State employees who were bypassed for an across-the-board pay increase earlier this year may want to brace themselves for another financial hit.
Due partially to Obamacare, the cost of health insurance premiums will be going up on seven of the eight insurance plan options offered to state employees beginning Jan. 1.
Increases will range from 2 percent to 12.5 percent, depending on the plan chosen and number of family members on the plan.
For employees who choose the popular HealthChoice High option, the option chosen by 80 percent of state employees, premiums will go up $20.88 a month for single employees with no dependents. Couples with two or more children on that plan will see their premiums rise $31.10 a month.
The federal Affordable Care Act, commonly referred to as Obamacare, is responsible for part of the rate hike, said Frank Wilson, administrator of the Employees Group Insurance Division of the Office of Management and Enterprise Services.
It requires a new federal tax that adds $5.25 a month per covered person to the cost of self-funded HealthChoice insurance plans, he said.
Health Maintenance Organizations are required to pay both the new tax and additional fees, so employees who choose the CommunityCare HMO and GlobalHealth HMO options will experience much greater rate hikes, he said.
The only insured state employees who will escape the premium hikes are those who choose the cheapest, most basic health plan — the high-deductible HealthChoice S-Account.
Their premiums will remain unchanged, but only about 350 of the state's estimated 33,000 employees are on that plan, Wilson said.
The new federal tax applies to the HeathChoice S-Account as well as the others, but the Oklahoma Employees Insurance and Benefits Board chose not to pass the tax on to those policy holders.
Sterling Zearley, director of the Oklahoma Public Employees Association, said the rate hikes are going to be tough on state employees.
“The rising cost of health care, especially HMO premiums, is taking more money out of the pockets of hard working state employees,” he said. “Many of these workers have not had a raise in several years and their expenses continue to rise.”
In 2012, the state froze the amount it allocates to employees for insurance benefits, so employees will have to absorb the premium hikes, Zearley said.
Even after the hike, Oklahoma's insurance benefits will still be among the most lucrative in the country.
State employees receive a fixed allowance on top of their wages to cover the cost of health insurance. The current annual allowance is $7,273 for the worker, an additional $8,061 for the employee's spouse, and an additional $2,759 if one dependent child is on the plan or an additional $4,383 if two or more children are covered.
The allowance adds up to $19,717 a year for a family of four.
The allowances are high enough that single employees without dependents currently can choose coverage from any but the most expensive two of the state's eight health insurance options, add dental, vision and life insurance coverage, and still have money left over to supplement their salaries.
That still will be true after the hike, but they will have less allowance money left over to supplement their salaries. The portion that is rolled over into salaries becomes taxable.
For families on all but the most expensive two health plan options, allowances have been and will continue to be high enough to cover their health insurance premiums. But many are already kicking in extra money for dental, vision and/or life insurance for their families. That amount will go up in January.
Zearley acknowledged the state's health plan is generous, but said most studies show state employees are paid 19 percent to 25 percent below private sector salaries and many state employees count on the allowances to supplement their salaries.
At the governor's request, a compensation study currently is being done and will be used to make recommendations for future raises.
John Estus, spokesman for the Office of Management and Enterprise Services, said the study is not yet complete, but it is likely that a phased in approach to pay changes and benefits will be recommended.