What many people may not be aware of is that CA public retirement systems do not actually fully fund the retiree’s monthly healthcare premium. They pay a monthly healthcare allowance to retirees of approx $200 – $350, depending on the retiree’s highest year’s gross pay and years of service. The actual cost of the premiums is much higher as they are priced at COBRA rates. For instance, SDCERA charges $619.11 to $975.01 mo for an HMO for the member only. A PPO costs $2,080.08 mo for the member only.
The member is free to take their monthly healthcare allowance into the open market and purchase healthcare coverage with it. Those that can qualify to be underwritten as a reasonable rate most certainly do this.
Obviously, if the separating employee under the age of 65 has pre-existing conditions or cannot otherwise qualify for a plan on the open market at a reasonable price, they take one of the plans offered by the assn and pay the difference in premium with their mo pension (IF their monthly pension is high enough to do this). The assns plans must accept all eligible retirees and their spouses/domestic partners, regardless of health.
Medicare supplements offered by the assn are only $213.99 to $365.16 per mo for the member only.
Thus, LA could likely put $200 – $350 mo for each existing retiree back into their general fund (IF it is they who are actually funding their retiree’s healthcare allowances) if they are able to legally remove the benefit.
