Retirees enrolled in Nevada's state worker health insurance program are set to experience potentially substantial premium increases beginning in July. The Public Employees Benefits Program (PEBP) board approved these changes in a 5-4 vote on Friday, aiming to decrease how much the state covers for various health insurance plans. This measure seeks to curtail the practice of certain plans subsidizing others and generate up to $5 million in savings for the program, which has faced a long-standing issue of revenues falling behind expenses.
While the precise size of the July increases remains unknown, officials provided estimates based on what would have occurred this year. Retirees in the two most popular plans could have seen monthly increases ranging from $34 to $172. Active employees enrolled in these same plans would have experienced changes from a decrease of about $13 to an increase of approximately $57. Active workers whose plans include a spouse or their family are also likely to face premium hikes, whereas those who are the sole members of their plans may see modest premium decreases.
The changes are poised to particularly affect thousands of participants. Across the two plans for which cost estimates were provided, about 3,100 retirees are enrolled, with approximately 850 of them potentially facing monthly hikes exceeding $150. Additionally, around 4,800 active employees are enrolled in the plans that will see the most significant impact from these adjustments. The PEBP program recently reported being about $15 million in the red during the most recent plan year.
Outside consultants presented multiple options to the board, which ultimately selected a plan designed to particularly affect retirees and active employees whose plans cover a spouse or family. Board member Laura Rich, who is also the director of the Nevada Department of Human Services, explained that many retirees in PEBP are "early retirees." These individuals are typically younger than 65, not yet eligible for Medicare, and may have access to health insurance through other employment. Rich expressed concerns about subsidizing these individuals at the expense of active employees, stating it was "very unfair" for current workers to fund higher retiree subsidies for benefits they would not access.
Rich also suggested that active employees whose plans include a spouse or family, who are disproportionately affected by the recent changes, might have alternative healthcare options available through their own employers. Board Chair Jim Wells added that the state has historically subsidized dependents' health insurance costs at a higher rate compared to local governments. Another group considered by board member Blaine Harper, but not ultimately given a carve-out, consists of about 200 retirees ineligible for a certain premium-free Medicare program due to their state service start date.
The board's decision drew criticism from some members and public commenters. Blaine Harper, who cast one of the four opposing votes, described the situation as "playing a tug of war between participants and the plans." Michael Kagan, chair of the UNLV faculty senate, criticized the approach of "dividing different members of our community against each other," arguing against reducing current employees' premiums at the expense of retirees who have served the state. Kent Ervin, chair of the legislative committee for the Retired Public Employees of Nevada, argued that shifting costs onto workers and retirees should be a last resort, to be considered only after the governor's executive budget is known.
The changes unfold against a precarious financial situation for the PEBP. In the previous plan year, the program's expenses outstripped its revenue by $14.6 million, with two healthcare plans operating at a deficit. The program's reserve balance has remained relatively stagnant in recent years, while its cash on hand has decreased. Theresa Carsten, PEBP's executive officer, went as far as to describe the program as "insolvent," although one board member disputed this characterization.
The approved changes are projected to generate approximately $4 million to $5 million in savings, which are intended to help replenish the program's reserves. Despite a 30 percent increase in state subsidies for plan enrollees last year, the program's revenue outlook did not improve correspondingly, a point of criticism from board members and public commenters. Chris Viton, UNLV's chief financial officer and a board member, acknowledged the issue's complexity but also its "basic kind of simplicity," noting that while the Legislature budgeted a higher assessment for the program's account, those funds were not being seen in the account. Board Chair Jim Wells noted that if the board had not made a policy decision this month, the governor's office and health officials would have had to make the decision while crafting the next two-year budget.
Board members indicated that more premium changes could still occur, as this decision primarily addressed plan subsidies. The board is expected to finalize the ultimate premium rates early next year. A more detailed timeline regarding how allocations were used, along with updated information on revenues and expenses for each plan, is anticipated at the board's next meeting in November. The board had previously significantly raised certain enrollees' premiums in March for the plan year spanning July 2026 through June 2027.