Lawmakers vote to try to fix PEBP ‘orphans’ problem

CARSON CITY — Lawmakers are finally trying to fix the Nevada Public Employee Benefits Program “orphans” problem.

The orphans were created in 2007 when lawmakers passed legislation to allow non-state retirees into the PEBP plan only if the active employees of their former government employer participated in PEBP. Lawmakers also directed state and non-state retirees be rated in separate risk pools.

That, in effect, cut off the supply of active non-state employees joining PEBP. Especially those who spent their entire career in public service and don’t qualify for Medicare were hard hit because, for them, the changes created a high-risk pool that has every year become more and more lopsided. By last year, legislative analysts say there were just nine active non-state, non-Medicare members left in the pool to support some 1,200 retirees.

As a result, their premiums have risen dramatically. While the state’s non-Medicare retirees will pay $209 a month for health insurance in 2018, those non-state, non-Medicare retirees will pay $392 — nearly double — for the same insurance coverage. That monthly premium rises to $953 for a retiree and spouse compared to $478 for the state non-Medicare retiree.

One of the possible fixes was to change the law and shift the roughly $19 million annual cost of covering those non-state, non-Medicare retirees back to the local governments they retired from. But Assembly members Heidi Swank and Olivia Diaz expressed concern that doing so all at once would be an unexpected hit to those local plan budgets. Instead, they voted to shift the responsibility back to those local plans, the largest being the Clark County School District, over a four-year period.

That, however, required adding some funding to the PEBP budget to cover the transition. The subcommittee of Senate Finance and Assembly Ways and Means voted to put $2.4 million into the Fiscal 2018 budget and another $1.8 million into the 2019 budget to cover those costs.

Subcommittee Chairman Swank, D-Las Vegas, said this should fix a problem lawmakers have been grappling with for several sessions.