State employee insurance costs could increase under proposal

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A subcommittee of the Alabama State Employee Insurance Board voted to recommend a plan that creates a dental surcharge and increases out-of-pocket expenses for some state employees.

A subcommittee of the Alabama State Employee Insurance Board voted to recommend a plan that creates a dental surcharge and increases out-of-pocket expenses for some state employees.

Out-of-pocket costs for state employees would increase in several areas under a plan approved by a subcommittee of the State Employees Insurance Board on Wednesday.

If accepted by the full SEIB next month, state employees would see a new charge for dental services each month and increased out-of-pocket expenses for urgent care and prescription drugs.

The proposal passed the three-member subcommittee unanimously, but without enthusiasm. Reflecting divisions in the full board, subcommittee members struggled to find a balance between closing a projected deficit and keep health insurance costs reasonable.

“It’s not a good day for state employees at all,” said Paige Hebson, vice-chair of the State Employees Insurance Board and a field supervisor for the Department of Rehabilitation Services, following the meeting. “I don’t feel like we won. I feel like we attempted (to reach) middle ground. I don’t think we got middle ground.”

William Ashmore, CEO of the SEIB, said he expected the full board to take up the proposal within the next two to three weeks. A plan must be in place by Oct. 1, the start of the 2014 fiscal year.

The changes include a new premium for dental services, which are being broken out as a separate plan under the Affordable Care Act; increased urgent care co-pays; increased out-of-pocket expenses for employees and increased co-pays for generic prescription drugs over $50.

Much of the discussion focused on reducing what is currently projected as a $36.7 million shortfall, due to a lack of funding from the Legislature, service requirements under the Affordable Care Act such as contraception, and the shrinking of the state employee workforce, which has cut revenues but not obligations, as many former state employees elected to take retirement.

Acting Finance Director Bill Newton, a member of the subcommittee, said he would have preferred a plan that eliminated the deficit entirely, but was willing to work with the Board if they could bring the deficit below $10 million. The agreement would reduce the projected deficit to $9.9 million, which Ashmore said could be covered by existing reserves. However, that would leave little money to cover a projected deficit in 2015.

“If the Legislature doesn’t appropriate additional funds, which I don’t think they will, then can you make it through 2015 as well?” Ashmore said after the meeting. “You’ll still have to make changes in 2015. If you have to make those changes that were recommended today, as well as the changes we’re going to have to make in 2015, it’s going to be draconian. It would really shock our members.”

Ashmore argued in the meeting that some of the new charges, such as the increased co-pay for urgent care, could be avoided by employees who make regular trips to the doctor. Hebson, however, said that would only benefit “your educated consumer, the person who doesn’t show up on Saturday morning” needing treatment.

Although there was little enthusiasm for the proposal, there was even less enthusiasm for going to the full board with a plan that had not passed unanimously. An earlier proposal brought to the SEIB last week that passed on a 2 to 1 subcommittee vote was rejected by the full board, as were other proposals brought to it.

Compared to private sector plans, the state employee health insurance plan is cheap: A Kaiser Family Foundation study released last week found the average worker pays $4,565 a year for health insurance, or about $380 a month. However, state employees have said they generally accept lower pay for increased benefits, and that both have eroded in recent years.

Highlights of the proposal:

Highlights of the proposal:

A subcommittee of the State Employees Insurance Board Wednesday approved the following changes to state employee health insurance. The full board must approve the plan for the changes to take effect; that vote is expected in the next two to three weeks.

Premiums and dental coverage: After discounts, state employees currently pay $15 a month for single coverage, and $205 a month for family plans. Those rates currently include dental coverage. Under the proposal, the dental coverage would be broken out as a separate option, and cost an additional $5 per month for single plans, and $10 a month for family coverage.

Urgent care: Urgent care co-pays would increase from $35 to $100, not including labs and other work.

Out-of-pocket costs: Following maximums outlined in the Affordable Care Act, out-of-pocket expenses for single employees would be capped at $6,250 a year; for family plans, the cap would be $12,500. There is currently a $2,500 cap on prescription drug expenses.

Lab co-pays: Lab co-pays would drop from $10 to $7.50.

Prescription drugs: State employees have a $10 co-pay for generic drugs. Under the proposal, state employees would pay 20 percent of the price of generic drugs costing $50 or more, to a maximum co-pay of $40 per drug.

Surviving spouses: Spouses of state employees who choose to take state insurance when other insurance is available would be charged $15 per month for single coverage and $20 in a family plan.

– posted by Brian Lyman

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