Most current employees in the state’s health insurance plans for public school and state employees and retirees would pay less than they currently do and most retirees would pay more under proposed changes for calendar year 2024 that the state Board of Finance approved Wednesday.
The Legislative Council’s employee benefits subcommittee is slated to consider the proposed rates for the state’s health insurance plans for public school and state employees and retirees on Aug. 23, and the council is scheduled to consider the proposals on Aug. 25.
During the state Board of Finance meeting Wednesday, state Department of Finance and Administration Secretary Jim Hudson — the former chief of staff at the Department of Commerce — served as board chairman, taking over for former finance department Secretary Larry Walther, who is now the state treasurer until 2025. The state treasurer serves on the state Board of Finance. Gov. Sarah Huckabee Sanders appointed Walther as state treasurer last Thursday and Hudson as finance department secretary on Monday.
“As I shared with somebody this morning, if you weren’t going to be here, I wasn’t coming,” Hudson quipped to Walther.
“I am glad you are here, and there is a reason why he is sitting next to me,” Hudson said. “I told him if I do something that is inappropriate or just plain dumb, please kick me. I do look forward to serving with this board. It is a very important board and I certainly want to build on the work that the treasurer has already done.”
The state treasury reported record interest earnings in fiscal year 2023 that ended June 30.
More than 99,000 public school employees, retirees and dependents are covered by the state’s public school employee health insurance program and more than 55,000 state employees, retirees and dependents are covered by Arkansas’ state employee insurance plan as of Aug. 1, said Grant Wallace, director of the state’s Employee Benefits Division.
The state’s health insurance plans offer premium, class and basic plans to state and public schools employees and non-Medicare eligible retirees. They also offer Health Advantage coverage and United Healthcare’s Medicare Advantage with prescription drug coverage for Medicare-eligible retirees.
STATE EMPLOYEE PLAN
In the state employee plan, 11,286 employees with employee-only coverage in the state’s premium plan would contribute $162.14 a month in 2024, a drop of $9.86 a month from their 2023 contribution, under the rates approved Wednesday by the state Board of Finance.
In the state employee plan, 1,583 employees with employee-only coverage in the state’s classic plan would contribute $85.52 a month in 2024, a drop of $13.18 a month from their current contribution, and 1,726 employees with employee-only coverage in the basic plan would contribute nothing in 2024 as they currently do in 2023, according to the board’s records.
In the state employee plan, 1,404 non-Medicare eligible retirees with retiree-only coverage in the premium plan would pay $331.06 a month in 2024, an increase of $8.98 a month from their current contribution in 2023, the board’s records show.
In the state employee plan, 2,822 Medicare-eligible retirees with retiree-only coverage through Health Advantage would pay $233.04 a month in 2024, an increase of $21.19 a month from their current contribution, with 5,601 Medicare eligible-retirees with retiree-only coverage would pay $17.03 a month in 2024 through United Healthcare’s Medicare Advantage with prescription drug coverage plan, an increase of 50 cents a month from their current contribution, according to the board’s records.
The state employee health insurance plan is projected to have an estimated surplus of $31.2 million and estimated reserves of $101.7 million, or 32.7%, of expenses in 2023, according the Milliman actuarial firm.
PUBLIC SCHOOL EMPLOYEE PLAN
In the public school employee plan, 11,284 employees with employee-only coverage in the premium plan would pay $201.96 a month in 2024, a cut of $19.14 a month from their current contribution, and 14,888 employees with employee-only coverage in the classic plan would pay $88.38 a month, a drop of $6.45 a month from their 2023 contribution, the board’s records show. In the public school employee plan, 4,518 employees with employee-only coverage in the basic plan would pay $43.24 a month in 2024, a reduction of $11.07 a month from their 2023 contribution.
In the public school employee plan, 2,117 non-Medicare eligible retirees with retiree-only coverage in the classic plan would pay $252.18 a month in 2024, a cut of $25.28 a month from their 2023 contribution, according to the board’s records.
In the public school employee plan, 8,158 Medicare-eligible retirees with retiree-only coverage in the Health Advantage plan would pay $121.98 a month in 2024, an increase of $11.09 a month from their 2023 contribution, and 6,493 retirees with retiree-only coverage through United Healthcare’s Medicare Advantage with prescription drug coverage plan would pay $9.03 a month in 2024, an increase of 50 cents a month from their 2023 contribution, the board’s records show.
The public school employee plan has an estimated surplus of $51.9 million and estimated reserves of $223.8 million, or 51.1%, of expenses in 2023, according to Milliman.
The state’s Employee Benefits Division started offering group Medicare Advantage with prescription drug coverage through United Healthcare during this calendar year. The group Medicare Advantage plan offers significant savings to retirees and the state, and the group Medicare Advantage plan is different from individual Medicare Advantage plans, state officials said last year.
TREASURY INVESTMENTS
The state Board of Finance voted Wednesday to set an investment return range of 3.2% to 3.3% for the state treasury for the quarter that started in July and closes at the end of September.
The state treasury’s interest earnings totaled $254.6 million in fiscal 2023 that ended June 30, exceeding its previous high of $116.9 million in fiscal 2019 that ended June 30, 2019, with the help of rising interest rates and a larger investment portfolio that reached $10.9 billion, said Chief Deputy Treasurer Eric Munson.
The treasury’s investment return was 3.22% in the quarter that ended June 30, above the target range of 3% to 3.1%, said senior investment manager Robert Romanik.
“The portfolio management team certainly credits tighter monetary policy and rising interest rates for the considerable amount of income produced over fiscal year 2023, but a good investment strategy, team collaboration, and patience during the lean times also helped,” he wrote in a portfolio update.
“Sometimes good things take time,” Romanik added.
Walther said the state treasurer’s staff has done an outstanding job of doing the business of the state treasury during the past seven months.
The late Mark Lowery, a Maumelle Republican, was sworn in as state treasurer Jan. 10. He suffered strokes in March and in June before he died July 26.