The bill would reduce the cost of health insurance provided by the Employees Retirement System (ERS) for certain retirees. Under current law a retiree who is under age 65 and does not meet the rule of 80 is required to pay the full cost of participation in the ERS plan. This cost is greater than the average state contribution in part due to the likely age of the participant, and in part due to assuming adverse selection among those willing to pay the full cost of insurance. The bill would reduce payments required by these retirees to the state contribution, or even lower if additional funds were appropriated for this purpose.

It is anticipated that the bill would have a negative actuarial impact on both ERS and the Teacher Retirement System. Affordable health insurance is a high priority for retirees. The bill would significantly lower the costs of retiree health insurance, which would generally result in earlier retirements by those state and higher education employees insured by ERS who were eligible to retire but did not meet the rule of 80. The impact has not been estimated by the retirement systems. Since the bill applies to a much smaller percentage of TRS retirees, it is not anticpated to have a significant actuarial impact on TRS.