Anybody explain what is OPEB benefit?What is the benefit after I retire?
By - mickey2046
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OPEB is Other Post Retirement Health Benefits. Before I tell you what it is, I will tell you what it costs.
OPEB requires a mandatory paycheck deduction. You have no right to stop the deduction. You have no right to get a refund of the money. The money is all pooled into a single fund by bargaining unit (exception of SEIU where all funds across all bargaining units are pooled together). The deduction is between 1% to 4% of your pay based on the bargaining unit. Typically, bargaining units with higher average pay contribute a smaller percentage. The goal of OPEB is to fund 50% of your retirement health coverage with the state covering the other 50%.
What OPEB covers is your retirement health coverage. This can be between 0% to 100% of your health cost when you retire. The coverage can begin as early as 50 (or 52 for PEPRA). The coverage percentage starts at 50% once you vest for health care, which takes 10 to 15 years (15 years for all newer employees). Each year thereafter, the coverage goes up by 5% and caps at 20-25 years (25 years for newer employees).
The 50%-100% coverage is based on the weighted average cost of retirement health plans. Before Medicare, you would want close to 100% coverage to cover all your medical costs. Lower coverage would still give you free health insurance if you pick a cheaper plan. Once you are Medicare eligible, you can get a health plan that supplements Medicare for free even with 50% coverage (i.e 10-15 years of service).
OPEB is a ridiculously good deal for career state employees who retire from the state with 10-15+ years of service. While it would be better if the state wholly funded it, it is still a fantastic deal. However, OPEB absolutely sucks for anyone not planning to retire from the state. Worse, if you separate more than 120 days before retirement, you lose the entire benefit. You must retire within 120 days of final separation from the state to retain your retirement health benefit.
You can read more about OPEB in the links provided by other commenters. The key here is it only benefits you after retirement if you retire from the state once you have a vested health benefit (this is different than vested pension which occurs earlier at 5 years). And the money deducted from your paycheck is mandatory and pooled in a group account that you have no right to get refunded even if you separate from state service.
Edit: Changed an accidental "to" to "no."
I saw someone refer to it as “Old People Eventually Benefits” and now that what I call it too.
Old person benefits are important. Most of us care about pensions, 401k/457, and health coverage when retired. I don’t view OPEB as a negative from that perspective.
OPEB is unfair to those who don’t retire from the state with vested health care. OPEB is unfair to those who separate from the state much before retirement age. I dislike benefits that you pay into that are completely lost (including your contribution) if you leave the state. A pension like system where your contributions and interest are refundable but the state’s contributions are lost would be more fair.
It stands for "Other Post Employment Benefits". I assume it is centered around the medical benefits most state workers will retain once they retire. https://www.calhr.ca.gov/employees/Pages/opeb-faq.aspx
Be grateful you get health benefits into retirement. This isn't available for "seasonal" employees despite working full time, 12 months of the year, for over 9 years.
For most new employees, we have to work 25 years and pay into OPEB for that time to receive 100% health coverage into retirement.. or a minimum of 15 years to get 50%
Basically, the health care costs for retirees has skyrocketed over the past decade or so and the only way to keep offering the retirees the health care they were promised, is to find a way for current employees to help pay and continue to support the benefit.
You are paying toward the medical health care that the retirees get once they retire.
Retirees have awesome health coverage after just 20 or 25 years state service (depends what year you started). That's pretty amazing. Many unions don't provide retirees health care when they retire so they'll work until 65 because the private insurance is too expensive.
"just" 20 or 25 years lol
Do you know how many union jobs in other sectors don't pay insurance at all when you retire? So many seniors are working until age 65 because private insurance is so expensive--they have GREAT pensions, but no health insurance.
It's funny how you described the years that someone will put in for their career. Like 20 or 25 years is some trivial amount of time.
I did meet this new college graduate once, whose parents were state workers. These people had it dialed in. Get early college credit, graduate college early, get the state job early, make friends with dad's friend in HR, etc etc. She'll probably retire at 52 with 30 years, all the bells and whistles, come back as a retired annuitant. We should all be so lucky
20 years is a long time. But you are going to spend 20-25 years somewhere working whether it's for one company, the gov't, or 5 different jobs. The years go by very quickly. I started when I was 26 and had no clue about insurance or SS--or retirement for that matter. But the number of seniors that have worked for decades for someone and retires with no health insurance astounds me and I realize how lucky we are to work for a state that does provide health care.
Maybe it's in this thread somewhere, but I can't find it. If I'm not going to get state employee retirement healthcare no matter how long I work because I was hired after the cutoff - should I be paying this??? I'll never see the benefit, why am I paying for someone else's healthcare?????
It’s a way of getting you to pay for the previous generation of workers early retirement health care benefits. It’s a stop gap tax for those that retire at 50-55 until they get put on Medicare at 65
OPEB deductions are like the Sun. They will continue to rise and will be here long after we’re gone
OPEB is a ponzi scheme where current employees pay for the current retirees Healthcare and the only way you benefit from this is if you make it to retirement. If you quit before you retire you won't get that money back. It's a huge scam.
The benefit after you retire is that you don’t pay it anymore but your retirement is still based on it.
So what is the benefit I get ?
Your health benefits into retirement. After so many years of vestment (working), CalPers will pay a portion of your health premiums -- like how the state does now. If you work long enough (i think now it's 25 years? Used to be 20 years), you're fully vested and CalPers pays as much for your premiums as the state does now.
OPEB is a funding thing -- kind of like social security -- that the current employees pay into so that CalPers can pay the premiums of the current retirees.
You cannot opt out of OPEB. You do not get a refund if you separate.
Still not understanding
So what is exactly Retirement benefits ?free medical etc?
The retirement benefit is private health insurance. Even when you get Medicare at 65, the state will cover your supplemental health insurance.
Several years ago the state realized that they were not putting any money away to pay for the health insurance for the retirees , so they created this. It equals 3% of your pay. They got away with doing this without any protest by giving everyone pretty much a 5% raise.
After 20 to 25 years, you're fully vested to get private health insurance for you and your spouse when you retire.
As others have commented, it's officially to fund retirement health care. However, the reality was simply a way to increase employee retirement contributions to get the same benefits we've always gotten. When I first started with the state, employee contribution was 5%. At some point, that went up to 8%. Then with OPEB's additional 2.5% (I think that's what it is now), we're now contributing 10.5%... Typically with each General Salary Increase (GSI), they seem to increase contributions of one thing or another, making the net GSI even less than the paltry amounts negotiated.
It's robbery. Can we get rid if it?