No increase in teachers’ insurance cost in 2015

April 15--The governing board of the Public Education Employees Health Insurance Program voted Monday to keep premiums and co-pays unchanged in 2015.

Premiums will stay at $15 per individual plan per month for teachers and support personnel, and $177 per family plan per month for active employees. Rates in most programs for retirees, ranging from $10 to $391 a month depending on their age and the ages of any dependents, also will remain the same, as will co-pays for all medical services.

PEEHIP provides medical coverage to about 300,000 people statewide. About 242,000 people receive dental coverage through supplemental programs offered.

Increases in the plan seemed a possibility, if not a liklihood, at the beginning of the year as PEEHIP faced a $220 million deficit. The deficit was caused by a larger pool of retirees, a flat number of active employees paying into the program, increasing health costs, and new costs associated with mandated coverage under the Affordable Care Act, such as coverage for birth control.

However, the program plans to close the deficit with about $107 million from a $1.15 billion retiree trust fund; $36 million from using maximum out-of-pocket costs required under ACA, and what PEEHIP estimates at $77 million in new funding from the Legislature.

The 2015 education budget, passed by the Legislature on April 3 and signed by Gov. Robert Bentley last week, raises the state's share of insurance from $714 per active member per month to $780 per month.

It was the first increase for the program since 2008, when Alabama's share was $775 per active member per month. Amid recession-fueled cutbacks to state programs, the share was cut to $752 the following year, and $714 in 2012.

"We got more than we anticipated, because for the last several years we got zero," said David Bronner, CEO of the Retirement Systems of Alabama, which administers PEEHIP. "Any increase for us is a huge increase for us."

However, Bronner and other members of the board voiced concerns about the program in fiscal years 2016 and 2017. PEEHIP officials estimated the shortfalls in the program will be $345 million and $417 million in those years.

At the urging of Diane Scott, RSA's chief financial officer, the board also voted to require members to participate in a Wellness Program, starting in August. Covered members will be required to answer a questionnaire about their health and health habits and participate in biometric screening.

Additionally, members who have asthma, diabetes and various heart-related diseases would be placed in a disease management program, aimed at ensuring those with the conditions receive treatment.

Scott said those sorts of preventative programs would save PEEHIP money in the long term. "There's big money in changing people's behavior in disease management," she said at the meeting.

The programs would begin this August. The proposal initially called for an additional $50 premium per month for individuals who did not complete the program, and a $100 premium on family insurance. However, the board voted to consider the size of the penalty at its December meeting.

Some smaller programs did see increases, though Scott said those were either mandated or allowed under state law. Rates for COBRA, which allows some employees to continue coverage after leaving or losing their insurance, would go from $403 per month to $409 per month for individuals, and from $997 a month to $1,041 a month for families.

Surviving spouse programs, not subsidized by the state, would see premiums set at anywhere from $354 a month to $934 a month, depending on the age of the contract holder and the number of dependents. Those would represent increases of $21 to $83 a month. Scott said there were between 1,800 and 1,900 contracts for surviving spouses.

Co-pays for prescription drugs were left at $5 for preferred generic drugs, $20 for non-preferred generic drugs, $40 for preferred name-brand drugs and $60 for non-preferred brand drugs.

In his initial budget in January, Bentley proposed a 2 percent teacher pay raise and funding aimed at avoiding increased co-pays for teachers in the plan. House and Senate budget chairs agreed to a rate of $754 per active member per month, but a group of Republican senators revolted over the proposal when it came to the Senate floor on March 20, saying they did not want to see increased costs for education personnel. Bentley and lawmakers eventually agreed to a $780 figure for the program.

"That was important to him," Bentley spokeswoman Jennifer Ardis said Monday. "That was one of his top education budget issues for next year. He is glad to see that teachers will not have any out-of-pocket increases for next year. It's a good win for teachers and support personnel."

House Speaker Mike Hubbard, R-Auburn, said in a statement that education employees and retirees were "invaluable" to the state.

"I'm proud that the Legislature and governor were able to provide needed funding to PEEHIP to ensure that our educators and education retirees would not have to pay a dime out of pocket towards their increasing healthcare costs, unlike many in the private sector," the statement said.

Additional Facts

PEEHIP Costs

The governing board of the Public Education Employees' Health Insurance Program (PEEHIP) agreed to keep premiums and co-pays for education employees and their families unchanged for 2015. PEEHIP provides medical coverage to about 300,000 Alabamians.

--Individual premium (FY 2015): $15 per individual per month; state share $386 per month

--Family premium (FY 2015): $177 per plan per month; state share $844 per monthCo-pays for services will remain unchanged.

--The program was expected to face a shortfall of $220 million in FY 2015. The program will close the gap with:

--$107 million in transfers from a $1.15 billion retiree trust fund;

--$77 million from the Legislature increasing the state's share for active members from $714 per month to $780 per month;

--$36 million from employing ACA maximum caps on out-of-pocket spending from $6,350 per individual per year, and $12,700 per family per year. (In FY 2015, there will be no cap on drug co-pays, but those will be included in FY 2016. Without using the cap, PEEHIP said it would have to rely on its current out-of-pocket cap on major medical expenses of $700.)

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