CHARLESTON, W.Va. — The PEIA Finance Board has bumped up the tiers for the insurance program by $2,700 to ensure that raises public employees recently received won’t be deteriorated by corresponding out-of-pocket healthcare cost increases.
The board also received continued good news about the insurance program’s finances — a significant surplus for the current fiscal year and a projected surplus for the coming fiscal year.
“In the future, when there’s really bad news in front of you, remember days like this,” Jason Haught, the chief financial officer for PEIA, told the board during a monthly meeting this afternoon.
Gov. Jim Justice on Monday announced his desire to bump up the tiers for the Public Employees Insurance Agency.
PEIA is unique in that it is based on ability to pay, with 10 salary tiers throughout the system.
The move that the Finance Board approved is expected to help 14,000 state workers who would have been bumped up into a higher-priced insurance tier based on their salary increases.
PEIA’s plan for the coming fiscal year was frozen after teachers went on a statewide strike over complaints that insurance costs were going up faster than their pay could absorb. State workers received average 5-percent raises after the nine-day strike that stretched from February to March during the recent legislative session.
This would be a fix to address an unintended consequence of the raises. PEIA director Ted Cheatham said the cost to the program will be about $3 million to $4 million. That’s because some workers will actually wind up in lower tiers.
Another outcome of the teachers’ strike was the establishment of a PEIA Task Force to look at the plan’s cost and structure.
Task Force members have consistently spoken of trying to find ways to come up with an additional $50 million a year for PEIA as costs continue to rise.
PEIA currently costs the state almost $1 billion a year.
On Thursday, though, the program’s actuaries described some good financial news.
PEIA is running a surplus of about $31 million for the current fiscal year.
For fiscal year 2019, the plan is now estimated to run a surplus of about $70 million.
There was corresponding good financial news as it applies to retirees.
The retiree health benefit trust is expect to end the current fiscal year $37.6 million ahead. Next fiscal year, the retiree health benefit trust is expected to be up $38.5 million.
PEIA’s analysts said the program has benefited because of savings that have resulted from initiatives like a 90-day drug plan and rebates that are going to be up 30 to 35 percent over last year.
“A couple things,” Cheatham said. “Claim costs are down. We’ve renegotiated some contracts.”
Surpluses can be put into savings to offset future shortfalls, PEIA financial officials said.
“PEIA is not a for-profit entity,” Haught told the Finance Board. “Every bit of money that PEIA saves goes back to the plan, goes back to the members, goes back to utilization in the future to offset the cost.”
Despite the good financial news right now, Cheatham said the Task Force shouldn’t take its focus off long-term stability for PEIA.
“The Task Force has been charged by the governor to find a way to help PEIA,” Cheatham said. “Part of that is probably a revenue stream when we need it, when we need it.”