Healthcare without Premiums

Currently in Illinois, 90 percent of retired state employees (or their survivors) do not pay premiums for their healthcare coverage.

by Amanda Griffin-Johnson

Currently in Illinois, 90 percent of retired state employees (or their survivors) do not pay premiums for their healthcare coverage.  Most state employees can receive premium-free healthcare coverage from the state if they retired before 1998 or if they worked for the state for 20 years or more (with a 5 percent reduction in benefit for each year worked under 20 years).  Elected officials can have shorter service requirements, with legislators only needing four years of service at age 62 or eight years of service at 55 to start collecting premium-free health coverage.  Although the vast majority of these retirees don’t pay for premiums, they do have to pay co-payments out-of-pocket.

The Illinois Department of Healthcare and Family Services (DHFS) recently found that retirees with state-provided healthcare who are ineligible for Medicare had average annual household incomes of $77,900 and received an average annual pension of $30,900.  According to the U.S. Census Bureau, in 2008, the median household income in Illinois was $56,230.

Governor Pat Quinn has made two proposals to increase the amount retirees contribute towards their health care benefits in the past, but both have been rejected by legislators and retirees. Gov. Quinn’s first proposal was to limit the amount of the premium subsidy to the premium cost for Medicare-eligible retirees, while his second plan was to limit the premium subsidy to $300 per month (see Graphic 1).   The state hoped to reduce costs by $254.5 million by limiting monthly payments at $300. In fiscal year 2010, retirees paid a total of $10 million in premiums to the state, while the state’s retiree healthcare costs were $488.2 million.