Oct. 1 Paychecks Reflect New Legislation, 2016 Insurance Premium Changes
September 29, 2015
When you receive your Oct. 1 pay stub, you’ll note the effects of both new legislation and Plan Year 2016 insurance premium changes. How much these changes affect you will vary based on your specific circumstances, but most active employees will see a slight decrease in their take-home pay.
As you examine your pay stub to account for the decrease, keep the following potential changes in mind:
- Increased pension contribution rates as passed by the Legislature in House Bill 9, legislation that preserves the ERS pension fund by funding it at near actuarially sound levels. The pre-tax pension contribution increased from 6.9 percent to 9.5 percent, a 2.6 percent increase. The offsetting salary increase for contributing employees was 2.5 percent, so it neutralized all but 0.1 percent of the increased contribution. (One thing to keep in mind is that prior to the actions of the 84th Legislature, the 83rd Legislature had already put into statute scheduled contribution increases of 0.3 percent in FY 2016 and 0.3 percent in FY 2017 without corresponding salary increases.) The State has also increased its contribution rate to 9.5 percent, with agencies continuing to contribute an additional 0.5 percent.
- Increased monthly premiums for dependent health insurance. The State continues to cover 50 percent of these premiums, including 50 percent of Plan Year 2016 premium increases, but that still leaves 50 percent of the premium increase for employees to cover. (Use the Rates Calculator on the Employees Retirement System website to review the rates for your specific insurance elections.)
- Any changes that you made during Summer Enrollment. Such changes might include adding spousal or dependent coverage, adding an optional supplemental insurance product through the Group Benefits Program, or new or increased participation in the Texa$aver 401(k) and 457 program.
TPEA recognizes the impact these changes have on active employees’ take-home pay, as well as the employee turnover problems faced by the State, which can be attributed to attrition to the private sector. As we advocate for active and retired state employees, TPEA works to balance educating lawmakers on each component of the compensation package: salary, health insurance and pension. Our continued mission is to ensure legislators recognize and act on the need to provide reasonable salaries while at the same time preserving the benefits that make it worthwhile to devote your career to public service.
What changes will retirees see?
- If you are a retired employee not yet eligible for Medicare, and you carry dependent health insurance, you will also see an increase in your monthly dependent premiums.
- If you are a Medicare-eligible retired employee who carries dependent health insurance, Plan Year 2016 changes will go into effect Jan. 1, 2016. Your premiums will decrease slightly.
- Retirees will not see a change in their monthly annuity payments at this time. The ERS pension fund must be in an actuarially sound condition before any retiree benefit enhancement can be given. The increased funding levels specified in House Bill 9 will serve to reduce the pension’s fund unfunded liabilities, but recent stock market fluctuations will also affect the fund’s health. The ERS Board of Trustees will receive the next actuarial valuation of the pension fund in November.