How To Reduce Illinois' Retiree Health Insurance Problem and Prevent Further Fiscal Gaps

 
The unfunded portion of Illinois retired state and local employees’ pension and health care funds now stands at $110 billion. That total can be reduced by $50 billion without raising the state income tax, according to Jim Tobin, President of National Taxpayers United of Illinois (NTUI). In addition to the $11.5 billion the state will receive over the next 19 months from the federal government’s “stimulus” package, certain important measures can be taken to solve the predicament of the state´s unfunded liabilities.

“Requiring government employees to increase their contribution to the pension fund by 5 percentage points would reduce the unfunded liability by $20 billion. Additionally, government employees should be required to pay at least 3% of their payroll for retirement health benefits and at least $250/mo after retirement. Under current law they pay nothing for either and receive health, dental, vision and life insurance for themselves and their dependents after retirement. This very reasonable requirement would also save another $30 billion in unfunded health care liability. Note that $250/month is less than most Medicare recipients pay for much inferior coverage.”
“Additionally, if all new state hires are required to enter Social Security and save for their retirement with their own contributions to 401(k) programs, these new hires will not become part of the unfunded pension or unfunded health care problem.”

Click here for a printable copy of the news release.

 

6 Comments
  1. Another uniformed heard from. If they put new hires back on SS then the state will HAVE to put 6.5% of their check and will not be allowed to take a pension holiday anymore. Also, the 401K would require some matching, also exempt from the pension holiday. The state made an agreement with the federal government to supply us with a pension instead of SS. If the state had put in 6.5% every year we would have billions of dollars in surplus. Why should I pay 5% more(I already pay 8%) since the state stole from the pension fund and paid the state of Illinois. It’s not our fault. The state is liable and should be sued in federal court for fraud.

  2. Why is it that radicals like you don’t mind raising the costs of others, while wanting to maintain the benefits of others at no cost or a lesser cost. Asking government employees to pay an additional 5% is like imposing a 5% tax increase on them. That would equal a 167% increase in their contribution to the state. The governor is only asking for a 50% increase and at least he is asking it of all citizens not just a select few. I wish people like you would quit trying to shift the burden of government cost on to a selected few and start thinking of all citizens and not just yourself!

  3. In addition, pensions for government employees is the same as for all pensions for employees in the public or private sectors. Pensions are a part of compensation, not a gift. Many times employees give up pay increases or reduce pay demands in exchange for better pensions. Therefore, if you increase the cost to employees for pensions, you must increase their compensation to offset their losses that they have aready paid for in past concessions!

  4. At this time, State employees pay in 8% of their pay into the pension fund. Your suggestion of employees paying in 13% is insane! With social security, the employer must pay their share. Will the State of Illinois be able to put in their share to social security when they haven’t been putting in their share to the pension?
    I agree retirees should pay something for their health insurance but over $250/month is quite a jump from zero! And, get your facts straight — retirees (or current employees) do NOT get free insurance for their dependents; at least not University employees (can’t speak for Chicagoland teachers union).
    I worked over 24 years for a state university, paying in 8% every paycheck to the pension fund. Was the State paying their share?? If I was paying social security, wouldn’t the State have to pay in their share??

  5. Make folks who took early retirement (non union folks) pay for their health care benefits.
    The company I work for just raised the health care premium for folks who took early retirement to rates that are in the range of Cobra. This was a huge jump – some retirees are now paying $1,000 and up per month.
    Yes, they howled. But, it was necessary for the financial health of the company. Some may have to return to jobs.
    Well, many many State of Il early retirees got new jobs after they retired. Now they have their pick of whichever benefit plan is best – their new employer, or State of Il.

  6. The Governor’s proposal to make retirees pay part of their personal health insurance premium(they currently do so for dependents)has some meritbut also some defects.If you were hired prior to the 1990’s the employee didn’t pay into medicare but only into the state plan so many retirees are not eligible for medicare and would be hit hardest by his plan simply because of the conditions of employment when they were hired. Secondly there seems to be no account taken of the individuals ability to pay. In my view all state employees and retirees should make a contribution to health insurance costs but strictly prorated according to income(from employment or retirement) and without a cap. Thirdly the Governor seems to think he can do this by diktat as he did with contributions for dental care. This seems to me to violate the contract with employees and retirees which should allow them input into the process which affects them directly.

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Taxpayers United Of America: (TUA). is a nonpartisan, 501(c)(4) taxpayer advocacy group. Founded June 27, 1976 in Chicago, Illinois by activist and economist Jim Tobin, TUA works on behalf of taxpayers to reduce local, state, and federal taxes. In the past forty years, TUA has saved taxpayers more than $200 billion n taxes and has become one of the largest taxpayer organizations in America. Check All posts. s.

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