The General Assembly gave final approval to the budget conference committee report on Thursday. The 2005-07 budget has been sent to the Governor. The provisions of the budget relating to retirement and the State Health Plan are summarized below.
Cost-Of-Living Adjustments
All governmental retirees will receive increases in their monthly pension payments. The adjustments for each group are presented below.
- Retired teachers, state employees, legislators, members of the judicial system: 2.0%
- Retired local governmental employees: 2.5%
- Retired members of the N.C. National Guard: increase in the monthly minimum from $50 to $75 and the monthly maximum from $100 to $150
- Retired volunteer firemen and rescue squad workers: Monthly payments increase from $161 to $163.
All COLAs and increases are effective July 1, 2005. These will be included in the August pension checks along with the retroactive payment for July.
Repayment of Escrowed Funds
The budget includes a $25 million appropriation to repay the Teachers and State Employees Retirement System for payments that were diverted from the System by the Governor in 2001-02. This is the third installment of a 5-year repayment schedule established by the General Assembly in 2003. A balance of approximately $74 million remains to be repaid in the next two years.
Retired Teachers Re-employment
A special provision in the budget provides a 2-year extension of the law allowing retired teachers to return to work full time after a six-month separation from service without loss of pension benefits and with no limits on earnings. School systems that re-employ retired teachers must pay to the Teachers and State Employees Retirement System a Re-employed Teacher Contribution Rate equal to 11.7% of the covered salaries paid to retired teachers.
Definition of Retirement for Teachers and State Employees
The budget also includes a new definition of retirement for members of the Teachers and State Employees Retirement System who retire and then return to work with a state employer under the 50% earnings cap provisions. The new definition requires teachers and state employees who retire on or after November 1, 2005 to be completely separated for at least 6 months before returning to work. The retired employee cannot render any part-time, temporary, substitute, or contractor services during this 6-month period. This provision does not become effective for participants in the UNC Phase Retirement Program until June 30, 2007.
State Health Plan
The General Assembly appropriated $108.6 million for 2005-06 and $142.7 million for 2006-07 to partially offset projected cost increases in the State Health Plan. In addition, the budget changes several out-of-pocket and co-payment provisions for members of the Plan.
- Maximum annual out-of-pocket for individuals increases from $1,500 to $2,000.
- Member payments for first day of hospital stays increase from $100 to $150.
- Member payments for outpatient fees and charges rise from $50 to $75.
- Member payments for emergency room services increase from $100 to $200.
- Co-pay for branded prescription drugs with generic equivalents increases from $35 to $40 per prescription.
- Co-pay for branded prescription drugs not on the approved state formulary increases from $40 to $50 per prescription.
The monthly premiums for spousal and family coverage increase by 12.3%. This is a lower percentage increase than originally proposed in either the Senate or House budgets.
