State Employee Health Benefits

1. Rapidly rising commercial premiums are impacting state budgets;
2. State fiscal pressures are leading to more proposals to increase employee share of costs;
3. Co-payments and deductibles are on the rise in many places, separate from the established premiums.

A few general facts about state employee health plans, based on two national surveys: 1

This web-based report seeks to pull together diverse resources on this growing area of health and personnel policy.
 

 List of State Employee Health Plan Agencies with Links

Each of the states has evolved a distinct structure for administering state employee health benefits.  Many states offer a relatively complex matrix of plans and premiums, varied by family size, type of plan (HMO, PPO, Indemnity).  A majority of states have some type of employee unions or collective bargaining units that may play a substantial role in defining benefits and costs.  The table below provides some examples from the agencies that run these state programs. 

STATE	Agency Administering State Employee Health   also see 50-state Personnel Departments (NASPE link)	Examples of premiums & benefits (state web links*)
Alabama	Alabama State Employees Insurance Board (37,527 employees, 7/08); Public Education Employees' Health Insurance Plan .	2008-09
Alaska	Alaska Benefits Section, Department of Administration	2007-08 | 2008-09
Arizona	Arizona Benefit Options (AzBO), Dept. of Administration	2006-07 | 2007-08 l 2008-09
Arkansas	Arkansas Employee Benefits Division	2007 | 2008 l 2009
California	CalPERS - California Public Employees Retirement System	2007 | 2008 | 2009
Colorado	Colorado Dept. of Personnel & Administration, Division of Human Resources	2008-09
Connecticut	CT Retirement and Benefits Services Division, State Controller	2006-07 | 2007-08 | 2008-09
Delaware	Delaware Statewide Benefits Office, Office of Management and Budget
Florida	Florida Div. of State Group Insurance	2008-09
Georgia	Public Employee Health Benefit Plan (SHBP) Division,  Dept. of Community Health  (690,440 people, 6/08)	2007 | 2008 l 2009
Hawai'i	Hawaii Employer-Union Health Benefits Trust Fund (EUTF)	FY 2007 l 2008-09
Idaho	Dept. of Administration: Employee Group Insurance Benefits	FY 2007 | FY2009
Illinois	Bureau of Benefits, Dept. of Central Management Services	FY 2007 | FY 2008 l FY 2009
Indiana	State Personnel Dept.: Benefit Information	2007 | 2008 l 2009
Iowa	Department of Administrative Services, Human Resources Enterprise	2007 | 2008 | 2009
Kansas	Kansas Health Policy Authority	2007  Benefits l 2008 l 2009
Kentucky	Dept. for Employee Insurance, Kentucky Personnel Cabinet   (245,000 people covered 11/07)	2007 | 2008 l 2009
Louisiana	Department of State Civil Service	2006 -07 l 2007-08 l 2008-09
Maine	Maine Div. of Employee Health and Benefits	2007-08
Maryland	Maryland Department of Budget & Management	2007-08 l 2008-09
Massachusetts	Massachusetts Group Insurance Commission (GIC) (286,000 enrollees w/ local)	2007-08 | Full cost l 2008-09
Michigan	Michigan Employee Benefits Division	2006-07 l 2008-09
Minnesota	Dept. of Employee Relations, Benefits Division	2009
Missouri	MO Consolidated Health Care Plan	2006 | 2007 l 2009
Mississippi	State Insurance Admin., Department of Finance and Administration	2008
Montana	Employee Benefits Bureau, Health Care and Benefits Division	2009
Nebraska	NE Administrative Services-Employee Benefits;   Office of Risk Management	2008 l 2009
Nevada	Public Employees Benefit Program	2009
New Hampshire	Human Resources, Department of Administrative Services | Health Benefits	2009
New Jersey	Health Benefits Bureau, Div. of Pensions and Benefits	2006 l 2009
New Mexico	General Services Division	2008-09
New York	Employee Benefits Division, Dept. of Civil Service | Governor's Employee Rel.	2009
North Carolina	NC State Health Plan  (667,000 state employees and retirees)	2006-07 | 2007-09
North Dakota	North Dakota Public Employee Retirement System: Group Health Insurance Plan	2007-09 benefits
Ohio	Ohio Benefits Administration Services  [updated 3/08]	2006-07 | 2008-09
Oklahoma	OK Employee Benefits Council	2007 | 2009
Oregon	Public Employees Benefit Board (PEBB), Oregon Educator's Benefit Board	2007 l 2009
Pennsylvania	PA Employees Benefit Trust Fund (PEBTF)   (144,000 state employees, retirees, dependents)
Rhode Island	Department of Administration
South Carolina	Employee Insurance Program, SC Budget and Control Board. (244,000 employees; 400,000 lives covered)	2006 | 2007 | 2008 l 2009
South Dakota	Bureau of Personnel	2008-09
Tennessee	Insurance Administration, Dept. of Finance & Administration	2007 l 2009
Texas	Texas Employees Group Benefits Program (GBP), Employees Retirement System (ERS)	2006-07 | 2007-08 l 2008-09 (to 9/30)
Utah	Public Employees Health Program
Vermont	Department of Human Resources, State Employee Center	2006 | 2007 l 2008 l 2009
Virginia	Benefits, Department of Human Resource Management	2006-07 | 2007-08 l 2008-09
Washington	Public Employees Benefit Board (PEBB)	2007 l 2008 l 2009
West Virginia	West Virginia PEIA	2005-06 | 2007-08 l 2008-09
Wisconsin	Division of Insurance, Dept. of Employee Trust Funds	2008  | 2009
Wyoming	Department of Administration and Information, Human Resources Division	2008 l 2009
State	Agency Administering State Employee Health

