Alabama state employees could see increased health insurance premiums, costs

A committee of the State Employee Insurance Board (SEIB) Tuesday proposed a combination of increases in state employees’ premiums and a decrease in benefits to address a deficit, despite the board’s resistance to the changes.

“It can be a combination. It could be there on the premium side – the premium increase – or it could be on the benefit side – with benefit reductions and higher co-pay,” said William Ashmore, the chief operating officer for the board. “What ultimately we have shared with you today is a combination of the above.”

The board’s proposed recommendation for funding the State Employees’ Health Insurance Plan (SEHIP) and addressing a $36 million shortfall will be presented to the full board next month on September 20 at 1 p.m. in the RSA building.

Changes include a $20 increase in premium for active employees in 2024; an increase of $7 for individuals and $9 for family dental coverage; an increase of $3 for single and no increase for family vision and cancer coverage. Medicare retirees will see an increase of $5.

The price of visits will also increase. Hospital deductibles could increase by $50; nurse practitioner visits by $15; urgent care visits by $25 and emergency room and surgical facility visits by $100. Prescription copay in all tiers will increase by $5.

Currently, state employees can pay as little as $30 per month for health insurance for an individual after a non-tobacco usage and a wellness program participation discount. Without any discounts, individual state employees pay a premium of $140.

The program includes a $50 surcharge for spouses, but they can apply for a waiver if the spouse is able to enroll in another employer’s insurance coverage.

Currently, spouses who receive the waiver do not pay the surcharge. In 2024, the waiver could only cover $25 of the surcharge, and the spouse would be responsible for the remaining $25.

The board chose not to recommend that a $50 Medicare spousal surcharge be decreased to $25. Ashmore said the benefit increase for Medicare retirees, while trying to cut costs, was to better comply with the Centers for Medicare & Medicaid Services (CMS).

State employees could see health insurance costs increase as board addresses deficit

Connie Grier, the active state employee representative on the board, had questions.

“Where did the benefit increase come from?” she asked. “I mean, why would we do that if we’re trying to raise the bottom line? Why are we going to decrease all the other benefits and increase just that segment?”

Ashmore said that with the surcharge, Medicare retirees could eventually pay more than what it costs.

“My concern there is you’re getting to a point where these individuals pay more money than the actual contract cost,” Ashmore said, which he said does not comply with CMS.

He said it wasn’t a big deal because the Medicare costs were high, but they have come down substantially.

Bob Childree, a retired board member who was present at the executive meeting, said that the state has a “really good insurance program, and everybody would agree with that,” and that it’s a significant factor in recruiting state employees.

“It’s very important that we maintain the integrity of that insurance program, because that is a seller,” said Childree.

He also said that retirees are struggling. He said Social Security cost-of-living adjustment will be less this year, and that Medicare Part B costs are going up.

“Number one is I think we ought to do whatever we can do that is going to have the least impact on retirees, and maintain the high-level program that we have,” said Childree.

By implementing these changes, the program is still expected to run nearly $36 million in the red for the fiscal year 2024, with the projected expense growth rate. The program would have to increase monthly health insurance premiums by $20 a month each year to balance the budget by 2028, according to the board projections.

SEIB had three options moving forward: increase revenue either through the General Fund or by raising employee premiums; reduce board expenses by increasing copays employees pay or cutting benefits; or use the board’s reserves from the carry-over fund and the Retiree Trust Fund.