Nearly 180,000 retired teachers and state employees will pay more out of pocket for medical expenses next year, an increase that one advocate for retirees described as “pretty unbearable.”
At their most recent meeting, members of the State Health Plan’s Board of Trustees approved sweeping changes for retired and current state employees, including a new system for active workers’ health insurance that comes with lower out-of-pocket costs, though many of them could see their monthly premiums rise for the second straight year.
Board members and the State Treasurer say the cost shifting is necessary to dig the plan out of a projected $1 billion deficit for 2027, and address the constantly rising costs of health care.
What choices do state retirees have for health care?
The medical insurance plans for state retirees are administered by Humana and Aetna. If a state employee retires before they turn 65, they stay on Aetna’s 70/30 plan for state employees, and can stay on that plan through Medicare if they choose to once they turn 65.
Retirees 65 or older can also choose to participate in one of the State Health Plan’s Humana Medicare Advantage plans. The program offers two paths: a base plan and an enhanced plan.
The base plan is free for an individual retiree who served as a state employee for at least 20 years while the enhanced plan costs $81 per month. Retirees who put in 5 to 19 years of service pay $68 per month for the base plan and $145 for the enhanced plan. Those costs will remain roughly the same in 2027.
Monthly premiums can be as high as $204 for the base plan and $435 for the enhanced plan if a retiree wants to add their family, depending on how many service years they have.
Both plans have zero deductible.
What is changing for North Carolina’s retired state employees?
Under the new changes, retirees will pay more for several services in 2027, including hospital stays, specialist visits, imaging and some prescription drugs.
The largest dollar increases are in the annual out-of-pocket maximums, which will rise by $500 in the Base plan and $400 in the Enhanced plan.
Prescription drug costs may also increase for some retirees.
Retirees on these plans currently have no copay for Medicare Part B drugs, but will have to pay $50 each time they receive them, starting next year.
Medicare Part B drugs are generally those that are administered by a health care provider, according to the Centers for Medicare & Medicaid Services. They include common injectable and infusion medications like Prolia for osteoporosis, Eylea for macular degeneration, and cancer therapies like Keytruda and Opdivo.
"These are drugs that are thousands, and thousands, and thousands of dollars," Tom Friedman, the State Health Plan's executive administrator, said at June’s Board of Trustees meeting. Friedman said the cost of Part B drugs was a major factor in rising health care costs for older adults.
The board said the changes will save the State Health Plan $54 million.
How are retirees reacting?
Members of the Retired Government Employees Association and the State Employees Association of North Carolina are opposed to the cost increases.
“The legislature has failed to approve cost-of-living raises to pensions for years, and now retirees face hundreds of dollars more per year in health insurance costs on top of that,” SEANC said in a written statement. “The financial squeeze on state retirees is real.”
In June’s State Health Plan Board of Trustees meeting, representatives from both groups also addressed trustees directly.
“These increases are going to turn our folks on their head," Suzanne Beasley, government relations director at SEANC, said. "They do live on a fixed income. So this is going to be pretty unbearable."
In their state budget outline announced in May, Republican leaders in the legislature said they agreed in principle to give retirees a one-time payment of 2.5% of their annual retirement allowance. They have not yet released a full budget proposal for the next fiscal year, and failed to pass a budget last year.
The State Employees Association released a statement criticizing the 2.5% bonus, saying the group does not consider it a true cost-of-living adjustment. Retired state employees have not gotten a permanent cost-of-living adjustment since 2017.
What happens next?
The dates for open enrollment for 2027 coverage have not yet been finalized. The schedule is expected later this summer.
State employees who plan to retire soon or current retirees can learn more about their retirement options here.
State employees should also have an Orbit account, which provides more information about retirement benefits.
This article first appeared on NCLocal and is republished here under a Creative Commons Attribution-NonCommercial 4.0 International License.