Alabama state employee health insurance premiums up, benefits down

The State Employee Insurance Board (SEIB) Wednesday approved an increase in Alabama state employees health premiums and a decrease in benefits.

The changes to the State Employee Health Insurance Program (SEHIP), which SEIB officials said were needed to address a deficit, amount to an increase of about $20 per month per member, and increases to out-of-pocket costs for visits to health care professionals and for prescription drugs.

William Ashmore, the chief executive officer of the SEIB, said after the meeting that the committee looked at the options and had to weigh the impact the changes would have on members. With some state employees making $30,000, he said that even a $20 increase might make a big difference.

“A lot of folks, especially in state government, they can’t afford some of these changes that many of us will look at and say it’s not a big change,” he said.

The changes include a premium increase of $7 a month for individuals and $9 a month for family dental coverage; an increase of $3 a month for individual vision and cancer coverage and no increase for family vision and cancer coverage. Tobacco users will see a $5 increase per month.

The price of visits will also increase. Hospital deductibles will increase by $50; nurse practitioner visits by $15; urgent care visits by $25 and emergency room and surgical facility visits by $100. Prescription copay in all tiers will increase by $5.

The board had discussed increasing the cost of benefits for Medicare retirees by $5 a month, but chose not to do it on Wednesday.

Currently, a state employee on an individual plan who does not use tobacco and participates in a wellness program can pay as little as $30 per month for health insurance. Without any discounts, individual state employees pay a premium of $140.

The program includes a $50 surcharge for spouses, but they can apply for a waiver if the spouse is able to enroll in another employer’s insurance coverage.

Currently, spouses who receive the waiver do not pay the surcharge. In 2024, the waiver will only cover $25 of the surcharge, and the spouse would be responsible for the remaining $25.

Despite the changes, SEHIP is still expected to run nearly $36 million in the red for the fiscal year 2024. Ashmore said that the main reason is a decline in active state employees that pay into the insurance program.

Alabama state employees could see increased health insurance premiums, costs

The program would have to increase monthly health insurance premiums by $20 a month each year to balance the budget by 2028, according to the board projections.

“With the funding shortages that we’re looking at, [the board] did another outstanding job of keeping any increases in premiums and the number out-of-pockets to a minimum, but at the same time, keeping the plan financially sound,” Ashmore said.

Liane Kelly, the executive director of the Alabama Retired State Employees’ Association, said Wednesday that she hopes  the Legislature or the governor will address these cost increases, or at the very least, prevent another round of premium hikes next year.

“We’re going to do everything we can to make sure, if it can be remedied, that there’s a solution to fix this before it actually gets implemented,” Kelly said. “And if that’s not the case, then hopefully moving forward in next year’s budget, this is not repeated.”

Rep. Rex Reynolds, R-Huntsville, chair of the House Ways and Means committee, said in an interview Wednesday after the meeting that it was not the Legislature’s intent to increase those costs.

“I’m just one voice, but certainly, our revenues continue to be strong in the General Fund. Most of that strength comes from our [Internet sales tax] and our interest on state accounts. So there may very well be a supplemental going into 2024. I, for one, am willing to take a look at it,” Reynolds said.

Sen. Greg Albritton, R-Atmore, the chair of the Senate Finance and Taxation General Fund committee, said over the phone that he wants to take a look at the numbers passed by the board, but did not say whether he would be open to a supplemental package. 

“We all have that concern of making sure that we have the funds to cover the costs, that’s for sure, and to cover the promises that were made to [state employees]. Those are all important,” he said. “We’ve had these discussions over the last year, as to how and what to do, but I’m willing to see where we’re headed with this more clearly.”

Mac MacArthur, the executive director for the Alabama State Employees Association, said Wednesday that this was “a good solution for right now.” He said that for the program to be sustainable, some hard decisions will have to be made going forward.

“What you have to do is look to make the best decisions possible to keep these costs down,” MacArthur said. “I know the legislature began looking at it, and I’m fearful that it if SEHIP can’t get where it needs to be cost-wise, there are some things that they are going to consider in the future.”

Updated at 11:19 a.m. Friday to correct that William Ashmore is the CEO of the SEIB, not the COO.