Notes: Plan benefits vary widely from state to state. Numerous states offer a range of plans from basic HMO, to comprehensive HMO, plus PPO and an Indemnity plan. Some have regional pricing as well. Family size almost always affects premiums. For example Louisiana has scaled prices for 1) Single, 2) Single with spouse, 3) Single with children, and 4) Family.  Retirees often have separate premiums and benefits.  Premium rate links (above) connect to state agencies' pages that may change or be deleted without notice.

Health Care Reimbursement Accounts (HRA) - The pre-tax flexible spending accounts that many employees use to cover expenses not covered by insurance, as allowed by IRS Section 125.
Voluntary Employee Beneficiary Association (VEBA) - The federal government allows entities to receive favorable tax treatment on contributions to a trust set up under section 501(c)(9), IRC. Contributions to this trust may be made on a pre-tax basis, assets in the trust may be invested and earnings are tax-exempt, and certain qualified benefits may be paid out on a tax-exempt basis. States also may allow favorable tax treatment for a VEBA trust.  See Montana's example and explanation: http://www.montanaveba.org/

a -AZ self-funds PPO and EPO policies as of 2004, also has fully insured HMOs.
b -CO self-funds 3 PPOs, 1 HSA, also fully insures 2 HMOs.
c -HI self-funds PPOs and HDHP as of 2007, also has fully insured HMO.

Of the eight states that do not self-fund, the following were considering implementing a self-funded program in the future: , Nebraska,  Oregon.

All states with self-funded plans contract with outside vendors to provide some type of administrative service. Services include claims payment, utilization review, disease management and pharmacy benefit management. The state of Louisiana was the first state reporting that claims administration and payment is handled in-house. Pennsylvania pays a limited number of claims internally for their supplemental medical plan.

Examples of 2003-2009 Plan Features and Changes

• West Virginia first included such a feature in part several years ago. [view employee affidavit form]  
• Kentucky in late 2004, (in H1a) created a smoker surcharge of $15/month for individuals and $30/month for family coverage.
• Alabama in December 2004 (in HB 2) authorized smoker rates during special legislative sessions.  For 2007 the smoker surcharge increased from $20 to $22 per month.  In August 2008, Alabama added a premium for obesity [see description below]
• Georgia initiated a smoker surcharge.  GA: State employees who smoke pay extra for insurance  Beginning July 2005, more than 54,000 people covered by the insurance plan for state employees are paying an extra $40 per month because they smoke or use tobacco. Tobacco Q & A.
• Indiana added a non-smoker rate incentive in 2006.  For 2007, enrollees save up to $500 /year on annual deductibles when the Tobacco Incentive is applied.
• Kansas has a smoker surcharge authorized in 2008.

