State Employees Face Health Insurance Premium Hikes Amid Changes

Over 77,000 state employees in the U.S. will experience increased health insurance premiums for the second consecutive year as the State Health Plan addresses a projected $1 billion shortfall anticipated for 2027. The Board of Trustees for the State Health Plan has approved a 5% average rise in monthly premiums, set to take effect in January.

State employees will simultaneously benefit from a revised insurance system that reduces out-of-pocket costs if they choose specific healthcare providers. This change follows the State Health Plan's previous shift to a salary-based sliding scale for premium calculations, aiming to align better with employee earnings.

Last year, state employees earning $50,000 or less saw monthly premiums rise from $25 to $35 for the Standard plan and from $50 to $66 for the Plus plan. Those making $90,000 or more encountered the steepest hikes, with premiums increasing by up to $110 per month. As a result of the latest decision, employees covering only themselves will face increases of up to $4 monthly in 2027, while those with dependents may see increments reaching $42 monthly, contingent on income.

Employee advocates unsuccessfully argued to maintain steady premiums, highlighting that recent state budget raises do not sufficiently counterbalance the increased costs. Ardis Watkins, executive director of the State Employees Association of North Carolina, emphasized this during discussions with the trustees.

Revised Provider Tiers

State Treasurer Brad Briner, overseeing the State Health Plan, underscored the need for annual premium adjustments due to escalating medical costs while striving for consistency relative to employee compensation. In June, Trustees authorized a new structure for active employees designed to support cost savings despite rising premiums. This structure classifies healthcare providers into four tiers, moving beyond traditional "in-network" and "out-of-network" categories, with each tier featuring distinct out-of-pocket expenses.

The "preferred" provider tier offers significantly lower costs and requires providers to agree to discount arrangements with the State Health Plan. Currently included in this tier are UNC Health, Novant Health, and Iredell Health Systems, with a new search tool launching in August to assist state employees in identifying preferred providers.

Future Plan Management

Trustees resolved to revert the operation of the State Health Plan to Blue Cross Blue Shield of North Carolina in 2028 after Aetna's management tenure since 2025. The impacts of this transition on premiums, costs, or provider networks remain undetermined. Meanwhile, "access" provider agreements are underway with Duke Health and WakeMed, offering costs equivalent to current in-network rates but higher than preferred. The "non-preferred" tier involves significantly higher costs, associated with providers in competitive urban zones that opt-out of the preferred program.