CHARLESTON The Public Employees Insurance Agency (PEIA) is proposing significant cost increases for the next fiscal year, leaving public employees, retirees, and lawmakers facing tough financial choices.
PEIA is facing a $113 million-dollar funding gap, which stems from rising medical and prescription costs outpacing available resources. Proposed changes include premium hikes of 14% for the state fund and 16% for local government plans. Retirees could see a 12% increase. Deductibles would rise by an average of 40%, or over $300, along with higher copays for services such as emergency room visits, therapy, and pharmaceuticals. The spousal surcharge would jump from $147 to $350.
These increases follow a 2023 legislative mandate to maintain an 80-20 cost split between government employers and employees. Lawmakers also raised medical provider reimbursement rates to 110% of the federal Medicare rate to address concerns from healthcare providers about the state's traditionally low reimbursement rates.
Senate Finance Chairman Eric Tarr said state employees have benefited from measures like flat insurance premiums and repeated 5% pay raises, even as private-sector workers faced substantial premium increases during the same period. He described the proposed increases as a necessary balance to address the state's obligations under rising medical inflation.
Public employees, however, are concerned about absorbing the additional costs. Kanawha County Delegate Mike Pushkin attended a PEIA public hearing in Charleston and noted that many state workers and retirees already struggle to make ends meet. Pushkin criticized the Legislature for failing to prioritize long-term solutions for PEIA’s funding challenges.
PEIA hosted statewide public hearings to gather input on the proposals, but the ultimate decisions will likely rest with the incoming governor and Legislature.
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