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Health insurance costs' uptick OK'd; state plan’s premiums to rise 5%

by Michael R. Wickline | June 19, 2021 at 9:03 a.m.
This Aug. 21, 2014, file photo shows health care tax forms 8962, 1095-A, and 8965 in Washington. (AP/Carolyn Kaster)

With no discussion, the Arkansas Legislative Council on Friday signed off on a 5% increase for next calendar year in premiums for current and retired employees in the health insurance plan for state employees and on changes in the wellness credits for current employees.

The changes were proposed by the state Board of Finance earlier this month. The state employee plan covers more than 58,000 people.

The council also approved a revised request for $35 million out of the state's restricted reserve fund in fiscal 2022 to help shore up the state's other health insurance plan, for public school employees and retirees, in addition to requests for $62.5 million more out of the fund for other state programs. The health insurance plan for public school employees and retirees covers more than 100,000 people.

Fiscal 2022 starts July 1.

The Board of Finance proposed the insurance changes under Act 1004 of 2021, which dissolved the State and Public School Life and Health Insurance Board and temporarily transferred its duties to the finance board.

STATE EMPLOYEE

PREMIUM CHANGES

Beyond the 5% increase in premiums in 2022, the council's approval of the finance board's recommendations will mean a reduction in the wellness credit for current state employees from $50 to $25 a month and the creation of a $25-a-month contribution for employees who don't participate in the wellness credit.

The council's action also will spell the end of on-site wellness clinics and require current employees to visit their primary care doctors for the wellness credit.

Most current state employees in the health insurance plan are covered by the premium plan. The other plans are called classic and basic.

The council's action will mean that a projected 9,389 current state employees in the premium plan with the wellness credit will see their monthly contributions to the plan increase from $143.99 to $176.19, or 22.4% more, next year, while a projected 3,738 active state employees with children in the premium plan with the wellness credit will have their monthly contributions increase from $263.52 to $301.70, or 14.5% more, next year based on estimates from the Milliman actuarial firm, which is employed by the state's Employee Benefits Division.

A projected 2,597 active state employees in the premium plan without the wellness credit will have their monthly contributions increase from $193.99 to $226.19, or 16.6% more next year, while a projected 905 employees with children in the premium plan without the wellness credit will see their monthly contributions increase from $313.52 to $351.70, or 12.2% more, next year, according to Milliman.

A projected 8,219 post-65 retirees in the plan will have their monthly contributions increase from $183.92 to $193.12, or 5%, next year, while a projected 2,684 post-65 retirees with spouses on Medicare in the plan will see their monthly contributions increase from $440.62 to $462.65, or 5%, based on Milliman's estimates.

The state's monthly funding per employee will increase by $50, from $450 to $500, effective Aug. 1 of this year, under the council's approval of the board's recommendations.

These changes are projected to eliminate the projected deficit of $33.3 million in 2022 for the health insurance plan for state employees, according to state officials. The Milliman firm now projects a 2022 reserve estimate of $38.6 million, based on the changes.

The finance board also recommended to the Legislative Council creating a $10 million set-aside in the restricted reserve fund or other fund for the health insurance plan in case that money is needed next year.

$35 MILLION FOR

SCHOOL INSURANCE

The Legislative Council on Friday approved the revised request for $35 million from the restricted reserve fund in fiscal 2022 for the health insurance plan for public school employees. The Board of Finance initially recommended the fund transfer for fiscal 2021, which ends June 30.

The council also approved 13 requests from Gov. Asa Hutchinson to transfer a total of $62 million out of the restricted reserve fund to various state programs and projects.

These requests included:

• $28.5 million for the state Department of Education's educational facilities partnership program.

• $12.4 million for the state Division of Higher Education to expand graduate medical residency programs.

• $4.8 million to the Arkansas Economic Development Commission for a grant to the Arkansas State Police Foundation to be used for improvements to the Arkansas State Police precision driving track. The improvements will include the addition of an observation tower for track safety and a maintenance shop for vehicle operations..

• $4 million to the Division of Higher Education for scholarships for historically black colleges and universities, and for outreach programs to promote awareness of the scholarships.

• $3.8 million to the Arkansas State University System to implement an enterprise resource planning system for its seven institutions.

• $3 million to North Arkansas College to partially fund the planned construction of its $8 million Center for Robotics and Manufacturing Innovation facility. The other funds will include federal grant funds, private and local contributions, local grant funds and college reserves.

• $2 million to the Department of Public Safety for the criminal victims reparations revolving fund to continue to provide financial compensation to victims who have suffered personal injury or death as a result of violent crime.

• $1.5 million to the Division of Career and Technical Education for statewide expansion of the Career Coaches Program.

• $1 million to the Department of Agriculture to make grant payments to the county and district fairs to defray unavoidable expenses and needs created by the coronavirus.

• $483,000 to the Division of Higher Education to provide startup and initial distribution of loans and/or scholarships from the Osteopathic Rural Medical Practice Student Loan and Scholarship Program.

• $325,000 to the Department of Labor and Licensing to help provide funds to Arkansas Athletic Commission operations as a result of a reduction in funding caused by the covid-19 pandemic.

• $300,000 to the Department of Veterans Affairs to provide counties financial assistance of $500 per quarter for each quarter that the county veteran service officer maintains accreditation with the U.S. Department of Veterans Affairs and $500 more per quarter for each quarter that the officer obtains or maintains proficiency and access to the U.S. Department of Veteran Affairs' Benefits Management System. Act 941 of 2021 created an incentive structure to ensure that county veteran service officers are maintaining the necessary tools and training to best serve Arkansas veterans, said state Department of Veteran Affairs Secretary Col. Nate Todd.

• $75,000 to the Department of Agriculture to provide a grant to the city of Washington in Southwest Arkansas for an emergency road improvement project.

The transfers will reduce the restricted reserve fund's set asides from $171.4 million to $73.9 million, according to Bureau of Legislative Research records.

Print Headline: Health insurance costs' uptick OK'd

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