• Missouri law generally provides that public and private employers may provide health insurance at a reduced premium rate and reduced deductible level for employees who do not smoke or use tobacco products.

• South Carolina's Budget and Control Board voted in August 2008 to impose a $25 monthly surcharge for state public employees and their family members who smoke or chew tobacco, effective 2010.  According to the Augusta Chronicle, an estimated 58,600 people, or roughly 20 percent of the state's more than 400,000 insurance participants, will pay the surcharge.

• South Dakota has a smoker surcharge authorized in 2008.

• SMOKING CESSATION PROGRAMS - A growing number of states have launched tobacco cessation programs and policies, primarily using positive incentives, high visibility marketing and some assessment requirements to meet reduced tobacco use goals.  The following are just a few examples.

• 

  • Tobacco Cessation: State and Federal Efforts to Help - NCSL report features 50-state map, laws and program information.

  • Alabama's Tobacco Cessation Program is now provided by the SEIB for its covered members; for 2009 the state will reimburse each member 80% of the cost of the program, with no deductible. There is a lifetime maximum benefit of $150. Tobacco cessation seminars and all forms of nicotine replacement are covered services.  Prescription medications for tobacco cessation are covered and are not subject to the $150 lifetime maximum benefit. [2/09]

  • Idaho’s Wellness Program: First Phase -Tobacco Cessation. For 2008 there will be a $10 co-payment for every thirty-day supply of quit aids.  Pharmacists will  require a state Blue Cross of Idaho identification card to dispense the quit aids.

  • North Carolina, "37 percent of all preventable deaths are attributed to tobacco. Each smoker represents approximately $1, 623 in excess medical expenditures. By making nicotine replacement therapy patches free with counseling, the State Health Plan anticipates improved member health and significant long-term savings for the plan and for taxpayers". - NC State Employee Smoking Cessation Plan, 2008.
  • North Dakota's Public Employees Retirement System recently received a grant to help state employees and their dependents age 18 and older quit smoking or chewing tobacco. The grant will help pay for participating in one of more than 20 approved smoking cessation programs. Most of these programs are available through public health departments across the state of North Dakota. This project is administered by Blue Cross Blue Shield of North Dakota. The program will pay 100 percent of your out-of-pocket expenses for your office visit and prescription and over-the-counter medication up to $500, for a total benefit of $700. The program will end April 30, 2009.  Program description.

WELLNESS PROGRAMS for state employees becoming more widespread.

U.S. Dept. of Labor ISSUES CHECKLIST FOR WELLNESS PROGRAMS.  Wellness programs must be carefully reviewed to assure that they fit within a variety of legal boundaries. Particularly important for 2008 and beyond are the nondiscrimination rules under HIPAA. The Department of Labor (DOL) has issued helpful guidance in Field Assistance Bulletin 2008-02 (FAB 2008-02), including a useful checklist. This guidance can be reviewed by any policymaker or plan sponsor implementing a wellness program or considering one. ["CheckUp" by Sibson, 3/10/08)
 

• Alabama will be the first state to charge overweight state workers who don't work on slimming down.  The State Employees' Insurance Board in August 2008 approved a plan to charge state workers starting in January 2010 if they don't have free health screenings. If the screenings turn up serious problems with blood pressure, cholesterol, glucose or obesity, employees will have a year to see a doctor at no cost, enroll in a wellness program, or take steps on their own to improve their health. If they show progress in a follow-up screening, they won't be charged. But if they don't, they must pay starting in January 2011. The State Employees' Insurance Board implementation plan also includes a discount for participation in Wellness Screenings, with a $25 per month wellness premium discount off the single coverage provided the employee has submitted baseline readings for the following health risk factors: Blood pressure, Cholesterol, Glucose and Body mass index.
  Articles: Government Employee Relations - Alabama Program for State Employees Seeks to Raise Awareness of Risk Factors. 8/8/08.
  "Extra pounds mean insurance fees for Ala. workers" by AP, 8/22/08.

