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2016 1110 PEIA

PEIA Executive Director Ted Cheatham is pictured in this 2016 file photo.

CHARLESTON — State and public school employees who get health insurance through West Virginia Public Employees Insurance Agency will enjoy one more year of coverage with no premium increases.

However, the plan presented Thursday to the PEIA Finance Board calls for a series of yearly employee premium hikes beginning July 1, 2023. The plan calls for a 9% premium hike for the 2023-24 benefits year, followed by 16% and 12% hikes the following two years.

Over the three-year period, employee premiums will increase by a total of $50.5 million, according to the PEIA five-year plan.

Heads of the state’s teachers unions urged Finance Board members to pressure the Legislature to come up with funding options to avoid consecutive years of steep premium increases they said teachers and other state employees can’t afford.

“Doom is coming,” West Virginia Education Association President Dale Lee told the board. “We know that. Unless there’s a willingness by the Legislature to do what they said they would do in 2018, then, next year, we’re in real trouble, and the year after and the year after.”

Fred Albert, president of the American Federation of Teachers — West Virginia, also alluded to legislative promises to find permanent funding solutions for PEIA, a key issue that prompted the first of two statewide walkouts of teachers and school service personnel that year.

“We do know there needs to be a funding source so we don’t have to go back to 2018 and the actions that were taken by our members,” Albert said.

As one of the steps to end the 10-day strike, Gov. Jim Justice created a PEIA Task Force to come up with solutions for the agency. The task force last met in January 2019, and none of its recommendations have been enacted by the Legislature.

“Don’t say we have a voice, only to never listen to that voice,” Lee commented.

The pending premium hikes also will cost taxpayers, with employer premiums projected to increase $201.5 million over the three-year period.

Existing law sets an 80-20 split for employer and employee premiums.

The premium increases will be needed to cover what the plan projects will be a 3.6% increase in medical and pharmaceutical expenses in 2022-23, a 3.5% increase in 2023-24, and hikes in excess of 10% the next two years.

The 2022-23 plan year will mark the fourth straight year of no premium increases for state and public school employees.

As proposed, it also makes no changes to benefits for the coming year.

As of October 2020, the five-year plan had projected that an 8.4% premium increase would be needed for the coming plan year, but investment earnings brought in $40.6 million for the 2020-21 budget year, almost double what PEIA expected to earn.

The 2022-23 plan also will use $31 million of a $105 million PEIA Rainy Day Fund. That will be the first time PEIA has tapped into the fund, set up in 2019 to help offset increasing medical and pharmaceutical costs.

Retirees on Medicare also will benefit under the new plan, with an average 19% decrease in premiums, beginning Jan. 1, thanks to lower prescription drug costs in the new Humana Medicare Advantage Plan, and because of strong investment earnings that grew the Retiree Health Benefits Trust Fund by more than $448 million in the 2020-21 fiscal year.

Lee said he is pleased to see financial relief for retired teachers and other public employees.

“They dedicated their lives to the state, and they’re on fixed incomes,” he said.

The Finance Board will conduct public hearings on the proposed plan from Nov. 8 to Nov. 18, including a telephone town hall hearing Nov. 8, and hearings in Charleston on Nov. 9 and Beckley on Nov. 10.

Hearings will begin at 6 p.m., with speaker sign-ups in the preceding hour.

Lee said the hearings probably won’t draw large crowds, since the proposed plan has no premium increases, but warned, “I guarantee you, if the Legislature doesn’t do something to provide a funding source, you will see huge, huge crowds next year.”

The board is scheduled to meet Dec. 16 for a final approval vote on the 2022-23 plan.

PEIA benefits plans traditionally are approved more than six months ahead of their effective dates to give the Legislature, state agencies and school boards time to come up with additional funding, if necessary, for increases in employer premiums.

Thursday’s meeting was the last for PEIA director Ted Cheatham, who announced his retirement late last month, effective Oct. 29. Cheatham has been director for nearly 15 years.

Mary Jane Pickens, acting administration secretary, told Cheatham, “I’m always impressed with the way you’ve handled really challenging situations with honesty, grace and a sense of humor.”

“This isn’t about me,” Cheatham responded. “This team at PEIA has got to be the best group of professionals I’ve dealt with in all my years.”

Longtime PEIA chief financial officer Jason Haught will serve as interim director.

Phil Kabler covers politics. He can be reached at 304-348-1220 or philk@hdmediallc.com. Follow @PhilKabler on Twitter.

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