NC Newsline–The state Health Plan Board of Trustees plans a vote Friday on a proposal that will for the first time set premiums according to how much state employees earn.
Premiums would increase substantially for the state’s top earners.
Premiums will increase $10 a month, to $35 monthly, for state employees and teachers enrolled in the standard insurance plan, make $50,000 or less, and have coverage for only themselves. That same coverage will cost $80 a month for employees who make more than $90,000.
The premium this year for workers who insure only themselves under the standard plan and say they don’t smoke is $25, no matter how much they make.
The proposal establishes four salary tiers: under $50,000, $50,001-$65,000, $65,000-$90,000, and $90,001 and more. Premiums increase from tier to tier.
The premium increases and other changes to the health insurance plan that covers 750,000 state employees, teachers, and retirees would help erase a deficit that is running at $507 million this year.
State employees have gone seven years without premium increases. The plan has been using cash reserves to help pay the bills. The health plan is operating at a loss and reserves are running low.
“The past eight years, the state Health Plan was spending more money than it was taking in,” executive administrator Tom Friedman said Thursday.
“The previous Treasurer came in with significant reserves. Those reserves are gone. As health care costs continue to increase, without reserves we had to make pretty significant changes to make sure that we were solvent,” he said.
The proposed changes will put the insurance plan on solid fiscal footing into 2028, Friedman said.
About $150 million to $200 million included in the stop-gap state budget the legislature approved last month also helps address the deficit.
The median salary for state agency employees was about $57,000, according to state Department of Human Resources’ June data.
Premiums will drop for employees who make $90,000 and less if they opt for insurance coverage for themselves and their children. Reducing premiums for dependent coverage has been a long-time State Health Plan goal.
This year, premiums for state employees and their children are $218 a month under the basic plan. Premiums for comparable coverage will drop to $185 a month for employees who make less than $50,000.
Breast cancer screening techniques that go beyond standard mammography, such as MRIs and ultrasound, will be free.
State employees said earlier this year that increases would come as a hard blow because the low premiums are seen as a balance to low wages.
While health insurance costs are rising for state employees, they are not guaranteed raises this year. House and Senate Republicans have not agreed on a comprehensive state budget for the fiscal year that started July 1 that would include state employee and teacher raises.
The health insurance plan overhaul has been a multi-step process that will continue after Friday’s vote.
In May, the trustees voted to raise out-of-pocket costs in the form of increased deductibles and copays for some medical care.
Last month, state Treasurer Brad Briner announced active members and their families covered under the health plan will be able to receive certain surgeries at no cost through a network organized by the company Lantern.
The health plan is continuing to work to lower surgical costs for enrollees. It is negotiating with health systems to lower prices for specific surgeries in exchange for being designated as preferred locations for treatment.
“It’s a substantial overhaul,” Friedman said. “Historically, the state health plan has been every member can have access to any provider with the same cost sharing across the board. We’re going in a different direction in trying to align member incentives with provider incentives with the plan incentives, and really using market forces to try to drive better prices for our members for higher quality care.”
