continue to strengthen public education and preserve it from the threat of vouchers and tuition tax credits. AFT retirees are active in national and state legislative and political efforts that affect our ability to have long, healthy and productive retirements.

The AFL-CIO's Alliance for Retired Americans also has membership opportunities. All AFT retirees are automatically members of the national alliance and are not required to pay dues. The alliance has already chartered nine state affiliates and plans to have that many more chartered by the end of the calendar year. Once again, the alliance is sending buses to Canada from neighboring states to dramatize the difference in prescription drug prices between the two countries. The adage that there's strength in numbers still applies as you make the transition to a more comfortable, but no less active, time of your life.

For more information, e-mail the AFT retiree program at retirees@aft.org or call AFT retiree program director Frank Stella at 202/879-4526. The retiree program also produces an electronic newsletter, "AFT Retiree E-news," which provides up-to-date information 20 times a year on retirement issues. To subscribe, send your name, local union name and e-mail address to retirees@aft.org.

Walter Dunn is chair of the AFT national retirement committee, an AFT vice president, and second vice president of the New York State United Teachers.

American Federation of Teachers, AFL•CIO - 555 New Jersey Avenue, NW - Washington, DC 20001