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Illinois in Debt – $56 Billion Paid for Retiree Health Insurance

by Vanessa Jones on May 9, 2014 at 9:59 AM
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 Illinois in Debt – $56 Billion Paid for Retiree Health Insurance

During the pension crisis in 2011 Illinois - USA, incurred a debt of $1 billion in state pension debt. Apart from this, a lesser known fact is that the state incurred billions of dollars of debt - more than $56.4 billion by providing health insurance to government pensioners.

Retired personnel from with jobs from state government and public universities hardly pay anything towards their health insurance plans; they receive insurance from the State Employees Group Insurance Program - SEGIP.

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The general assembly had given Gov. Pat Quinn the authority to increase the amount of premium paid by the retirees, though the governor made only some marginal changes. Taxpayers will pick up the deficit which was $900 million for the year 2014.

These problems will increase and in the next 10 years the taxpayer costs for these programs will increase to $2.6 billion. Retirees from the private sector usually pay their own health insurance, as compared to government and university employees who can afford to take an early retirement - in their mid-fifties. In most states government retirees pay 54% of their own health insurance costs.
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In most other states, public employees pay 54% of their health insurance costs which is considered generous enough. The Illinois state has a $56 billion debt due to the retiree health insurance which is not a publicized fact, though the growing debt is reducing resources for other priorities. Steps should be taken to establish a system which can take care of the current and future retirees, in a fair manner, so that the tax hikes may be avoided.

References:

Dave, May 2014

Hannah Punitha (IRDA Licence Number: 2710062)

Source: Medindia
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