The N.C. State Health Plan's Board of Trustees voted Friday to increase premiums for many of the more than 750,000 state employees who are covered by it.
State Treasurer Brad Briner said increasing premiums was necessary to help the plan reach financial stability.
In January, when Briner was sworn in, the Health Plan faced a $500 million deficit for 2026 that was projected to balloon to more than $1.4 billion by 2027. For years, Briner said, the plan had been using its reserves to keep premiums steady even as it spent more than it brought in.
With increased appropriations from the General Assembly, negotiating lower payments to healthcare providers and increasing premiums, State Health Plan officials now say they expect it to be financially stable through 2028.
Representatives from state employee organizations expressed concerns about the rising premiums during Friday's meeting, arguing they represent a pay cut even as Briner said they are needed for the plan's long-term stability.
"I know that few people are going to be happy about that," Briner said about the increased premiums, "but it is necessary. We want to have a State Health Plan in the future."
The State Health Plan provides health insurance to state employees, teachers, retirees and their dependents.
The new premiums introduce a sliding scale, with state employees who earn less than $50,000 annually paying the least for health insurance and those earning more than $90,000 paying the most. There are other brackets split around a $65,000 salary.
Under the health plan's current pricing, the premium for its 70/30 plan is $25 per month for someone who fills out a tobacco attestation. That will rise to $35 to $80 for employee-only coverage, depending on the employee's income. The plan will be called the Standard PPO moving forward.
For the 80/20 plan, now dubbed the Plus PPO, premiums will increase from $50 for someone who fills out the tobacco attestation to somewhere between $66 and $160 depending on income.
The new rates will not differentiate based on whether an employee uses tobacco, an idea State Health Plan Executive Administrator Tom Friedman told reporters had run its course.
Briner noted that people who obtain health insurance through the Affordable Care Act marketplace are poised to see premium increases averaging $670 per person in 2026. By comparison, he said, the State Health Plan's premiums are increasing by $35 or $50 per month.
Without increased revenue from premiums, Briner told reporters, benefit cuts would have been necessary.
Briner pointed to the State Health Plan's decision last year to no longer pay for GLP-1 weight loss drugs as a benefit that was already slashed due to the plan's finances.
"You can think about it any other way you want, but the benefit cuts already started last year because the reserves were known to be almost empty last year, as well. So we would have had to figure out ways to cut other benefits if we didn't have more premiums," Briner said.
There are 295,800 active employees who receive coverage through the State Health Plan, according to board materials presented Friday. Of those:
- 60,500 (20.4%) earn less than $50,000.
- 94,900 (32.1%) earn between $50,001 and $65,000.
- 93,200 (31.5%) earn between $65,001 and $90,000.
- 47,200 (16%) earn more than $90,001.
For retirees without dependents who are covered by the State Health Plan and are not eligible for Medicare, premiums for the Standard PPO plan will remain free. Rates for the Plus PPO plan will rise from $50 to $66.
Retirees without dependents who are enrolled in Medicare will also continue to not pay a premium for the Standard PPO plan or for the Medicare Advantage Base Plan. Rates for the Medicare Advantage Enhanced Plan will rise from $67 to $81 per month.
Plan members oppose hikes
Speakers from several groups representing State Health Plan members opposed the premium increases Friday.
Bryan Proffitt, vice president of the N.C. Association of Educators, told trustees that when he started teaching in 2004, health insurance was free and offered better benefits. In 2004, Proffitt said, it was impossible for him to find a job as a public school teacher.
"Now we have 8,000 vacancies in North Carolina public schools, and you can see the relationship between these two phenomenon. So this is ugly, y'all and I want to be really, really clear about it: Raising health care premiums is a pay cut," Proffitt said.
Proffitt urged the board to ask the General Assembly for additional funds for the State Health Plan instead of aiding its finances by hiking premiums.
The General Assembly is paying for more than 80% of the plan's total revenues. A stopgap budget measure that became law last week appropriated an additional $150 million to the State Health Plan by increasing the state's maximum contribution for covered employees to $8,500, up from $8,095.
Charles Owens, a healthcare technician at the N.C. Department of Health and Human Services' Cherry Hospital in Goldsboro, told the board they should wait to increase premiums.
Without a budget and potential raises for state employees, Owens said, the premium hike is just a pay cut. That will make it harder, he said, to hire staff at a hospital where many employees are already working 12- and 16-hour days to maintain care.
"A steady paycheck and a decent healthcare benefit were the last things that were assisting us in getting new hires and retaining permanent staff. With the miniscule raise increases, the exorbitant increases in our healthcare costs along with the diminished coverage that Aetna provides, we can't acquire or keep competent and reliable staff," said Owens, who is also the vice president of the N.C. Public Service Workers Union, UE Local 150.
