Positive finances likely means no premium increases
CHARLESTON — A month before they will sit down to hash out details of the proposed 2019-20 benefits plan, members of the Public Employees Insurance Agency Finance Board got good news Thursday on the financial health of the plan.
Preliminary results show PEIA finished the 2017-18 plan year on June 30 with a $44 million surplus, spurred by prescription drug costs that came in $35 million below estimates.
“Overall, we have really good news both for PEIA and the (retiree) trust,” actuary Chris Borcik told the board.
PEIA executive director Ted Cheatham said the positive financial picture should allow PEIA to put together a 2019-20 plan without premium increases.
He said he will propose about a half-dozen minor changes to the plan, primarily to benefit retirees.
“At the moment, we don’t need any new revenue for the next fiscal year,” he said.
Borcik said the number of people covered by PEIA dropped by about 2,000 over the past year, which caused revenue from premiums to fall about $2.8 million below projections but also reduced medical and drug claim expenses.
The Retiree Health Benefit Trust also finished up with a surplus as claims costs came in some $29 million below projections, while investment earnings topped estimates by $26 million.
Jason Haught, PEIA chief financial officer, said those savings will allow PEIA to transfer $37.9 million into the trust’s Premium Stabilization Reserve Fund to help offset future increases in retiree premiums.
“In essence, $38 million is being set aside to offset future premium costs,” said Haught, who said discussions are underway at PEIA to set up a similar reserve fund for active employee premiums.
Cheatham said that at the October meeting, the Finance Board will get the governor’s financial guidance for the 2019-20 plan year, a letter designating how much money the state will provide for the employers’ share of PEIA premiums — a letter Cheatham had previously erroneously thought was due Sept. 15.
Cheatham said he anticipates that the funding level will remain unchanged, meaning no premium increases for either employers or employees.
Missing from Thursday’s meeting was any recommendation from the PEIA Task Force, created by executive order of Gov. Jim Justice at the height of the statewide teachers walkout to find a “fix, not a freeze” for issues of PEIA costs and plan benefits.
During the regular session, legislators put an additional $29 million of funding into PEIA in order to freeze the current plan year premium rates at 2017-18 levels to avoid employee premium hikes.
During the spring and summer, members of the 29-member task force indicated they would like to have recommendations ready to submit to PEIA by the Finance Board’s September meeting. Officially, the task force has until December interim meetings to submit its final recommendations for long-term fixes for PEIA.
However, the task force subcommittees last met Aug. 23-24 and had tentatively planned to have a joint meeting Sept. 18. That meeting never came to be, and to date, the task force subcommittees have not posted public notice for any meetings for the remainder of September or in October.
The PEIA Finance Board will meet again Oct. 18 and has tentatively scheduled five public hearings on the proposed 2019-20 plan in November, beginning with a statewide teleconference hearing Nov. 7.
“In essence, $38 million is being set aside to offset future premium costs.”
PEIA chief financial officer