West Virginia University officials urged a state board Thursday to overhaul public employees’ health insurance plans, saying the system has shafted WVU employees for years.
WVU workers pay higher monthly insurance premiums but get fewer health benefits than other state employees, university administrators told the Public Employee Insurance Agency’s Finance Board.
“There are just so many inequities with the way this thing has been designed,” said Toni Christian, WVU’s director of benefits administration. “We’re asking you to please take a look at this.”
Each year, WVU employees pay about $54 million into PEIA, but the agency pays out only $30 million in claims for university workers’ medical expenses, according to PEIA financial data.
“We believe we’re truly overcharged for premiums, compared to claims paid,” Christian said, “and we believe that is continuing.”
People sign up for part-time, low-paying state jobs and take advantage of PEIA’s discounted premiums, even though those employees might have high-paying jobs in the private sector or have spouses who make more than $100,000 a year, WVU officials said.
PEIA doesn’t include a spouse’s pay or outside income when calculating monthly insurance premiums.
“Isn’t that a tragedy?” said Margaret Phillips, WVU’s vice president of human resources. “We’ve allowed these people to pay and to subsidize others who were truly not low-income, and we have put that on the backs of our employees. That is a tragedy to me.
“We’re paying $24 million more into this health plan than we’re utilizing, so we feel we are subsidizing . . . a lot of people who are gaming the system.”
State employees who pay higher insurance premiums also pay higher deductibles and out-of-pocket expenses — and they receive fewer health benefits under PEIA’s plan, the WVU administrators said.
“We call it the triple whammy,” Phillips said. “We can find no other place that does that and penalizes employees who pay more for their benefit but get less.”
PEIA’s “sliding-scale” premium payment structure — higher paid employees pay higher monthly premiums — also penalizes WVU employees who receive salary hikes. Last year, a $504 pay increase triggered PEIA premium hikes that exceeded university workers’ pay raises. So their take-home pay actually shrank.
“When you base the premiums on income,” Phillips said, “it creates all kinds of inequities.”
What’s more, WVU employees pay higher monthly premiums than their counterparts at nearby schools, such as Virginia Tech, the University of Kentucky and the University of Tennessee, according to data presented at Thursday’s Finance Board meeting. The other universities don’t have sliding-scale plans.
“When we’re trying to compete with these institutions for faculty, we are at a distinct disadvantage,” Phillips said. “Not only are we paying a much higher premium, but they have less benefits.”
WVU officials also noted that married state employees who don’t have children pay the same premiums as those with children under PEIA.
“Myself and my husband, we pay the same as somebody with 10 children,” Phillips said.
PEIA Finance Board member Josh Sword said the agency must avoid making changes that would hurt low-income state employees. PEIA’s sliding-scale plan was set up in 1991.
“The problem is, somebody is going to have to cover that benefit cost if changes were made,” Sword said, “and I can’t think of a scenario in which those increased costs don’t fall on the backs of those who can least afford it.”
WVU officials suggested that the Finance Board include a family’s entire income — not just the pay of the state employee — when calculating monthly insurance premiums. The administrators also suggested that PEIA reduce the number of salary “tiers” — used to calculate premiums — from 10 to three. WVU also wants a seat on the Finance Board.
“Our faculty and staff are very much in support of continuing to subsidize low-income people, and we believe that’s the right thing to do,” Phillips said, “but we are subsidizing people we should not be subsidizing. There’s been an unfair structure in place for years.”
Reach Eric Eyre at firstname.lastname@example.org, 304-348-4869 or follow @EricEyre on Twitter.