• Arkansas has an expanded Healthy Lifestyle program, whereby state employees can earn up to three days per year for participating in a voluntary program that focuses on increasing physical activity, increasing consumption of fruits and vegetables and decreasing or eliminating the use of tobacco products.  See savings examples in the 2008 premium rate chart.

• Delaware officially launched DelaWELL on April 1, 2007, as a new comprehensive wellness program for state employees. This statewide initiative is available free to all full-time State employees, school district, charter school and higher education employees and pre-65 retirees currently enrolled in group health insurance programs. The program will assess employee health risks and provide confidential, personalized feedback, and coaching interventional strategies that target lifestyle topics such as back care, blood pressure management, exercise, nutrition, and stress management through various modes of communication and health-related events.

• Kansas, in September 2007, launched a program so that state workers will be able to volunteer for personal health-risk assessments.

• Minnesota highlights various health improvement services offered through the Minnesota Advantage Health Plan for insurance-eligible state employees and their covered family members. An online wellness chart provides details for 2008. [2/08]

• Missouri has incentive rates for employees, saving up to $25 /mo, who take the PHA and participate in Lifestyle Ladder or Smart Steps® to be eligible for the incentive rate.

• Montana announced Wellness Programs including new for 2007 all State employees and their adult dependents have access to free health coaching, intended to "help individuals make permanent changes in their lives."  The wellness program also offers options such as health screenings, spring fitness, and lunch and learn programs, which are designed to maintain and promote healthy lifestyles for members.

• New Hampshire's wellness program includes a risk assessment, run by Anthem. (2008)
• North Dakota wellness services are included in the state BC/BS managed plan.
• Ohio: The Healthy Ohioans initiative, which includes wellness activities and resources, is sponsored by the State Employee Health and Fitness Taskforce. The taskforce was charged with: (1) developing guidelines for state agency health and fitness programs; (2) identifying tools to annually measure the effectiveness of such programs; (3) identifying models for on-site wellness programs; and (4) identifying community partnerships or resources that might be utilized to further wellness programming for state employees.  For 2008, "Take Charge! Live Well! Road Show Events" can earn employees a $25-$200 incentive payment.
• Oklahoma in 2006 launched "OK Health wellness program," providing "All active state employees the opportunity to participate in the state's wellness mentoring program offered by the Employees Benefits Council State Wellness Program.  The goal of OK Health is to give you the right tools to help you feel better and improve your health."  Enrollment in the OK Health Program,  involves completing an online health risk assessment (HRA). An OK Health representative will call and arrange an initial visit with your Primary Care Physician for some basic measurements and labs.  They say, "As a program participant, the initial cost to visit your physician and receive lab work (specific to OK Health) will be waived by your health care provider.  Following your initial PCP visit, you will receive your first orientation call from a professional health mentor."
• Virginia: (2007-08):  Routine wellness care is covered for children through age 6 and for children and adults age 7 and over. There is no deductible, copayment or coinsurance for the member to pay before the plan pays for routine wellness coverage.  Routine well child care through age 6 covers at no cost office visits at specified intervals, immunizations, routine lab tests and x-rays at facilities and doctors’ offices. Routine well adult care age 7 and older includes a routine annual wellness check-up at no cost, as well as routine lab tests, immunizations and x-rays at facilities and doctors’ offices.  Preventive care benefits include for specified ages at no cost an annual gynecological exam or prostate exam, and the following services once per calendar year: a Pap test, mammography screening, prostate specific antigen (PSA) test and colorectal cancer screening.
• Washington: Wellness Initiative, 2006: King County, which comprises the greater Seattle area and is the 12th largest county in the nation, is projecting a reduction in rising healthcare costs by as much as $40 million over the 2007-2009 period due to wellness initiatives. (10/17/06)
• West Virginia also created the Pathways to Wellness program by law (W. Va. Code § 5-16-8). It requires the Public Employee Insurance Plan to provide wellness programs and activities which include benefit plan incentives to discourage tobacco, alcohol and chemical abuse and an educational program to encourage proper diet and exercise.
   

