The State Employees Insurance Board (SEIB) voted Wednesday to increase insurance premiums for state employees and their dependents by $15, 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.
Stephanie Azar, the Chief Executive Officer of SEIB, stated during the meeting that the recommended increase was not due to the 11-year gap but because "the financials of the plan demonstrate necessity." Without the increased premiums, SEIB was projected to face an $81.4 million deficit by the end of fiscal year 2028. The board cited rising healthcare costs and concerns over the stability of the program as key reasons for the decision.
The premium increase passed with board member Bob Childree casting the sole dissenting vote. Childree advocated for exempting retirees from the increase, arguing that they have not received cost-of-living adjustments. He stated during the meeting, "We are in a serious crisis, and I’m going to tell you that retirees are suffering more in this crisis than any other constituency group." Over 20,000 retirees currently utilize state insurance. Azar explained after the meeting that the board's expenditures "been exceeding revenue for several years," necessitating the inclusion of retirees in the premium increase.
Earlier this month, the SEIB executive board had recommended a higher increase of $20 across the board. Board member Connie Grier proposed reducing the cost to $15 to help alleviate the financial strain on employees. Grier noted, "To some people, $5 is $5," emphasizing the impact of even small amounts on household budgets. The approved $15 increase is estimated to have a financial impact of approximately $9 million, compared to the $12 million impact the original $20 proposal would have provided.
In addition to the premium adjustments, SEIB also approved other changes to benefits, though specific details of these changes were not provided.
Looking ahead, SEIB plans to request a $75 per member per month increase from the Legislature for fiscal year 2028. This would bring the state's rate to $1,250 per member per month and is estimated to have a $480 million impact on the General Fund budget for SEIB's roughly 32,000 active members.
Azar informed the board about the potential challenge of securing this funding, acknowledging a possibility that SEIB could remain level funded for FY28. She stated, "Me being somewhat familiar with the headwinds that that general fund is facing, I would say there could be a possibility we will be level funded in 2028." Faye Nelson, chair of the board, suggested that SEIB should consider strategies to put "skin in the game" to secure funding from the Legislature. Nelson noted the upcoming budget will be "very tight" and involve "new legislators, new governor," suggesting the need for negotiation leverage.
