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story.lead_photo.caption Arkansas State and Public School Life and Health Insurance Board member Renee Mallory is shown with Dr. Joe Thompson in this file photo. - Photo by John Sykes Jr.

Health insurance premiums for current and retired state employees will increase 5% next year under a plan approved Tuesday that involves reducing the amount of money set aside to pay unexpected large medical claims.

In the same unanimous vote, the State and Public School Life and Health Insurance Board also decided that the premiums for school employees will stay the same next year as they are this year.

Starting Jan. 1, state employees will pay $113.32 a month for individual coverage under the premium plan, the most popular option, up $5.40 from the $107.92 a month the employees now pay.

For family coverage, the plan's monthly premium will increase by $24.94, from $498.88 to $523.82.

With an annual deductible of $500 for an individual or $1,000 for a family, the premium plan offers the richest benefits among the three plan options available to state employees. It covers about 22,000 of the 26,000 state employees covered under the plans.

The board's decision on the increase came after it learned during previous meetings that the state employees' plans faced a potential shortfall in the money that will be needed to pay claims next year, based on the plans' current rates and projected increases in medical and drug expenses.

If no other changes were made to the plans, the employees' rates would need to increase by 16.6%, John Colberg, an actuary with the consulting firm Cheiron of McLean, Va., told the board's benefits subcommittee last month.

To reduce the funding gap, the board decided Tuesday to use about $15 million of the $30.6 million it had set aside in a catastrophic reserve fund, which is meant to help pay for unexpected, large medical expenses.

That money, combined with the additional revenue generated by the rate increase, will most likely be enough to close the funding gap without dipping into money set aside to offset premiums in 2021, Colberg told the board Tuesday.

Even so, if medical expenses continue to increase at an annual rate of about 5.5 percent, the rates for state employees' plans will need to increase 29 percent in 2021 unless other changes are made, according to Cheiron's projections.

Chris Howlett, director of the Department of Finance and Administration's Employee Benefits Division, said he was confident that the reduced amount in the catastrophic reserve fund will still be enough to cover unexpected medical expenses.

Before he became director of the division in 2016, he said, the fund only held about $6.5 million. Reducing the amount in the fund will mean it will contain enough to pay an extra month of claims at their current level, instead of two month's worth, he said.

John Bridges, director of the Arkansas State Employees Association, said the group understood the need for the increase and considered it a much better alternative than another option discussed by the board: eliminating drug coverage for retirees who are on Medicare.

That idea, which would save money for the state employees' plans even after reducing retirees' health plan premiums, was unanimously opposed by about 100 retirees who attended a meeting at the association's headquarters last week, Bridges said.

"We think it's a shame that we have to increase our premiums, but reality is reality," Bridges said.

Unlike the state employees' plans, the plans for school employees have enough money in other reserves to hold rates steady next year without reducing the plans' catastrophic reserve fund.

But if medical and drug expenses continue increasing at the current rate, the plans will need to increase rates in 2021 by 17% unless other changes are made, Colberg said.

The last time the rates for state or school employees increased was in 2017. That year, the rates rose 2 percent for school employees and 3 percent for most state employees.

Among school employees, the most popular plan option is the classic plan. School employees will continue to pay up to $46.02 a month for individual coverage or $358.32 for family coverage under that plan, which has an annual deductible of $1,750 for an individual or $2,750 for a family.

Some school districts reduce the premiums paid by their employees by contributing more than the state-required minimum of about $159 a month per covered employee.

The classic plan covers about 25,000 of the 47,000 public school employees enrolled in a state plan.

For coverage under the state employees' version of the classic plan, the monthly premium next year will increase by $2.40, from $47.88 to $50.28, for individual coverage and by $15.76, from $315.18 to $330.94, for family coverage.

That plan, which covers about 2,200 state employees, has an annual deductible of $2,500 for an individual and $5,000 for a family.

The 17,000 school employees covered under the premium plan will continue to pay up to $183.46 a month for individual coverage or $833.44 a month for family coverage.

The school employees' version of the plan has an annual deductible of $750 for an individual or $1,500 for a family.

