Popular State Worker Health Insurance Plan Projected To Go Up In Price 17% Next Year

Popular state worker health insurance plan projected to go up in price 17% next  year

Source: The Sacramento Bee, by Wes Venteicher

Premiums are projected to grow an average of about 7% for CalPERS health insurance policyholders next year, with two popular PPOs spiking by more than 14%, according to preliminary prices posted online Tuesday by the retirement system.

The California Public Employees’ Retirement System provides health insurance for about 1.5 million people, including roughly 750,000 state and local public employees and retirees and about 770,000 dependents.

The system introduced changes two years ago that boosted PPO premiums while lowering costs for two expensive plans with the richest benefits. The changes are aimed at preserving the top-tier plans and stabilizing prices over the long term.

The plans that will go up in price are the PERS Gold and PERS Platinum PPOs. Together they cover about 278,000 people.

PERS Gold, covering about 124,000, is projected to increase in price by 17.8%, reaching $766 per month for an individual starting Jan. 1, according to preliminary figures.

PERS Platinum, covering about 153,000, is projected to go up 14.5%, to $1,084 per month next year, according to the figures.

The most popular plan by far that CalPERS offers is a Kaiser Permanente HMO that covers about 556,000 people. The Kaiser HMO is slated to go up about 6% next year, reaching about $853 per month.

The preliminary rates posted online are subject to further negotiation, and could change slightly before they are approved by the CalPERS Board of Administration next month. California pays about $650 per month toward individual state workers’ plans, and offers an additional $260 health insurance stipend to members of SEIU Local 1000.

Two years ago, the CalPERS board approved a new rate-setting methodology on the recommendation of its health insurance experts, who said the system needed to make changes to save three of its best plans.

Those plans — Anthem Traditional HMO, Blue Shield Access+ and a plan formerly known as PERS Care — attract people who spend the most on medical treatment. Insurers kept raising their premiums to cover large bills, driving healthy people away and prompting more price hikes.

That pattern, known as a “death spiral,” would have made the plans unsustainable, experts told the board two years ago.

So the board adopted a structure that, in oversimplified terms, essentially shifts money from plans with lower health risk to those with higher risk. As a result, the prices for the Anthem and Blue Shield plans are projected to go down by nearly 7% each next year, in a second year of price drops.

Plans formerly known as PERS Select, PERS Choice and PERS Care were combined into two plans, the Gold and Platinum plans, which under the new methodology are supposed to level off in price starting in 2024.

CalPERS also offers Medicare Advantage policies and Medicare supplemental plans for those who qualify.

Included in the offerings are Medicare supplement plans called PERS Gold and PERS Platinum that cover about 150,000 seniors. The Gold plan premiums are going up 4% and the Platinum premiums are going up about 10%.

Other popular Medicare plans will go up by a couple percentage points or be reduced. A Kaiser Permanente Senior Advantage policy covering about 111,000 seniors will drop in price by about 6.4%.

Open enrollment, during which policyholders may switch plans, will run from Sept. 19 to Oct. 14.

Short-Term Cash Incentives Are Popular

The vast majority of employers use incentive-based pay to recruit, motivate, and reward employees, according to a study by WorldatWork and Vivient Consulting. According to the Center on Executive Compensation. The following are key findings:

Private, for-profit Organizations:

  • Short-term incentives decreased slightly among these employers to 94% in 2015 from 97% 2013.
  • Long-term incentives also decreased slightly to 53% from 56%.
  • In 2015, almost 75% of privately held companies with a short-term incentive plan offered at least three programs.
  • Annual Incentive Plans (AIPs), the most prevalent short-term incentive plan at private companies, are offered to employees at the exempt, salaried level and above at most employers.

At the 75th percentile, the majority of private companies increased their short-term incentive budgets to 12% of operating profit in 2015. They forecast an increase to 14% of operating profit for 2016..

Nonprofit/Government Organizations:

  • In 2015, more than 75% of nonprofit and government employers offered three or fewer short-term incentive plans.
  • While government incentive-pay budgets remain modest, nonprofit budgets have increased significantly. Nonprofit, short-term incentive budgets are starting to approach the levels reported by the private, for-profit employers.
  • More than 80% of nonprofit and government employers say their AIPs are effective at achieving their objectives.
  • 65% of the nonprofit/government employers with AIPs say the programs are used to reward employees while 62% use the incentives to focus employees on organizational goals.

Voluntary Long-Term Disability Plans Are Getting More Popular

As employers move away from fully funding products, they are becoming more interested in voluntary long-term disability (VLTD) solutions to fill benefit gaps. In fact, the number of employers that fully fund LTD benefits has decreased from 51% in 2009 to only 24% in 2014, according to a 2014 Eastbridge study.
With this increased interest comes the demand for more flexible and innovative VLTD plans. Some innovations include higher maximums, new benefit options, more hybrid products, and plans that can meet the needs of not only the middle and large-employer market, but also smaller employers. In 2011, carriers added survivor benefits and cost-of-living adjustments. Since that time, carriers have also added optional benefits, such as employee-assistance programs, ADL increases, and financial counseling.

Although the majority of benefit options are chosen at the employer level, carriers are also looking at ways to offer more options at the employee level. These include more choices of benefit amounts, varying benefit durations, and the ability to buy less than the amount for which the employee is eligible.
More features and benefits offered by carriers, both at the employer and employee levels, have helped meet much of the increased demand for voluntary long-term disability coverage. Carriers should continue to look for ways to truly differentiate their product from others on the market, according to the report.

Last Updated 06/29/2022

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