An infusion of $15 million a year for four years into the Public Employees Insurance Agency should help ease premium increases or benefits cuts for state and public school employees with health insurance coverage through PEIA - just not this year.
Part of an agreement to assure passage of $98 million a year in tobacco tax increases, the Tomblin administration legislation will transfer a total of $60 million from various special revenue reserve fund accounts over four years to rebuild the PEIA Reserve Fund that was spent down over the past four years to avoid previous PEIA rate hikes.
"For active employees, in the future, we can use that money to reduce possible benefit cuts," said Department of Administration spokeswoman Diane Holley Brown.
However, for the new plan year beginning July 1, those employees will see 12 percent premium increases, as required under a state law that mandates an 80 percent/20 percent employer/employee match on PEIA premiums, she said.
The 2016-17 budget bill approved Friday by Gov. Earl Ray Tomblin includes about $67 million in new employer contributions to PEIA - $43.5 million in general revenue, and $24 million in special revenue, requiring the corresponding increase in employee premiums.
However, the roughly $13 million of premium increases is in lieu of what would have been $120 million in benefit cuts in the form of higher co-pays, deductibles and out-of-pocket maximums that were pending had there been no new funding for employer premiums.
"The way I look at it is, we started at zero, and if you include the $15 million, we're getting $82 million in new, ongoing money for PEIA," said Josh Sword, PEIA Finance Board member and secretary treasurer of the state AFL-CIO, who was a leading advocate for increased state funding for PEIA.
"In this budget environment, I think that's remarkable," he said of the funding increase.
Sword noted that the budget agreement, including the increased PEIA funding and passage of the tobacco tax increase was finalized with just 17 days remaining before a shutdown of state government.
"The most draconian plan of all was if there was no budget July 1, you lose your PEIA insurance," he noted.
Legislation providing the $15 million annual transfer of funding to PEIA (HB 123) specifies that $5 million a year will go to offset premium increases for retirees - who are not bound by the 80-20 match requirement - with $10 million a year going to the rebuild the PEIA Reserve Fund.
Non-Medicare retirees will be the first to benefit from the new funding, beginning July 1.
Those pre-65 retirees will receive 6 percent premium increases on July 1, instead of the 12 percent rate hikes that were pending.
For retirees with 25 or more years of service, that will mean an increase from $264 to $280 a month at 6 percent, instead of $294 a month at 12 percent, Holley Brown said.
For retirees with 20 to 24 years of service, the premium will increase from $341 to $360 a month, or $16 less than a 12 percent increase. Retirees with 15 to 19 years of service will see an increase from $456 to $482 a month, or $25 less than a 12 percent hike.
Medicare retirees who carry PEIA as a supplemental insurance have coverage on a January-December policy year and will have to wait until January to see any premium reductions from the new PEIA funding, Holley Brown said.
Meanwhile, Holley Brown said that, because of the late date for passage of the state budget, PEIA is extending the enrollment period for 2016-17 plans through July 15. Any changes PEIA insurees opt to make in their plans will be retroactive to July 1, she said.
Reach Phil Kabler at philk@wvgazettemail.com, 304-348-1220, or follow @PhilKabler on Twitter.