A new law allowing the University of North Carolina (UNC Health) and East Carolina University (ECU) health systems to create their own retirement plan separate from the state pension plan could possibly lead to its demise.

That was an accusation North Carolina State Treasurer Dale Folwell made Tuesday on his monthly call with reporters. 

The law, which became effective on Jan. 1, was included in the state budget passed in September and after Democrat Gov. Roy Cooper allowed it to become law in October without his signature.

Anyone hired after Jan. 1 by either health system would not be allowed to join the State Employees’ Retirement System (TSERS) but would be forced to join the UNC Optional Retirement Program (ORP) or a “similar plan.” 

Current employees can stay with TSERS or opt into one of the new plans. However, any current member of TSERS who leaves employment and later returns to UNCHC or the identified areas of ECU will not be able to accrue TSERS service credit. 

The move, Folwell says, leaves others who stay in the system on the hook with increased costs.

“Once you’re no longer connected to the pension system, that means you’re no longer connected to the State Health Plan,” he said. “So, they are trying to divorce from the state pension system. They want to do that without paying the bill that they have here at the pension system, which is nearly $500 million and nearly a billion-dollar liability on the State Health Plan.”

Folwell called it a “torpedo into one of the most safe and secure pension systems in the United States.” 

In addition, he accused North Carolina Office of State Human Resources (OSHR) Director Barbara Gibson of trying to create chaos within the pension plan by proposing to remove all of the flex products from the open enrollment platform from the SHP that allows people to get their dental, childcare, and healthcare benefits all synchronized into one easy system.

Folwell said that Gibson’s actions, along with UNC Health and ECU Health creating their own pension plans, could mean the end of the state pension plan, which he said in Tuesday morning’s Council of State (COS) meeting had topped $118 billion.

“It’s my opinion that if this is successful and if director Barbara Gibson decides to do what she’s trying to do, to even create more chaos this year before the governor leaves office, I think that people will be able to look back and realize that this was a move to get rid of the pension plan of North Carolina by not funding it properly,” he said.

In an email to Carolina Journal Wednesday, Paige Pearson, director of communications for OSHR, said the agency currently uses the SHP’s vendor, Benefitfocus, to enroll state and university employees in NCFlex benefits. They are looking at possibly switching to Empyrean, a vendor that the UNC university system has switched to for employees subscribing to NCFlex benefits.

While no change is imminent, Pearson said, “So far, we have seen no signs that university employees have experienced chaos or confusion from the transition to the University System’s enrollment vendor from the State Health Plan’s enrollment vendor.”

Pearson said if a transition occurs, they have offered the SHP the opportunity to sit down with OSHR and discuss the best timing for the transition. She said SHP hasn’t accepted the offer yet but hopes they will be able to meet sometime this month.

She stressed that it doesn’t affect which vendor will provide open enrollment of health insurance benefits.

Folwell had asked Cooper in the COS meeting to have Gibson “stand down” and not separate the open enrollment from the SHP from the Flex Plan. 

He told reporters that there is a connection through various actions, including those involving Blue Cross Blue Shield of North Carolina (BCBSNC) losing its contract with the state as the third-party administrator for the SHP. 

“It’s important for all of you on the call to see how all this connects with Blue Cross Blue Shield losing their status as the third-party administrator for the State Health Plan after 43 years, Blue Cross Blue Shield’s acquisition of subsidiaries based on this legislation that was so controversial this year, and how all this connects to the platform of what UNC, ECU, and Barbara Gibson, and Governor Cooper are trying to do regarding creating chaos in this plan,” Folwell said. 

When asked if this was a that BCBSNC was trying to regain some business after losing the contract with the SHP, Folwell said, “This all connects because of this subsidiary that Blue Cross Blue Shield owned a portion of that now owns a larger portion of that subsidiary that I believe is going to be connected to the state health plan that UNC is trying to create and the name of that company is called Brighton.”

Another issue that Folwell brought to Cooper’s attention during the COS meeting (and later on the reporters’ call) is an amendment to the dental plan in the Flex Plan through OSHR that allows people to sign up for webinars regarding their retirement readiness.

He said it allows counselors to have webinars about retirement readiness, reach out from those sessions, and have direct involvement in recommending things to members, and what they are seeing is the removal of money from the 401k and the 457 plans.

“Why are we setting up seminars that allow people to visit with people that may encourage them to take money out of a plan that is efficient and put it in a plan that is much less efficient?” he asked Cooper.

Moments before the meeting, Folwell said he learned that the process had impacted some members of the General Assembly. 

“Some were notified that their dental plan, because of this new platform that OSHR insisted on creating, has made some members of the General Assembly not have dental insurance, so I know it’s a serious issue,” he said.

Folwell said there needs to be an investigation into why such a provision allowing those outside of the state retirement plan to possibly sell members an inferior product exists and what happens to the money in the Flex programs that doesn’t get used.