State employees are likely in for a much more favorable situation with their health plan than the doomsday scenario predicted before the session began. 

Assemblywoman Maggie Carlton (D-Las Vegas), chair of the Ways and Means Committee, announced a plan during a Friday joint budget meeting to give participants in the Public Employees Benefits’ Program (PEBP) a one-month “premium holiday” during which enrollees don’t have to pay their share of their health insurance costs. That would apply to about 44,000 active and retired public employees, according to legislative staff.

Carlton said the arrangement was intended “to do something for state employees who have gone through a lot this last year and a half” while not adjusting the rates for the health plans during an ongoing open enrollment period. The expense would be covered through general fund dollars and would cost about $12 million over the biennium.

“We know how important health care is to families, especially now, and what the cost of that health care can be to a family,” Carlton said. “I still find it quite sad that we still have state employees that are on Medicaid. That's another thing that we need to fix as we move forward. But this is one thing that we can do for state employees at this moment in time.”

Carlton also proposed restoring a budgeted cut in how much the state contributes each month to the Medicare plans of retirees through a “Health Reimbursement Arrangement” (HRA). The governor had proposed reducing the contribution to the equivalent of $165 a month for employees with 15 years of service; the committee is restoring it to $195. 

That change will cost $6.6 million over the biennium, paid for through expected excess reserve fees collected by PEBP.

The motions were approved unanimously by members of a joint Senate and Assembly budget committee.

Current and retired state employees cried foul in January when PEBP proposed a slew of benefits cuts and program reductions to try to meet an initial 6 percent budget reduction target. Proposed cuts included reducing life insurance benefits from $25,000 for an active employee to $15,000 and from $12,500 for a retiree to $7,500, eliminating a long-term disability insurance program and lowering Medicare HRA contributions from $13 to $11 a month per year of service.

PEBP Executive Officer Laura Rich said in an interview that the idea of a “premium holiday” came about as a way for lawmakers and the system to mitigate some of the proposed cuts even though the system’s open enrollment period had opened last month — making it difficult to change things such as plan design, deductibles and copays for the current plan year.

“The new options that were presented were last minute options, based on the fact that there appears to be more funding available, and something that the legislators had a desire to fund,” she said.

Sen. Ben Kieckhefer (R-Reno) said he thought any discussion about a state-funded PEBP rate holiday paid through general fund dollars should come as part of a broader conversation in coming weeks on how the state should spend the extra $586 million the state expects beyond what was predicted in a December forecast. 

“PEBP has had significant cuts, and I'm supportive of restoring a lot of that,” Kieckhefer said. “I just think that if it's going to be through the general fund, that it might be more appropriate for that more global discussion.”

Sen. Heidi Seevers Gansert, R-Reno, added that “I'm struggling in part because this is inconsistent with how we've looked at a lot of the other budgets.” In the budget for the Nevada System of Higher Education, for example, accounts were being finalized this week with significant cuts but with the understanding that many will be backfilled at a later date thanks to higher-than-anticipated general fund revenue projections and an influx of federal COVID-19 relief funds.

Carlton said she understood the concern and desire to “hold very firm” to not restoring previously approved budget cuts until a “global discussion” could be held, but said she made a commitment to PEBP that she would give the system as much of a heads up as possible ahead of the start of the fiscal year in July.

“I feel very strongly that we need to be able to give guidance to PEBP moving forward on what the next two years look like so that they can plan for this, and they can account for it, and they can get the information out to the state employees as we move forward,” she said.

Several state employee representatives called into the meeting to thank lawmakers for proposing the premium holiday, but said they hoped lawmakers would take further action to reverse other benefits cuts proposed in the PEBP budget.

“The high out-of-pocket maximums in plan designs especially affect the sickest state employees, who, ironically, are bearing the most cost from the budget necessities of the pandemic economy,” said Nevada Faculty Alliance representative Doug Unger. “A global conversation is suggested by members of this committee and we believe this is needed. We hope state employee representatives can be at the table for that conversation.”