Public employees and retirees will pay more, get less for benefits |

Public employees and retirees will pay more, get less for benefits

The Public Employee Benefits Program board approved a budget package Thursday that raises employee premiums, limits future retiree subsidies and raises deductibles.

In a nutshell, members of the state plan will pay more and get a bit less in order to meet mandated budget cuts of $50.8 million over the biennium from the amount that would have been required to maintain the current benefits plan.

That holds the total program budget for the coming biennium to $913.8 million.

But at the urging of board members led by Jacque Ewing-Taylor, the board decided to look at more options for raising premium costs to employees and retirees. She said the initial proposal seemed to give active individual employees a better break, cutting the amount of their state subsidy just 1 percent, than other employee groups.

Retirees, she said, would see their subsidies cut 3 percent, and she expressed concern seniors and younger, lower-paid workers with families would be harder hit.

“I didn’t think 1 percent is significant,” she said. “Personally, I would be willing to pay more on my monthly premium so others had to pay less.”

But Executive Director Leslie Johnstone said the proposed change in premiums actually raises the subsidy for dependents of active employees by 4 percent and dependents of retirees by 2 percent. Nonetheless, she said, staff would prepare more options for the board to review. That decision, she said, could wait until as late as February to work out as long as the board agreed to the overall savings from the premium shift ” which generates nearly half the total reduction at $23 million.

Johnstone told the board the $50.8 million reduction is actually less than the $55 million they originally expected to cut. She said the change was based on new projections of how many people will be in the plan and new claims projections ” both down primarily because of reductions in the total number of state workers.

The budget plan that will be submitted to the governor’s budget office takes half the cut from cost shifts ” primarily the change in premiums for employees, dependents and retirees that impact all 40,000-plus members of the plan.

The other half will come from plan design changes, which impact only those members who actually use the plan in a given year. The biggest savings from plan design changes are in elimination of the benefit that cuts members’ deductibles in half if they complete a health assessment questionnaire. That allowed active employees to get their deductible down as low as $250 a year. The savings by eliminating that benefit are estimated at $12.2 million for the biennium.

In addition, Johnstone said, combining the high and low deductible programs into one option will save $4.1 million.

The low deductible option for an individual is now $500 with the high option set at $2,000 ” double those amounts for a family. Under the change approved Thursday, those would be combined into a single option with an individual deductible set at $750 a year and the family deductible at double that, $1,450.

The deductible amount will increase by the rate of medical inflation each year with the out-of-pocket maximum rising at half the inflation rate.

For those in the HMO program, cost increases will be held at a maximum of 5 percent a year for a savings estimated at $5.1 million.

Other changes include elimination of the ADD/ADHD benefits that were just implemented in July and, from now on, the Medicaid Part D payment won’t be sent to the member but, instead, split between the member and the plan. That saves the plan $2 million for the biennium but Johnstone said the actual cost to Medicaid members will only be about $9 a month.

And for those who retire after June 30, 2010, they will have to have at least 15 years service to qualify for the retiree subsidy ” now set at a base amount of $410 a month and provided on a tenure scale to all retirees with more than five years service.

The plan approved Wednesday amounts to a 14 percent cut in the existing program. Budget officials have said that could double unless things begin to turn around.

Board members voted to allow Johnstone and her staff to handle any increase in the amounts that must be cut ” again splitting the pain between cost shifting and plan design changes. But, they said, at the point the deductible amount reaches $900, they will want a special meeting of the board to make the adjustments needed.

The plan will be submitted to the budget office, which, along with the governor, must approve sending it to the 2009 Legislature.

– Contact reporter Geoff Dornan at or 687-8750.