CHARLESTON The Public Employees Insurance Agency finance board has approved a series of cost increases for state workers and retirees, with some modifications to earlier proposals.
A plan to reduce the number of salary tiers in the wage-based insurance program from 10 to five has been removed. Additionally, current financial assistance rates for retirees will remain unchanged, though retirees will still see premium increases next year.
The approved changes aim to address a projected $113 million funding gap for the upcoming fiscal year, driven by rising medical and pharmaceutical costs.
State employees covered by the plan face premium increases of 14% for the state fund or 16% for local government plans. Retirees will see a 12% increase in premiums. Deductibles are set to rise by an average of 40%, equating to over $300, and the surcharge for spouses will increase from $147 to $350. Other cost hikes include higher copays for various medical services, such as inpatient care, therapy, and emergency room visits.
The cost pressures stem in part from legislation passed in 2023, requiring an 80-20 cost split between the government employer and employees, while also increasing reimbursement rates for healthcare providers to 110% of the federal Medicare rate.
West Virginia Education Association President Dale Lee, speaking after the meeting, said additional legislative action is needed to address the financial strain on the insurance plan. He called for increased funding and flexibility in the 80-20 cost-sharing language, suggesting that the state cover at least 80% of costs rather than maintaining a strict cap.
The issue will soon fall to Governor-elect Patrick Morrisey and a Legislature with new leadership. Outgoing Governor Jim Justice, who will transition to the U.S. Senate, acknowledged the challenge of securing long-term solutions for PEIA during his tenure.
Justice highlighted the temporary relief provided by a PEIA Rainy Day Fund and pay raises, but he stressed the difficulty of finding sustainable fixes.
Healthcare costs for public employees remain a contentious issue in the state. The 2018 statewide educators’ strike, sparked in part by rising insurance costs, led to pay raises and increased focus on PEIA funding.
Organizations representing public employees and retirees are expected to appeal to the incoming administration and Legislature for relief from the latest cost increases.
The next PEIA meeting is scheduled for March, pending approval of the finance board.