At the end of April, the PEBP board met to take action to reduce the agency’s budget as requested by the Governor. After receiving recommendations from AFSCME Local 4041, the PEBP board voted to make cuts that do not require a reduction in current health care benefits for active workers.
The recommendations by AFSCME helped persuade the PEBP board to use the available catastrophic reserves, find savings from other programs and make cuts to underutilized budget items. The intention of these recommendations is that any budget cuts minimize any financial burden to public service workers, many whom continue to be on the front lines providing essential services to our communities during the current public health crisis.
- Using 6.9 million in reserves from Health Reimbursement Account program (HRA) by reducing the reserve from being funded at 100% to a new requirement of funding it at 80%.
- Setting a cap on the Medicare Exchange Retirees HRA accounts to $8000 per year, effective May 31, 2021. Impacted retirees will have one year to file a claim to use any funds in their accounts over this new cap. This will also be funded at 80%, and we expect minimal impact to some retirees who are on the exchange.
- Using 7 million of PEBP’s Catastrophic Reserve funds towards the recommended budget cuts. They also set the new policy to require PEBP’s Catastrophic Reserves to be funded for 50 Days instead of its current 60-days level. This appears not to be a major concern, as PEBP was advised that their current 60-day Catastrophic Reserves policy was conservative compared to other states.
PEBP was also able to take savings and projected savings from the SaveOn Prescription program ($1.9 million) and renegotiated the contract with the ESI Market check for additional savings ($4.5 million).
PEBP was only required to cut 6% of their budget, whereas other agencies will face up to 14% cuts overall.
We thank the PEBP board and their Executive Officer Laura Rich for working with AFSCME to ensure that budget cuts are done responsibly and with minimal affect to public service workers and retirees on PEBP health insurance plans.
AFSCME members are continuously encouraged to get involved with our union, taking part in discussions on healthcare, retirement, contract negotiations, safety and workplace conditions. One way to get involved is to participate in the upcoming Contract Campaign Institute, starting on Saturday May 9, 2020. Click here to register before May 7, 2020.
