Retirees enrolled in Nevada's cash-strapped state worker health insurance program are set to see potentially sizable premium increases starting in July.

The exact size of the increase taking effect in July is not yet known, but if it had been in effect this year, retirees enrolled in the two most popular plans would see monthly increases ranging from $34 to $172. Active employees enrolled in these plans would have seen changes ranging from a decrease of about $13 to an increase of about $57.

Active employees will also likely experience premium hikes if their plan includes a spouse or their family. Active workers who are the only members of their plan will likely see modest premium decreases.

The changes are because officials last week approved decreasing how much the state covers for various health insurance plans. It was an effort to curtail the practice of certain insurance plans subsidizing the costs of other plans and create up to $5 million in savings to the program, which for years has seen revenues fall behind expenses. In the most recent plan year, the program was about $15 million in the red.

Across the two plans where officials provided cost estimates, there are about 3,100 enrolled retirees, and about 850 of them are part of the plans that could see monthly hikes of more than $150. There are also around 4,800 active employees enrolled in the plans that the changes would particularly affect.

In a 5-4 vote on Friday, the board of the Public Employees Benefits Program (PEBP) approved the changes. Opponents criticized yet another increase in costs at a time when healthcare costs are surging.

"It's playing a tug of war between participants and the plans," board member Blaine Harper, who voted against the measure, said at Friday's meeting.

Because this decision addressed subsidies of the plans, there could still be more premium changes. The board will likely finalize final premium rates early next year. In March, it significantly raised certain enrollees' premiums for the plan year that goes from July 2026 through June 2027.

Why some groups are facing higher premiums

After outside consultants presented the board with multiple options, it ultimately chose one that will particularly affect retirees and active employees whose plans include their spouse or families.

Retirees enrolled in PEBP are primarily "early retirees," meaning they are younger than 65 and not yet eligible for Medicare but could be working elsewhere that provides health insurance, said Laura Rich, a board member and the director of the Nevada Department of Human Services.

Additionally, these retirees' subsidies will not be available to state workers whose employment with the state began in 2012 or later.

"I don't feel like we should be subsidizing those folks at the expense of active employees," Rich said. "You've got a large group of active employees right now who are paying into a system to subsidize retirees at a higher rate for something that they are never going to get access to. So I think that's very unfair to begin with."

There's also a subset of about 200 retirees who are ineligible for a certain premium-free Medicare program because of when they started state service. Harper wanted to keep in mind these retirees, who can stay on the state's program even after turning 65, when looking at premium increases, but the final decisions did not include a carve out for them. 

Members also noted that active employees whose plans include a spouse or their family — disproportionately impacted by the latest changes — could have alternative options for healthcare.

"I think this is just another way to really encourage those people who have access to healthcare through their own employer to leverage that," Rich said.

The state has also historically subsidized dependents' health insurance costs at a higher rate than local governments, Board Chair Jim Wells said.

There was significant public comment in opposition.

Michael Kagan, the chair of the UNLV faculty senate, criticized what he called "dividing different members of our community against each other."

"We do not want to keep current employees' premiums down on the backs of retirees who already served the state," Kagan said. "We do not want to divide people with or without spouses and children against each other."

Kent Ervin, the chair of the legislative committee for the Retired Public Employees of Nevada, said costs should not simply shift onto workers and retirees.

"Cuts to benefits and increases of employee premiums should be the very last resort after the governor's executive budget is known next January, even if some contingency planning is required," Ervin said.

Wells said if the board did not make a policy decision this month, then the governor's office and health officials will have to make the decision themselves as they craft the next two-year budget.

Budget disputes

It's all happening against the backdrop of a precarious budget situation. In the previous plan year, PEBP's expenses exceeded revenue by $14.6 million and two healthcare plans were in the red. The reserve balance has also stayed relatively stagnant in recent years, while the amount of cash on hand is dwindling.

Theresa Carsten, the executive officer for PEBP, also went so far as to say the program is "insolvent," though one board member said it didn't look that way to him.

The changes approved Friday are expected to create about $4 million to $5 million in savings, which will go toward replenishing reserves.

Public commenters and board members also criticized the financial picture. For example, the state's subsidies for plan enrollees increased by 30 percent last year, but that didn't correspond to a more promising revenue outlook.

"While I agree that things are complicated, there's also a basic kind of simplicity to it," said board member Chris Viton, the chief financial officer of UNLV. "The Legislature provided a higher assessment that was budgeted to go to our account, but we're not seeing that in the account."

At the board's next meeting in November, there will be a more detailed timeline provided on how those allocations were used, as well as more information on revenues and expenses for each plan.