Insurance Rates and Changes Previewed

The third week of August, the Oklahoma State and Education Employees Group Insurance Board (OSEEGIB) and the Employees Benefits Council (EBC) will set the insurance rates for calendar year 2012. Before rate setting day, there is no way to anticipate the HMO rates, because of the bidding process. However, OSEEGIB does not anticipate increases in rates for the HealthChoice plan.

OPEA members successfully fought off attacks on the state employee health insurance plan four times last legislative session. Several proposed bills would have allowed agency budgets to be balanced with savings from the state employee benefit allowance.

“While OPEA understands that state employee health insurance should be addressed, the last minute proposals in the midst of session did not give the time needed for full consideration,” said OPEA Executive Director Sterling Zearley. “State employee health insurance benefit changes should only be considered in the context of total compensation.”

At the OSEEGIB Advisory Board meeting in July, participants discussed a possible change in the deductible for HealthChoice members. According to the proposal, the deductible for tobacco users could be increased to $750, while those who refrain from tobacco would have a deductible of $400. Questions were asked about how this would be enforced. According to information from other states, plan members must sign an affidavit and risk losing coverage if they are not truthful. Look for more information on this proposal on the OPEA and OSEEGIB websites.

The legislature did pass some minor changes at the end of session. OPEA negotiated the provisions of HB 1062 (Roberts and Breechen) with the authors. For state employees the most important section will allow legislators and state employees to opt out of the state insurance plan as long as they can prove they have other group coverage. If they choose this option, employees may keep a stipend of $150 per month. According to OSEEGIB’s actuaries, this would have little impact on the state risk pool as long as employees are required to have group coverage.

In addition, HB 1062 directs OSEEGIB and the Office of State Finance to contract with a vendor to provide health savings accounts (HSAs) for state employees who choose the high deductible health plans. Therefore, state employees could deposit funds into their accounts pre-tax. Currently, employees must open their own personal accounts, deposit funds after taxes, and wait for a refund at tax filing the following year.

HD/HSA Plans

Before session, the Employees Benefits Council sponsored a presentation by the Indiana governor’s office about their state’s usage of high deductible health plans with health savings accounts (HD/HSA). They moved a large number of their state employees into these plans by incentivizing these plans through the benefit allowance. In Indiana, state employees much chose a HD/HSA to receive the full benefit allowance. Several legislators attended the meeting with the Indiana representatives and promoted the Indiana plan throughout session. In addition, the governor’s office favored the use of HD/HSA plans.

In HD/HSA plans, the employer pays the premium for a high-deductible plan and then funds a health savings account from which members pay their health care costs. The funds can carry over from one year to the next and are not taxed until they are withdrawn for non-health-related expenses. Preventive care is usually free to plan participants. If an employee is healthy and rarely uses medical insurance, funds accumulate in the account. For individuals who have health care costs, care beyond the deductible is the traditional 80/20 co-pay. There also is an out-of-pocket maximum similar to that of most insurance plans.

OSEEGIB currently offers a HD/HSA plan for state employees. Participants pay a lower premium and can deposit their remaining benefit allowance in their health savings account. At the end of the year, any remaining funds can be rolled over to the next year and saved for retirement or when the funds are needed for medical expenses. Beginning January 2012, employees can access the new state HSA accounts and have deposits made directly before taxes.

“During the interim, OPEA will be working with the legislature and the governor’s staff to ensure state employee health insurance is maintained as part of a total compensation package,” concluded OPEA Executive Director Sterling Zearley.

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