One group of state employees who won't face an increase next year are those enrolled in individual coverage under the basic plan, which covers a total of about 1,700 workers.

They will continue to pay no monthly premium for that plan, which has an annual deductible of $6,450 for an individual or $12,900 for a family.

The premium for family coverage under the plan will increase from $165.46 to $173.74.

The 4,600 school employees enrolled in the basic plan pay up to $11.26 a month for individual coverage or $275.62 a month for family coverage. The school employees' version of the plan has an annual deductible of $4,000 for an individual and $8,000 for a family.

For about 10,000 retired state employees who are on Medicare, the monthly premiums for individual coverage will increase by $8.34, from $166.82 to $175.16. That plan covers prescription drugs and fills in gaps, such as deductibles and copayments, in Medicare's medical coverage.

The 5 percent increase will also apply to about 200 state retirees who are not on Medicare. For individual coverage, those retirees now pay monthly premiums ranging from $158.48 under the basic plan to $266.40 under the premium plan.

A Section on 06/19/2019

Print Headline: Health insurance premiums up 5% for state workers

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Archived Comments

  • LR1955
    June 19, 2019 at 6:49 a.m.

    Still a bargain compared to what most companies out there are offering their employees; reasonable premiums but very high deductibles.

  • RBear
    June 19, 2019 at 8:44 a.m.

    Completely agree, LR1955. I’m on a high deductible and about same rate as mine. I use an HSA to cover the gap and have a LOT more flexibility.

  • purplebouquet
    June 19, 2019 at 9:55 a.m.

    Ditto to previous two comments. Our employer-provided family coverage is $1,600/month, of which we pay half. Our aggregate deductible is $3,000, we don't have family/individual deductible. Last year, we paid twice as much in OOP medical costs (insurance premiums, deductible and co-pays) as we did in federal income taxes.

  • mrcharles
    June 19, 2019 at 9:59 a.m.

    Healthcare a mere inconvenience , like generic toilet paper. Merica has more important matters to attend to, kneeling, burning flags, keeping statutes up cause mericans too stupid to read about history, discriminated judeo-christians being discriminated against by not having their beliefs made the law of the land, the justifying of slavery to support the ancient book as "good", and whether putin being believed by DT is good or great by his supporters.

    While other modern countries understand , they think , that this matter is important, we here in arkansas worry about getting some really good defensive backs on our feetball team. And of course who can forget appeals to the creator of the universe and its plan for us, second by second, asking IT to make an exception for us. Who needs medical specialist when a IT can if IT wants to regenerate missing limbs, which makes curing cancer a piece of cake. Just walk through a hospital and see the suffering that could be cured by a wiggle of a nose [ we have noses, IT is what we were made in the image of]. Yet too much intereference in our affairs would violate free will.. Wait a minute says Uncle Joe we are told to ask to violate free will but then again we are left to our own ways so as not to interfere with free will. Oh he says, of course, a template for the gop way of thinking , just dont think to hard on the issue just believe.

    As the ADG editors tell us real reform is just around the corner as it is so easy an orangutan can fix the problem. Well OUR orangutan and its lesser imps appear not to have fixed the problem. Reading beautiful letters, genuflecting to putin and scarring children about the less than white people in our land we took fair and square from the less than white people who lived here , take too much time so health care seems to have been forgotten except the various ways to make it harder to work devised by small minds of a system of making government never work except for them being able to make money from mericans and its gubermint.

    Cant people just will themselves not to be ill. I mean cant we just say no cancer so we dont have to take advantage of money paid into a common pool for taking care of ill people? Like being taxed for the other side of the highway you never will drive on.

    Of course what worked in Massachusetts isnt workable for america, just like what worked in ancient days doesnt work for the ways of the modern world. Support less crowded highways, deport all immigrants and get rid of any government support for health care. Create jobs in the funeral industry. I have it on good authority the gop will add this idea to their party platform.

  • ThirdKid
    June 20, 2019 at 1:53 p.m.

    I thank God for affordable insurance for state employees and retirees.

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