For the past several years, the Legislature has had to appropriate extra money to address cost overruns in the State Employees Health Care plan. Last year, the amount was $11 million.
As legislators looked for ways to better budget for this part of the state employee benefit plan, there were questions about re-insurance stop loss coverage, limiting coverage options, or making other plan design changes to address these concerns.
Because of this, the Bureau of Human Resources (BHR) spent the past year working to design a health care plan that will work for state employees and taxpayers. The bureau created a work group including state employees, private sector employers, and those from the health insurance industry to look at our current plan, look at marketplace factors, and make recommendations to create a more affordable and sustainable benefit.
Savings generated by a move from the State’s direct contracts with healthcare providers to Wellmark Blue Cross and Blue Shield, are reinvested in Governor Noem’s proposed budget in two ways. Most of the savings would be reinvested directly to the benefits plans. In addition to the 2.4% increase proposed for state employees, $12 million in savings generated by this move would be used to bring employees closer to market rates.
The proposal includes four different options, giving state employees a wider range of choices to better meet their individual needs. One of those options will be a zero-premium plan, where the State pays the premium for the employee.
SB 57, which recently passed the Senate, provides the opportunity for employees to take full advantage of the changes proposed in the plans. Among changes in the bill is the ability for spouses who are both state employees to be covered on the same plan. Another change removes the condition that a dependent child must not have other coverage available. Like several of my colleagues, I was uncomfortable with the bill when it was first introduced. After researching the proposal and asking a lot of questions, I was able to support the bill.
One aspect that raised concerns is the proposal to repeal the option of health coverage for pre-65 retirees and their dependents. The number of pre-65 retiree participants has steadily declined since FY2015 when premiums were increased anywhere from 18% to 48% to align with the industry standard. Since the state eliminated the premium subsidy, enrollment in this category has dropped by nearly 80%.
Overall, the changes enabled by SB57 provide more benefit options, free up $12 million to help our employees most out of alignment with market salaries, and to build sustainability into the benefits package for the long-term. The vast majority of state employees will see salary increases, along with more health insurance options and lower costs when medical services are received.
Because individual situations are so unique, I would encourage any employee with questions to reach out to the BHR.