HomeMy WebLinkAbout03.a. Receive information on the two vesting options available for retired employee health plans through CalPERS Page 1 of 3
Item 3.a.
CENTRAL SAN
Y-109-ITMEN ME
January 14, 2020
TO: ADMINISTRATION COMMITTEE
FROM: TEJI O'MALLEY, HUMAN RESOURCES MANAGER
REVIEWED BY: ANN SASAKI, DEPUTY GENERAL MANAGER
ROGER S. BAILEY, GENERAL MANAGER
SUBJECT: RECEIVE INFORMATION ON THE TWO VESTING OPTIONS AVAILABLE
FOR RETIRED EMPLOYEE HEALTH PLANS THROUGH CALPERS
Recently, questions have come up regarding the vesting options that are available for retiree medical
benefits through Central San's participation in CalPERS. This memo is intended to provide information on
the differences between the two options CalPERS allows: 1) no vesting, which is referred to as the Public
Employees Medical and Hospital Care Act"PEMHCA Minimum", or 2)the State Vesting Schedule.
PEM HCA M inimum (No vesting)
All employers must adopt resolutions that outline the mandatory contributions to be paid on behalf of
retirees directly to CalPERS. I n 2019, the District adopted resolutions that dictate that the District must
pay the minimum required to participate in CalPERS. An employer may pay more for the health care costs
for their retirees but cannot fall below the PEMHCA minimum.
For retirees, the mandatory minimum contribution starts at$1 per month and is adjusted each year by 5%
of the active employee contribution (which is currently at$139 per month) until they are the same for both
active employees and retirees, which would happen in 20 years. The minimum amount for calendar year
2020 is $6.95.
To be eligible for the minimum amount, the retiree must have had a minimum of five years of service,
including reciprocal service, and be age 50 or above at time of retirement.
State Vesting Schedule
CalPERS allows agencies to adopt a vesting schedule which mirrors the vesting schedule of the state of
California. The maximum premium amounts the employer would be obligated to pay on behalf of retired
employees is determined by averaging the premiums of the four most popular CalPERS health plans in
the previous calendar year. The employers would then, based upon years of service, pay a portion of the
premium amounts for retirees up to the maximum, which is achieved at 20 years of service. The service
requirements for state vesting require that the service must be specific to the agency, and reciprocal
service is not included in the calculation. The table below reflects what the premium amounts would be
based upon the years of service for calendar year 2020.
January 14, 2020 Regular ADMIN Committee Meeting Agenda Packet- Page 3 of 22
Page 2 of 3
Years of Vested % Single Two-Party Family
Service _jM _ (Non-Medicare) (Non-Medicare) (Non-Medicare)
10 50% $303.00 $611.50 $792.50
11 55% $334.95 $672.65 $871.75
12 60% $365.40 $733.80 $951.00
13 65% $395.85 $794.95 $1,030.25
14 70% $426.30 $856.10 $1,109.50
15 75% $456.75 $917.25 $1,188.75
16 80% $487.20 $978.40 $1,268.00
17 85% $517.65 $1,039.55 $1,347.25
18 90% $548.10 $1,100.70 $1,426.50
19 95% $578.55 $1,161.85 $1,505.75
20 100% $609.00 $1,223.00 $1,585.00
District Vesting Schedule
Pursuant to CalPERS regulations, if an employer does not adopt the State Vesting Schedule, an
employer may determine its own vesting schedule as long as it does not impair the PEMHCA minimum
service and age requirements.
The District decided to maintain its current vesting schedule for retiree health care, which was negotiated in
the District MOU's prior to the transition to CalPERS. The table attached reflects what level of coverage
each Tier is eligible for, as long as the retiree meets the years of service and age requirements.
Staff will be available at the Committee meeting to answer any questions.
ATTACHMENTS:
1. District Vesting Schedule by Business Unit
January 14, 2020 Regular ADMIN Committee Meeting Agenda Packet- Page 4 of 22
LOCAL 1 District Vesting Schedule by Business Unit
Hire date Eligibility Medical Premiums Dental/Vision Premiums Reimbursement Life Insurance
Rule of 65, Min age 50 Half of coverage at retirement
Tier I Prior to 5/1/85 + 10 yrs service 100%of the highest cost core plan 100% Medicare (current max$25,000)
Rule of 65, Min age 50 100%until age 65,then 50%of
Tier 11 5/1/85 to 6/29/09 + 10 yrs service highest cost core plan 100%until age 65,then 50% Medicare $10,000
Health
Rule of 70, Min age 55 50%of the highest cost core plan for Reimbursement
Tier 111(a) 6/30/09 to 4/17/13 + 10 yrs service Retiree&Spouse only 100%until age 65,then 50% Account(HRA) None
Rule of 70, Min age 55 50%of the highest cost core plan for 50%of the lowest cost plan
Tier 111(b) 04/18/2013 or later + 10 yrs service Retiree&Spouse only Ifor Retiree&Spouse only JHRA INone
MS CG
Hire date Eligibility Medical Premiums Dental/Vision Premiums Reimbursement Life Insurance
Rule of 65, Min age 50 Half of coverage at retirement
Tier I Prior to 5/1/85 + 10 yrs service 100%of the highest cost core plan 100% Medicare (current max$37,500)
Rule of 65, Min age 50 100%until age 65,then 50%of
Tier 11(a) 5/1/85 to 4/18/03 + 10 yrs service highest cost core plan 100%until age 65,then 50% Medicare $10,000
Rule of 65, Min age 55 100%until age 65,then 50%of
Tier 11(b) 4/19/03 to 6/29/09 + 10 yrs service highest cost core plan 100%until age 65,then 50% Medicare $10,000
Rule of 70, Min age 55 50%of the highest cost core plan for
Tier 111(a) 6/30/09 to 4/17/13 + 10 yrs service Retiree&Spouse only 100%until age 65,then 50% HRA None
Rule of 70, Min age 55 50%of the highest cost core plan for 50%of the lowest cost plan
Tier 111(b) 04/18/2013 or later + 10 yrs service Retiree&Spouse only for Retiree&Spouse only HRA None
Management/Unreps
Hire date Eligibility Medical Premiums Dental/Vision Premiums Reimbursement Life Insurance
Rule of 65, Min age 50 Half of coverage at retirement
Tier I Prior to 5/1/85 + 10 yrs service 100%of the highest cost core plan 100% Medicare (current max$125,000)
Rule of 65, Min age 50 100%until age 65,then 50%of
Tier 11(a) 5/1/85 to 4/18/03 + 10 yrs service highest cost core plan 100%until age 65,then 50% Medicare $10,000
Rule of 65, Min age 55 100%until age 65,then 50%of
Tier 11(b) 4/19/03 to 6/29/09 + 10 yrs service highest cost core plan 100%until age 65,then 50% Medicare $10,000
Rule of 70, Min age 55 50%of the highest cost core plan for 50%of the lowest cost plan
Tier 111 6/30/09 or later + 10 yrs service Retiree&Spouse only Ifor Retiree&Spouse only I None INone
January 14, 2020 Regular ADMIN Committee Meeting Agenda Packet- Page 5 of 22 Updated:01/06/20