Explaining OPEB is boring and hard to explain, it seems to me. People’s eyes glaze over even more than normal when I speak about what OPEB is and why the state is diverting funds into a reserve for OPEB.
Other Post Employment Benefits are the benefits the state provides after retirement that are not pension benefits. Continuing to have health insurance coverage under the State Health Benefit Plan (SHBP) after retirement is a benefit the state provides at the present time. This group includes state employees, public school teachers and other public school personnel and the Board of Regents retirees.
Here is the way I explain the State Health Benefit Plan for laymen: Georgia self-insures those in the plan active and retired. The state, local school boards and the Board of Regents all contribute about 70-75 percent of the cost of health care for the group and the balance is paid by the insured as premiums. The way I look at it, your cost of providing healthcare one year becomes the premium the next year more or less.
For retirees, however, they have no employer to pay that portion of the cost of insurance. The state has recognized that obligation and written a check, essentially, year by year for those costs. The total paid out by the state in fiscal year 2014 was about $540 million for all retirees that SHBP employers share.
A national accounting standards organization, the Governmental Accounting Standards Board, or (GASB), has ruled that accounting-wise, a state should “book” this liability, fund a reserve for it and pay this yearly cost out of that fund rather than just writing a check yearly out of current revenues.
While the insurance is not required by law for retirees, the state has provided this benefit and thus must move forward with putting that reserve, estimated at $15 billion, in place.
State funding for other post-employee benefits
In October and November of each year, the annual enrollment period is held for members of SHBP and University System of Georgia Board of Regents (BOR) health plan for the next calendar year benefits. The SHBP provides health benefits for state government employees, public school teachers, and other public school personnel. Included among the over 600,000 SHBP members are a significant number of retirees and their eligible spouses — 149,778 to be exact as of June 30, 2014. The University System of Georgia provides health benefits to another 20,583 retirees and beneficiaries.
OPEB funds in Georgia
Upon retirement, state government, local public school employees, and university system employees who are eligible to receive state-sponsored retirement benefits, and who are enrolled in either the SHBP or BOR plans when they retire, may continue SHBP or BOR health coverage.
To provide for the costs associated with these benefits, the state has established the following OPEB plans: the Georgia State Employees Post-Employment Health Benefit Fund (state OPEB fund), the Georgia School Personnel Post-Employment Health Benefit Fund (school OPEB fund), and the Board of Regents Retiree Health Benefit Fund (BOR retiree plan for those enrolled in University System of Georgia health plan).
In addition, retirees and employees who were hired before July 1, 2009, are also eligible for group term life insurance benefits. The two OPEB Funds that provide for these benefits are funded by employee contributions and plan assets held in the Survivors Benefit Fund established under O.C.G.A. 47-2-128(c)(3).
At age 65, retirees are normally eligible for Medicare which becomes primary.
I may be reached at
234 State Capitol, Atlanta, GA 30334
(404) 656-5038 (phone)
(404) 657-7094 (fax)
E-mail at Jack.Hill@senate.ga.gov
Or call toll-free at
1-800-367-3334 day or night
Reidsville office: (912) 557-3811