• HEALTH SAVINGS ACCOUNTS: Examples of several states offering HSA's to their state employees for 2005-07:
• • Arkansas: (2004) For teachers, open enrollment in 2004 results were reported as "disappointing." 
  • Florida: (2005) The state will contribute $500 for an individual, $1,000 for a family account and pair that with a $1,250 (individual) $2,500 (family) deductible plan.
  • Indiana: (2007) The state offers two HDHP/HSA choices.  Plan 1 has a $2,000 individual/$5,000 family deductible; the state's annual contribution includes up to $1,375 for single or $2,750 annually for family to the HSA for active employees; the out-of-pocket annual maximum is $8,000.  Plan 2 has a $3,400 family deductible.
  • Kansas: (2006) is adding an HSA/HDHP choice with a $1,500/$3,000 deductible if network providers are used and a $2,000/$4,000 deductible if non network providers are used. [KS HSA plan]
  • Nebraska: (2007) offers a PPO Consumer Driven Health Plan. The CDHP has a $1,000 per calendar year deductible for in-network expenses with a $2,000 per calendar year maximum out of pocket. In addition, the new CDHP implements a four-tier formulary prescription plan with higher co-pays and/or co-insurance.
  • Pennsylvania: (2006) Offers a UnitedHealthCare CDHP option. In 2009 it features 100 percent coverage for preventive care services (PEBTF members have up to $500 maximum for single members/$1,000 for family per year).
  • South Carolina: (2004) The plan conducted state employee open enrollment at the end of October 2004.
  • South Dakota offers a $2000 deductible HSA-compatible plan for 2007; employees selecting this options receive $300 per plan year in Flex Credits in a Medical Expense Spending Account.  An offered $1000 deductible plan is not HSA compatible.  
  • Utah: (2006) HB 76 requires a High Deductible Health Plan and HSA option for Public Employees Benefit and Insurance Program (PEHP).
  • Virginia: For benefit year 2007-08, the state will pay 100 percent of the premium cost for a high-deductible health plan (individual or family), with other plans requiring modest employee contribution.
  • Wyoming: (2006) implemented a federally-qualified high deductible health plan.  Employees may select a state HSA vendor or their own. HSA contributions are 100% from employees.

PROMISING PRACTICES  
 

• The idea of "value driven purchasing" through pooled negotiation, common contracts and purchases is often discussed but less commonly implemented.  Four states have initiated or joined such efforts, and now have handy reports written and published through the Commonwealth Fund in 2006 and 2007. 

  • In California, CalPERS offers lower health premiums in 2009 if members enroll in one of the "newer plan options – Blue Shield of California NetValue (HMO) and PERS Select (PPO). These “high performance network” plans provide the same level of benefi ts and quality of care as Blue Shield Access+ HMO and PERS Choice, respectively. The difference is that enrollees pay a lower premium in exchange for choosing from a smaller panel of physicians.  A CA example" "To illustrate the value of a high performance network plan, let’s use the example of a State member who currently has health coverage for herself and her family (husband, 4-year old child, and a baby on the way) through Blue Shield. If this member transfers from the standard Blue Shield Access+ HMO family plan to Blue Shield NetValue, she would save more than $1,800 in premiums in 2009. She could use this savings to pay for additional health care services for her family, such as co-payments for 20 office visits for non-preventive care, 20 retail generic drug prescriptions, 20 retail brand prescriptions, 4 mail-order brand prescriptions, 4 mail-order nonformulary prescriptions, 12 urgent care visits, and 4 emergency room visits (without being admitted) – and still keep an extra $348 in her pocket. [2009 plan booklet]

