CHARLESTON, W.Va. - The Public Employees Insurance Agency (PEIA) Finance Board today adopted PEIA’s health care finance plan for fiscal year 2010, which includes necessary increases in members’ monthly premiums to help cover rising health care costs.
The cost change, which takes effect July 1, 2009, is the first premium increase in the last three years, and it will allow the Finance Board to preserve existing benefits.
Under the approved plan, for the average tobacco-free active employee earning $36,000 per year, the increase will be $3 per month for single coverage, and $13 per month for family coverage. Tobacco-free retired members of PEIA with Medicare will not have a premium increase; however, their annual medical out-of-pocket maximum will increase from $500 to $750.
The PEIA Finance Board approved the increases due to rising health care costs, a problem facing states throughout the nation. The average premium increases are about nine percent for active employees, 11 percent for non-Medicare retired members and 12 percent for non-state agencies.
The Finance Board chose not to adopt the many benefit changes that had been proposed for active employees and retirees, in response to the overwhelming comments received during the public hearings.
“Both active employees and retirees voiced their opposition to the benefit changes we proposed,” said PEIA director Ted Cheatham. “There may have been some misunderstanding of our intent. We had proposed benefit changes to offset the premium increases 'dollar for dollar,' but our members didn’t want those changes. “It was never our intention to adopt both the premium increases and benefit changes.”
During the public hearings, employees expressed concern that they had received a three percent salary increase, but a nine percent premium increase in their health care was being proposed. However, while the salary increase for a $36,000-a-year employee was $1,080, the annual PEIA family premium increase for that same salary would be $156.
Another issue raised frequently during the public hearings was the existence of a $363 million reserve in the West Virginia Retiree Health Benefit Trust. Many employees and retirees suggested that the board should spend down this reserve before increasing premiums.
This reserve represents the funding that the plan is required to begin setting aside for current and future retiree benefits. It is the funding for Other Post-Employment Benefits (OPEB) that every participating employer has to accumulate. To spend this reserve would simply increase the unfunded OPEB liability, further increasing costs in the future.
PEIA’s benefit design compares favorably with other southern states. PEIA’s individual deductible for a $36,000-a-year employee is $225 compared with the regional average of $284. The family deductible for a $36,000-a-year employee is $450, which is much lower than the regional average of $714.
PEIA provides health and life insurance benefits to more than 200,000 active and retired public employees and family member.