State employees can expect to pay higher health insurance premiums

Health insurance premium increases for about 300,000 state government employees in 2026 are part of a proposal approved May 20 by the N.C. State Health Plan's board of trustees.

However, state employees will have to wait until August to learn by how much of an increase the board will approve.

The board said the planned premium, higher deductible and co-pay increases will play a crucial role in addressing the plan's current $507 million deficit.

The state health plan is North Carolina's largest purchaser of medical and pharmaceutical services. It covers nearly 750,000 teachers, state employees, legislators, retirees and their dependents.

First-term state Treasurer Brad Briner made the health plan's precarious financial status a major focus of his 2024 campaign.

Particular areas of cost-cutting focus are orthopedic surgery, surgical eye care, maternity care, weight-loss medication and surgery.

State health plan staff recommended in February that all annual premium costs go up in 2026, with the percentage increase based on annual salary.

For example, recommendations were for monthly premium costs to rise $20 for individuals and families for those making $40,000 or less a year. The proposed increase would be $25 for those making $40,000 to $65,000, $35 for those making $65,000 to $100,000, and up $50 for those making more than $100,000.

Part of the changes the board approved is a Preferred Provider program that is focused on value, quality and access.

"This change will place the SHP on a more sustainable financial path, while continuing to provide members with access to high quality, affordable health care," according to a news release from the treasurer's office.

According to the news release, "it is expected premium increases will be less than previously anticipated, with some premiums in the standard plan, lowest salary-banded tier to go up $5 per month."

"The expectation is a new state budget will be approved by then, with a clearer picture of financials heading into next year."

Some pricing insight

State health plan staff recommended in February significant increases in copays, deductibles and out-of-pocket maximums for both the 70/30 and 80/20 plans, as well as cost hikes for prescription drug and formulary costs.

The board unveiled May 20 changes for active, non-Medicare and Medicare members, which included changes to deductibles and copays. The board presentation included projected cost increases for those members.

For example, the annual deductible for active and non-Medicare members would double from a range of $1,500 to $4,500 in 2025 to $3,000 to $9,000 in 2026 for the former 70/30 plan now branded as standard. That plan has come with a lower premium fee.

The increase is not nearly as sharp for the former 80/20 plan now known as plus, going from a range of $1,250 to $3,750 to a range of $1,500 to $4,500. That plan comes with a higher premium fee.

For the standard plan, a primary care provider office visit would increase from a range of $0 to $45 to a range of $15 to $50. For the plus plan, the visit cost would rise from a range of $0 to $25 to a range of $10 to $40.

There also would be a significant uptick in members' share of prescription costs.

Under the health plan's Medicare Advantage administered by Humana, members will have a $100 increase in the pharmacy out-of-pocket maximum for 2026.

"To keep benefits stable, the plan will split the medical and prescription drug plan," according to the news release. "It will continue to be administered by Humana and will save the Plan $70 million in 2026."

Medicare Advantage plan members will receive some duplicate communications and two identification cards.

Plan members will receive more information regarding the changes prior to the 2026 Open Enrollment period that takes place Oct. 13-31.

Final push for state employees

Several of the 46 members of the public who signed up to speak May 20 urged the board not to increase premium rates.

Tamika Walker Kelly, president of the N.C. Association of Educators, said that "considering the state of educator pay here in North Carolina, asking them to shoulder higher health care costs is not only unfair, but avoidable."

"Some employees will have to make difficult and impossible choices. For many of them, this could be the final push out of the profession entirely," she said.

"This decision is not simply about numbers on a spreadsheet, but about the people who keep our schools and state services running," Kelly said. "We cannot fix a budget issue by creating a human crisis."

Briner said that the board "is not going to have all the answers for 2026 ... but we've made very specific decisions on where we're going to start."

"I know the changes to benefits the board made today are hard, but I'm confident that these changes, coupled with new provider opportunities we're working on, will place the plan on a stronger financial path moving forward," Briner said.

"We're evolving from what we've learned and focusing on what works: trusted provider relationships, financial predictability and meaningful support for our members' health."