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PEIA proposes premium increases for state, local employees

CHARLESTON — The Public Employees Insurance Agency is considering significant premium increases for the coming year.

The PEIA Finance Board is proposing:

  • 10.5% premium increases and no benefits changes for state employees who get the insurance.
  • 13% premium increases for employees of local governments that opt into PEIA, plus the addition of a surcharge for eligible spouses of about $147.
  • No changes in premiums or benefits for retirees who are eligible for Medicare.
  • 10% premium increases and no changes in benefits for people who are old enough to have retired but not old enough to be eligible for Medicare.

The changes, which were outlined during a PEIA board meeting Thursday, aren’t a certainty yet.

The PEIA board will take the proposals out for public comment at several locations over the coming weeks: Nov. 6 in Wheeling, Nov. 7 in Martinsburg, Nov. 9 in Morgantown, Nov. 13 in Charleston, Nov. 14 in Bluefield and a virtual town hall on Nov. 16.

Then, the PEIA board will reconvene to finalize the plan or make any adjustments.

The premium increases are happening in large part because earlier this year the Legislature passed a multi-faceted bill in response to financial strains, making it mandatory that PEIA conform to an 80-20 cost split between the employer and employees.

That has been the cost ratio set in state code, but it got out of whack over the past few years after the governor and the Legislature established a reserve fund that PEIA could use to cushion its costs. The governor had promised no PEIA premium increases for employees during his time in office, which concludes in 2024. “Not on my watch. Period. Period,” he had said.

Now, PEIA costs for employees will have gone up two straight years.

During the fiscal year that started July 1, state employees and educators took on increases of about 24%. Workers insured by local government agencies that opt into PEIA got increases of 15.6%.

The possible increases introduced Thursday will be for the fiscal year that starts next July 1.
Justice, when asked by MetroNews during a regular news briefing about the possibility of premium increases, said he hopes to offset the pain with pay raises.

“I guess we started down the process of coming to, maybe, a permanent fix for PEIA. In doing so, what I’ve tried to do all along is to, basically, give pay raises — significant pay raises enough that took care of any premium increases and then had additional dollars on top of that,” he said.

“The Legislature, you know, last year changed the law and made the plan an 80-20 plan. But what we’ve got to do — and what I would be really, really supportive of doing is — as we have to have increases or whatever it may be, I don’t want our folks to feel that pain. So what I want to do is to cover that, at least cover it if not more dollars, to cover it with pay raises. But I don’t want our folks feeling that level of pain.”

At the end of the PEIA Finance Board meeting, West Virginia Education Association President Dale Lee said workers will experience sticker shock. He noted that for state employees, the cost of insurance will have gone up by about 35% over two years.

“I don’t know any private plans that have shown that dramatic an increase over two years in premiums. Now, I will give you that we went three years with no premium increases; I understand that. But that was at no fault of ours. The governor put additional money in and moved the tiers so that there wouldn’t be any increases and then suddenly in one fell swoop with last year’s bill we’re going back and paying for the premiums of the last three years,” Lee said.

“Now we’re looking at 10%, 10%, 10% over the next three years. While that might seem reasonable to some, it’s not reasonable to our employees. It’s not reasonable to the teachers, service personnel, bus drivers, cooks, who will need to see an increase in their salaries to offset that cost.

Lee acknowledged the Legislature and governor agreed on a $2,300 wage increase this past year to offset rising insurance costs.

“So I would call upon the Legislature to continue to do that because otherwise you’re gonna go in the hole really quick,” he said.

He also expressed concern for some of the retirees who could get walloped with increased costs.

“For people who can least afford it because they live with no increases in their retirement and probably won’t get one until 2034 when the retirement system is paid off,” Lee said.

He said the cost for that category of retirees amounts to $2,225,000 for the year.

“In the budget of PEIA, in the budget of the state that’s peanuts,” he said, urging the state to pick up the cost.