PEIA plans no premium increases this year, but financial future is cloudy

The Public Employees Insurance Agency, experiencing some financial challenges, is moving toward a plan for the coming year that still includes no premium increases for state employees.

But the agency does see even more financial strain in the future and is talking about preliminary steps to deal with the potential for a shortfall in the hundreds of millions of dollars within five years.

The PEIA Finance Board today signed off on a proposal for the coming year that would hold premium increases at zero for state employees. Retirees who receive PEIA benefits also would not experience a premium increase this coming year. There’s an exception for non-state participants, like local government organizations that opt in, whose plans would go up 9.7 percent.

Dale Lee

“I appreciate the fact that there’s no premium increases for our employees for next year,” said Dale Lee, president of the West Virginia Education Association while addressing the board during public comment.

PEIA will take the proposal out on the road to a series of public comment events across the state over the coming few weeks. The events include 6 p.m. Nov. 9 at the Culture Center in Charleston, 6 p.m. Nov. 10 at the Beckley-Raleigh County, 6 p.m. Nov. 15 with a telephone town hall, 6 p.m. Nov. 16 at Holiday Inn Martinsburg, 6 p.m. Nov. 17 at Holiday Inn Morgantown and 6 p.m. Nov. 18 at Wheeling’s Highlands Event Center.

The plan for the coming year was approved by the finance board after a delay of a couple of weeks. When the board met Oct. 20, agency officials said more time would be necessary to finalize the plan because of a complicated financial year. PEIA finished the most recent fiscal year $92 million behind projections.

More storm clouds could roll in over the next few years. That’s not a situation PEIA will act on immediately, but it’s on watch.

The five-year PEIA outlook released today anticipates keeping employee premium increases at zero through 2027. But costs to the state would go up exponentially over those years.

By 2027, the outlook anticipates, state government would have to transfer an additional $376.5 million in public funds to bolster the insurance program.

Fred Albert

“In 2027, we could have a train wreck,” Fred Albert, president of American Federation of Teachers-West Virginia, said while addressing the PEIA Finance Board today.  “You know, the governor has been very helpful, but we’ll have a new governor at that time.”

The pain of PEIA costs has been acute in West Virginia. In 2018, rising insurance premiums and flat pay prompted a statewide teachers strike.

A PEIA Task Force formed in response to concerns, but the governor wound up stepping in to establish a reserve fund of more than $100 million to hedge against rising insurance costs.

The long-term outlook for PEIA anticipates using $31 million from the fund for 2023 and $74 million for 2024 with nothing available after that, just at the start of the next gubernatorial administration.

The state’s overall revenue situation is more than solid right now, amounting to a billion dollars ahead of projections. Albert wondered if a portion of that money could be transferred to PEIA to replenish the reserve fund.

“Is there a way to ask for some of that money to be placed in the PEIA fund? I’m not sure how that works, but I would just say we need to be as proactive as possible,” Albert said.

Lee of the WVEA also asked about the longer-term expenses.

Jason Haught

Jason Haught, PEIA’s director, alluded to the possibility of increasing state allocations. But he acknowledged that’s not certain.

“And in the event that the appropriation would not materialize, this board would be faced with some difficult decisions as to how we would have to make it compliant with state code,” Haught told Lee.

PEIA Finance Board Chairman Mark Scott chimed in to say talks about what to do are already under way.

“There are discussions ongoing with the Legislature about ways that we might be able to impact these price increases going forward,” Scott said, “so we are definitely willing and wanting to listen to ideas for any and all parties, yourself included, as to ways we can keep these costs from increasing as high as we estimate.”

Lee noted that he would like to be involved in those discussions, but he doesn’t know how since they don’t seem to have been public.

“If I don’t know when or how these meetings are occurring, it’s difficult to be a part of it,” Lee said.

“Understood,” Scott responded.





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