Joint ERS Board-IAC May meeting highlights
The Employees Retirement System of Texas (ERS) Board of Trustees and Investment Advisory Committee (IAC) met on May 26.Meeting highlights include:
- The Board approved ERS’ recommendation to award a five-year contract to Minnesota Life / Securian to underwrite and administer the Group Term Life and Accidental Death & Dismemberment Insurance plans under the Texas Employees Group Benefits Program (GBP). Minnesota Life has been providing this insurance to GBP participants since 2012. The new contract will go into effect January 1, 2022 and extend through August 31, 2027.
- The Board also approved premium rates for non-Medicare Advantage GBP plans, effective September 1, 2021. There were no changes to monthly member contributions in the HealthSelectSM plans, DeltaCare® USA DHMO, Texas Income Protection PlanSM (TIPP) short-term disability insurance, optional and dependent life insurance, and AD&D insurance. There will be a 10% decrease to the State of Texas VisionSM plan rates and a 3% increase to rates for the State of Texas Dental Choice PlanSM and TIPP long-term disability insurance. The Board noted that GBP health insurance plans have gone several years without rate increases.
- The Board approved a staff recommendation, based on low participation and enrollment, to terminate the TexFlex commuter spending account (CSA) plan effective August 31, 2021.
Read on for a recap of the entire meeting. You can find more information, including the presentation slides and links to meeting materials and video recordings, on the May 2021 Board meeting page. In addition, ERS mailed premium information in all employees’ Summer Enrollment packets.
The next joint meeting of the ERS Board and IAC is scheduled for August 25. Currently, ERS plans to hold this meeting in person at the ERS offices in Austin.
Joint Meeting of the ERS Board of Trustees and Investment Advisory Committee
Incentive Compensation Plan (ICP) report
ERS staff presented the annual overview of the ICP. Based on a review by executive management and other stakeholders, HR recommended changes to better align the plan with those used by other public pension systems. The Board will review the draft recommendations and consider the final plan during the August Board meeting.
Investment performance and risk update
ERS’ Chief Investment Officer and representatives of NEPC, ERS’ general investment consultants, discussed the ERS Retirement Trust Fund’s investment performance. ERS staff also presented a risk update of the general market environment and ERS specific portfolios.
ERS staff provided an update on fixed income investments and a review of the securities lending program.
ERS staff and a representative from CBRE Caledon, ERS’ infrastructure consultant, presented the private infrastructure market update. The Board approved an amended infrastructure tactical plan for Fiscal Year 2021 and the proposed tactical plan for Fiscal Year 2022.
ERS Board and IAC members, as well as ERS staff, presented a resolution thanking Laura T. Starks, Ph.D., for her 29 years of service to the IAC. Starks no longer participates on the IAC, but continues to serve on the Texa$averSM Product Review Committee.
ERS Board of Trustees meeting
Retirement and service purchase actuarial factor tables update
ERS staff presented adjusted actuarial factor tables to calculate annuity reductions for non-standard retirement options and for certain service purchases. The Board approved the new actuarial factors for use beginning September 1, 2021.
Life and AD&D insurance contract awarded
The Board approved a recommendation that ERS award a contract for Group Term Life and Accidental Death and Dismemberment Insurance to Minnesota Life / Securian. Minnesota Life already provides services to ERS active members and retirees enrolled in life and AD&D insurance, including benefits underwriting, claims processing, account management and customer care. The current contract expires on December 31, 2021. The new, five-year contract goes into effect January 1, 2022.
Plan Year 2022 premium rates for HealthSelect plans
ERS staff recommended that the monthly member premium rates for the non-Medicare Advantage HealthSelectSM health plans remain at the Plan Year 2021 level. The Board approved those rates.
Specific to the non-Medicare Advantage HealthSelect health plans, ERS staff reported a temporary benefits change—adopted in response to COVID-19—will become permanent beginning in PY22. Mental health Virtual Visits through Doctor on Demand and MD Live will continue to be available at no out-of-pocket cost to HealthSelect of Texas® participants. Consumer Directed HealthSelect participants will have to meet their annual in-network deductible, after which 20% coinsurance applies. The temporary no out-of-pocket cost for non-COVID telemedicine provided through a provider’s platform expires June 30, 2021. Beginning July 1, 2021, eligible telemedicine services will have the same out-of-pocket cost as an office or onsite visit.
Additionally, ERS staff reported ERS is making it easier for members to manage a diabetes diagnosis. In PY22, HealthSelect of Texas participants and Consumer Directed HealthSelect plan participants will bypass the plan’s annual deductible when filling insulin prescriptions through the HealthSelectSM Prescription Drug Programs. While the copay and/or coinsurance still apply, this means participants do not have to meet the annual deductible first. Consumer Directed HealthSelect and HealthSelect Secondary participants diagnosed with diabetes will also be able to bypass the annual medical deductible when getting an in-network diagnostic hemoglobin A1C test. (HealthSelect of Texas participants have no annual deductible for in-network medical care.)
Plan Year 2022 optional benefits premium rates
The Board approved and adopted the FY22 member monthly contribution rates for optional benefits.
- State of Texas Dental Choice will see a 3% increase in monthly rates in PY22 to ensure member contributions can support anticipated costs. The rates for the dental HMO, DeltaCare USA, will remain at PY21 levels.
- State of Texas Vision. ERS staff expect use of the State of Texas Vision benefits to return to pre-pandemic levels and that the programs cash reserves can absorb any unexpected costs. Therefore, staff recommended a 10% reduction in PY22 member contribution rates.
- Life and Accidental Death & Dismemberment Insurance. Claims increased significantly during the pandemic, but ERS staff think the trend will not continue at the same level in PY22. This, along with sufficient plan assets, enabled ERS to recommend that premiums remain at PY21 levels.
- The Texas Income Protection Plan (TIPP) offers members two plans. Premiums for short-term disability coverage will stay at PY21 levels, while the long-term disability premiums will see an increase of five cents per $100 of coverage.
The TexFlexSM program
ERS staff recommended continuation of the administrative “fee holiday” through PY22. Participants enrolled in a flexible spending account (FSA) will not pay a $1 per-month program administration fee. The fee holiday has been in place for several years.
Citing low participation and enrollment, ERS staff also recommended, and the Board approved, the termination of the commuter spending account (CSA) plan effective August 31, 2021. Current participants can use their CSA funds on eligible transit and parking expenses through August 31, 2021, and will have until December 31, 2021 to submit parking claims incurred through August 31. Because the pre-tax CSA program is ending, those with money remaining in their CSA(s) may get a taxable refund in early 2022.
Board of Trustees election amendment
ERS staff presented a proposed amendment to ERS Administrative Code, Rule 63.4. The amendment authorizes the Board, or the Board’s designee, to cancel an election and certify a candidate as the trustee-elect when only one candidate meets the eligibility requirements to run. The Board approved the amendment, which covers current and future trustee elections. As a result of this action, Neika Clark will fill the Board position currently held by Ilesa Daniels, whose term ends on August 31, 2021. Clark, an employee of the Texas Health and Human Services Commission, was the only candidate eligible on this year’s ballot.
ERS’ Executive Director Porter Wilson provided information on state legislative activity related to ERS.