State Health Plan Board Approves Changes to Medicare Advantage Plans, Impacting Retirees
The Board of Trustees for the N.C. State Health Plan has recently decided to modify the Medicare Advantage plans used by approximately 175,000 state retirees. This decision, made to allow the Health Plan to save millions, will result in increased healthcare costs for retirees starting in 2027.
The modifications involve raising the out-of-pocket maximums for the base plan from $4,000 to $4,500 and for the enhanced plan from $3,300 to $3,700. Additionally, copays for hospital stays, specialist visits, and imaging services will see an increase. A significant change is that both plan members will now be required to pay $50 for Part B drugs, which were previously free. These drugs, as noted by this category, include those injected or administered by a physician.
During the board meeting, concerns were voiced by representatives of retired state employees regarding the impact of these changes. Suzanne Beasley, a lobbyist for the State Employees Association of North Carolina, remarked on the potential hardship these increases will impose, especially on those with fixed incomes. “These increases are going to turn our folks on their head. … They do live on a fixed income, there’s been no increase, their buying power is down I believe about 30%, so this is going to be probably pretty unbearable,” she stated.
Similarly, Jackson Cozort from the Retired Government Employees Association highlighted that health care costs are among the most significant expenses for retirees, who do not have the same opportunities as active employees to offset rising costs. He expressed “grave concerns” about the changes, emphasizing the financial strain they could pose.
The State Health Plan’s current arrangement with administrator Humana involves sending a fixed monthly check instead of paying based on healthcare services rendered. Under the new benefits, this will amount to roughly $60 per month for the 157,800 individuals on the base plan and about $143 for the 19,000 on the enhanced plan. This adjustment is anticipated to save the State Health Plan approximately $54 million.
Tom Friedman, the executive administrator of the State Health Plan, acknowledged that the change concerning Part B drugs is likely the most impactful. He described these drugs as a “major driver of price increases” for the plans. “These are drugs that are thousands and thousands and thousands of dollars,” Friedman noted.
State Treasurer Brad Briner, prior to the board’s unanimous vote, recognized the challenges of affordability that many are currently facing. He stated, “The challenge is that, more broadly, medical expenses continue to go against us in every piece of our population, and so in the spirit of we’re all in this together, which I think we sincerely have to be, we think this proposal is prudent from that perspective. But I understand that it’s not pleasant.”
Looking ahead, the board plans to vote on premiums for its Medicare Advantage members and PPO plans in July.