  • The Massachusetts Group Insurance Commission (GIC), a state entity that provides and administers health insurance and other benefits to the commonwealth's employees, retirees, and their dependents and survivors, is trying to improve provider performance through "tiering." GIC assigns its health plan members to a particular tier, based on quality and efficiency, and requires these plans to offer their members different levels of cost sharing, depending on which tier their chosen hospital or provider is designated.  8/07. 
  • The Minnesota Smart Buy Alliance is a group of public and private health care purchasers, including the state agencies overseeing Medicaid and public employee health benefits, along with coalitions of businesses and labor unions. The alliance is developing common value-driven principles, and its members are sharing VBP strategies.  8/07 
  • Washington State's Puget Sound Health Alliance, a broad group of public and private health care purchasers, providers, payers (health plans), and consumers, is working to develop public performance reports on health care providers and evidence-based clinical guidelines.
  • The Wisconsin Department of Employee Trust Funds (ETF), the state agency that administers health benefits for state and local government employees, is pursuing value through a variety of purchasing strategies. EFT is also becoming involved in public-private collaboratives such as a statewide health data repository.  ETF is the largest employer purchaser in the state, covering more than 250,000 active state and local employees and 115,000 retirees and their dependents.**  The state also has a "high performance tiered" network structure - see description under Wisconsin, below. 
     
• DOMESTIC PARTNER BENEFITS AND TREATMENT
  At least 16 states (plus DC) that have "a law, policy, court decision or union contract that provide state employees with domestic partner benefits":  Alaska, Arizona, California, Connecticut, D.C., Hawaii, Illinois, Iowa, Maine, Massachusetts, Montana, New Jersey, New Mexico, New York, Oregon, Pennsylvania (effective July 2009), Rhode Island, Vermont and Washington.   Normally health care is covered by the term "benefits."
  There are an additional eight states that prohibit discrimination against public employees based on sexual orientation/gender identity.  These states do not necessarily cover health care costs for a same-sex partner.  These states are:  Indiana, Pennsylvania, Alaska, Arizona, Colorado, Louisiana, Michigan, Virginia.
• • State Retiree benefit programs now extend retirement benefits to domestic partners in about a dozen states, with descriptions of policies and debates in other states. See Domestic Partner Retirement Benefits: NCSL Survey of legislative staff (03/06)
  • Example of Hawaii online resources for domestic partners. (2007)
  • Expedited Partner Therapy - State Information - Legal status and barriers by state to providing medications to persons infected with certain STDs to be administered to their sexual partners. The information applies generally, not just to public employees. (compiled by CDC, 11/07)
     
• STATE CONTRACTORS REQUIRED TO PROVIDE HEALTH BENEFITS 
  A few states require their private contractors to compensate their personnel using prevailing wage and benefit standards similar to public employees.
  • Illinois - Contractor employees must be paid prevailing wages and benefits and work under "conditions prevalent in the location where the work is to be performed." This applies to contracting in the areas of public works, printing, janitorial services, window washing and security guard services. 44 Ill. Adm. Code 1.2560.
  • Massachusetts - Contractors are required to provide their employees wages and benefits comparable to those paid to state employees performing similar services. The wages and benefits must be included in the bid and must be reported to the contracting agency on a quarterly basis. M.G.L.A. Ch. 7 Sec. 54.
  • California, Rhode Island and Washington require prevailing rates or wages for state contractors, but do not specify health coverage in statute.  The District of Columbia, Maryland and San Francisco, CA require paying a living wage.
• 2007 RETIREE Program cutbacks:
   

  The retirement of baby boomers — 79 million born from 1946 to 1964 — will make it hard for state and local governments to keep up with the cost of medical benefits for retirees. What governments are doing now:

  • Results of the Segal Medicare Part D Survey of Public Sector Plans. A summer 2006 survey shows that 79% of public employee plans that responded took the federal 28% subsidy, but that more would reevaluate for 2007.

  • West Virginia The state pension board is to vote Wednesday on shifting prescription drug coverage for retirees to Medicare, a federal program. The change, along with making retirees pay more, would slash the state's $8 billion unfunded liability to $5 billion.  "By tackling this early, we hope to save money in the long run," says Ted Cheatham, director of West Virginia's Public Employees Insurance Agency.

  • North Carolina Civil servants hired after Oct. 1 will have to work 20 years before qualifying for 100% state-paid medical coverage. Previously, workers had to wait only five years.

  • Oklahoma's employee and teacher retirement system has become a federally qualified PDP (Medicare Prescription Drug Plan) in order to coordinate Rx services to its members while obtaining federal reimbursement for virtually all transactions.  Pennsylvania's teachers retirement plan has taken as similar PDP direction, as an alternative to simply providing equivalent benefits and getting a 28 percent federal payment.

  • <