Board proposes higher health insurance fees for state retirees, steady rates for current employees

Retirees in state government’s health insurance plans for public school and state employees would pay slightly more for their coverage in calendar year 2026, but the current employees would pay the same amount next year under proposed contribution changes for calendar year 2026 that cleared the state Board of Finance this week.

The proposed contribution changes still must clear the Legislative Council’s State Insurance Programs Oversight Subcommittee and the Legislative Council. The panels are slated to consider the proposed contribution rates next week.

The state’s health insurance plans offer premium, classic and basic Health Advantage plans to state and public school employees and non-Medicare eligible retirees. They also offer Health Advantage primary coverage and United Healthcare’s Medicare Advantage with prescription drug coverage for Medicare-eligible retirees.

The enrollment period for the state’s health insurance plans for working public school and state employees is in October, and the enrollment period for public school and state government retirees is in November.

“We are proposing an increase on the retiree plans for plan year 2026 of $6 (a month) for both Medicare Advantage plan and the Health Advantage supplemental plan and that is a result of (United HealthCare) one-year renewal that is $60,” Grant Wallace, director of the state’s Employee Benefits Division, told the state Board of Finance on Tuesday.

“The state absorbs 90% of that, and the retiree has 10% of that, so that’s the $6,” he said. “We wanted to make sure we have parity between both of the retired plans so that’s why both are getting the $6 increases.”

The Employee Benefits Division’s current United Healthcare contract expires on Dec. 31 of this year. The state Board of Finance on Tuesday approved a proposed renewal of the contract through Dec. 31, 2026.

In addition, Wallace said the deductible for the per person deductible within the family deductible for the classic plans for the health insurance plans for the public school and state employees in calendar year 2026 will be increased from $3,300 to $3,400 “in order to keep up with the IRS guidelines and definitions of a high deductible (plan).”

Calendar year 2026 is the fourth year of the Division of Employee Benefit’s five-year transition plan toward the state paying 75% of the cost of the health insurance and employees paying 25% and making the rates competitive with those surrounding states.

Asked why the United Healthcare contract is increasing $60 per member in 2026, Courtney Traylor, chief of staff for the state Department of Shared Administrative Services, said Thursday in a written statement that “The initial term of the contract with UHC had locked in rates, with the expectation that these rates could change after the initial term and subsequent renewals.

“Now that we are outside of that initial term, and due to the Inflation Reduction Act, the funding structures and mechanisms on Medicare Advantage plans have changed,” she said. “The rate increase reflect the reduction in those funding structures.”

The state’s Employee Benefits Division is part of the state Department of Shared Administrative Services, which was formerly known as the state Department of Transformation and Shared Service until a new state law changed the department’s name on July 1.

In the state employee plan, Medicare-eligible retirees with retiree-only coverage through Health Advantage plan would contribute $262.34 a month in 2026 — an increase from their current contribution of $256.34 a month in 2025 — and Medicare-eligible retirees with retiree-only coverage through United Healthcare’s Medicare Advantage with prescription drug coverage would contribute $28.03 a month in 2026 — an increase from their current contribution of $22.03 a month — under the proposed rates approved by the state Board of Finance.

In the public school employee plan, Medicare-eligible retirees with retiree-only coverage through the Health Advantage plan would pay $127.98 a month in 2026 — up from their current contribution of $121.98 a month in 2025 — and Medicare-eligible retirees with retiree-only coverage through United Healthcare’s Medicare Advantage with prescription drug coverage would pay $20.03 a month in 2026 — up from their current contribution of $14.03 a month in 2025 — under the proposed rates approved by the state finance board.

Asked about the effect on the number of Medicare-eligible retirees with coverage through United Healthcare’s Medicare Advantage with prescription drug coverage from a three-month pilot program with a firm called Retiree First, Traylor said Thursday that, “The pilot has ended, and we are in the process of reviewing the pilot results and whether it would be an effective service for members.”