Overview:
In the face of a challenging financial situation, officials have reduced subsidy rates. Active workers with plans that cover a spouse or family are expected to encounter more significant premium increases.
Retirees involved in Nevada’s financially troubled state employee health insurance program may see considerable increases in their premiums beginning in July.
The precise amount of the increase scheduled for July hasn’t been disclosed yet, but had it been implemented this year, retirees in the two main plans would face a monthly rise between $34 and $172. Meanwhile, active employees with these plans could have experienced adjustments ranging from a decrease of about $13 to an increase close to $57.
It seems that active employees will also likely see their premiums rise if they have a spouse or family included in their plan. Those who are solo members may notice slight reductions in their premiums.
The adjustments are a result of a recent decision by officials to reduce the state’s contributions toward various health insurance plans. This move aims to limit the practice where certain insurance plans cover costs for others, with the goal of saving around $5 million for a program that has been operating at a deficit for years. Last year, the program recorded a shortfall of about $15 million.
Across the two plans affected, there are approximately 3,100 retirees enrolled, with around 850 of them facing potential monthly increases exceeding $150. The changes will also impact approximately 4,800 active employees in these plans.
During a recent 5-4 vote, the Public Employees Benefits Program (PEBP) board approved these changes. Detractors expressed concerns over another hike in costs during a time when healthcare expenses are skyrocketing.
“It feels like we’re in a tug-of-war between participants and the plans,” said board member Blaine Harper, who opposed the changes.
Since this decision pertained to the subsidies of the plans, further premium adjustments may still be forthcoming. The board is expected to finalize the premium rates early next year. In March, they had already raised premiums significantly for certain enrollees for the plan year that runs from July 2026 to June 2027.
Why some groups are facing higher premiums
Following the presentation of several options by outside consultants, the board selected one that particularly affected retirees and active employees with family plans.
Most retirees in the PEBP are considered “early retirees,” meaning they’re younger than 65 and not yet eligible for Medicare; however, they might have employment elsewhere that includes health insurance, noted Laura Rich, a board member and director of the Nevada Department of Human Services.
Moreover, these retirees won’t receive subsidies if their state employment began in 2012 or later.
“I just don’t think it’s right for us to subsidize those individuals at the expense of active employees,” Rich stated. “We have a significant number of active employees funding a system that offers them less access to benefits. It just doesn’t seem fair.”
There’s also a group of around 200 retirees who can’t access a particular premium-free Medicare program because of when they began their state service. Harper wanted to consider these retirees—they can remain on the state’s program past the age of 65—when deciding on premium increases, but the final decision didn’t include a special consideration for them.
Members also pointed out that active employees with family or spouse benefits—who will bear the brunt of the changes—could potentially seek alternative healthcare options.
“I think this approach might push those with access to employer-provided healthcare to use that option instead,” Rich added.
Historically, the state subsidizes dependent health insurance costs at a rate higher than local governments, according to Board Chair Jim Wells.
There was substantial opposition expressed during public comments.
Michael Kagan, chair of the UNLV faculty senate, slammed what he characterized as “dividing different members of our community against each other.”
“We don’t want to keep current employees’ premiums down by disadvantaging retirees who have already served the state,” Kagan remarked. “We should avoid splitting community members based on whether they have spouses or children.”
Kent Ervin, chair of the legislative committee for the Retired Public Employees of Nevada, stated that costs shouldn’t simply be shifted onto employees and retirees.
“Cuts to benefits and hikes in employee premiums should only be considered as a last resort, especially once we understand the governor’s executive budget next January,” Ervin argued.
Wells mentioned that without a policy decision made this month, the responsibility would fall on the governor’s office and health officials as they formulate the next two-year budget.
Budget disputes
This situation unfolds amidst a delicate budget scenario. Last year, PEBP’s spending outpaced its revenue by $14.6 million, with two healthcare plans facing deficits. The reserve balance has also remained stagnant in recent years, with dwindling cash resources.
Theresa Carsten, executive officer for PEBP, went so far as to label the program as “insolvent,” although one board member contested that assessment.
The changes sanctioned on Friday are projected to save around $4 million to $5 million, aimed at replenishing reserves.
Public comments and board members displayed concerns over financial matters. For instance, the state’s subsidies for plan enrollees surged by 30 percent last year without corresponding improvements in revenue projections.
“While I acknowledge that things are complex, there’s a straightforward aspect as well,” said board member Chris Viton, CFO of UNLV. “The Legislature offered a higher assessment intended for our account, yet we’re not seeing those funds.”
In the next board meeting in November, more thorough details will be provided regarding the allocation of these funds, along with clearer insight into the revenues and expenses for each plan.
