The State Employees Insurance Board (SEIB) on Wednesday voted to increase monthly premiums by $15 for state employees and their dependents, effective January 1. This marks the first across-the-board premium increase in 11 years for the approximately 102,000 state employees and family members whose insurance the board oversees. The decision was made to address rising healthcare costs and stabilize the insurance program, which was projected to end fiscal year 2028 with an $81.4 million deficit without the increase.
Stephanie Azar, the Chief Executive Officer of SEIB, stated during the meeting that the recommended premium increases were not due to the 11-year gap since the last increase, but rather because "the financials of the plan demonstrate necessity." Azar later said that the board’s expenditures have "been exceeding revenue for several years," necessitating the changes.
The premium increase passed with one dissenting vote from board member Bob Childree. Childree expressed a desire to exempt retirees from the increase, arguing that they have not received cost-of-living adjustments. He stated that retirees are "suffering more in this crisis than any other constituency group." Over 20,000 retirees currently use state insurance. Azar explained after the meeting that retirees had to be included in the increase due to the long-standing imbalance between expenditures and revenue.
Earlier this month, the SEIB executive board had recommended a $20 across-the-board premium increase. However, board member Connie Grier advocated for a lower amount to help ease the financial strain on employees. Grier remarked that "To some people, $5 is $5," highlighting the impact of even small differences. The approved $15 increase is estimated to have a financial impact of approximately $9 million, compared to the $12 million impact the original $20 would have provided. Along with the premium increase, SEIB also approved other unspecified changes to benefits.
Looking ahead, SEIB plans to ask the Legislature for a $75 per member per month increase for fiscal year 2028, which would bring the state rate to $1,250 per member per month. This legislative increase is estimated to have a $480 million impact on the General Fund budget for SEIB's roughly 32,000 active members. Azar cautioned the board that there is a possibility SEIB could remain level funded for FY28, given the "headwinds that that general fund is facing."
Faye Nelson, chair of the board, emphasized the need for SEIB to "put skin in the game" when seeking funding from the Legislature. Nelson noted that the board will be dealing with a "very tight budget and new legislators, new governor," suggesting the importance of empowering Azar with negotiation leverage.
