CalPERS Drops 18K Ineligible Dependents From Insurance Rolls
The cuts stem from a CalPERS Dependent Eligibility Verification project, which concluded on March 31 (Ortiz, "The State Worker," Sacramento Bee, 10/20).
In 2014, a CalPERS audit found that 9,000 individuals had been improperly listed as dependents eligible for state health coverage. In total, more than 14,000 wrongly insured dependents were removed from the state's insurances rolls after state workers and retirees voluntarily removed 5,300 ineligible individuals during an amnesty period before the audit.
Ineligible dependents included those who were older than age 25, as well as former spouses and domestic partners.
According to a report presented to the CalPERS Board of Administration, removing the ineligible dependents saved the state:
- More than $2 million monthly in premium payments; and
- $3.7 million monthly on other costs, such as hospital visits (California Healthline, 6/24).
Details of Latest Cuts
According to a release, the 18,000 ineligible dependents accounted for just more than 2.5% of the CalPERS dependent population of 700,000.
In total, the cuts from the verification project are expected to help CalPERS achieve savings and cost avoidance of about $122 million. The savings will stem from:
- Avoiding the cost of health care claims for ineligible dependents; and
- Reduced employer health premium contributions (CalPERS release, 10/20).
Rising Pension Costs Burden Taxpayers
In related news, taxpayers could be forced to shoulder the burden of budget gaps in cities across California resulting from rising pension costs, the Los Angeles Times reports.
According to the Times, CalPERS is considering a plan to incrementally move more of its $300-billion portfolio to safer, lower-return investments (Petersen, Los Angeles Times, 10/20). Under the plan, the fund's discount rate is expected to drop from 7.5% to 6.5% in 25 to 30 years.
Some officials from Gov. Jerry Brown's (D) administration say CalPERS should lower its discount rate faster (Kasler, Sacramento Bee, 10/20).
As a result of the plan, public pensions would receive less funding from investment income, leaving taxpayers to contribute more. A final vote could happen next month (Los Angeles Times, 10/20).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.