Nevada Public Employee Benefits board cuts 6 percent from budget

The Public Employee Benefits Program board voted Monday to cut spending for the coming fiscal year by $25.7 million.

That is actually $1.2 million more than the 6 percent target the program was given by Gov. Steve Sisolak’s Finance Office.

Employee and retiree groups actually praised the staff for coming up with ways to reduce the budget that do as little damage as possible to the program and its thousands of member state workers, retirees and their families.

At Executive Officer Laura Rich’s recommendation, they took the reductions from Catastrophic and HRA Required Reserves along with the Medicare Exchange HRA rollover caps.

The money doesn’t, however, automatically revert to the state General Fund. That requires action by Legislature and governor.

They voted to reduce the Catastrophic Reserves from a 60-day operating reserve to a 50-day reserve. That saves a projected $7 million.

In addition, the board cut HRA Required Reserve funding from 100 percent to 80 percent, saving another $6.9 million in the fiscal year beginning July 1.

“The reality is it doesn’t need to be funded 100 percent,” she said. “We’re not going to have 100 percent of these funds used.”

The Medicare Exchange HRA money, she said, can be capped at a maximum $8,000 per person because most Medicare Exchange members will not be affected since they don’t accrue large balances. She pointed out that there are participants with balances of more than $20,000 who have never used their HRA because the money can only be spent on qualified medical expenses and many people simply don’t have medical expenses.

She said that means PEBP can sweep amounts over $8,000 from those accounts without causing the participants any financial pain.

The decision saves a projected $5.4 million.

On top of that, Rich told the board the decisions they made at their March 31 meeting will save an additional $6.4 million next year.

The board renegotiated the contract with its pharmaceutical benefits manager, convincing ESI to reduce costs by $4.5 million.

Finally, Rich and her staff won an estimated $1.9 million worth of savings from the SaveOn program that provides co-pay assistance on expensive drugs. That co-pay assistance — basically paid by the drug manufacturers — was cutting off at $3,900 a year, the maximum out of pocket for employees. That left the state to pick up everything over that amount. Now, she said, the co-pay assistance continues through the entire year even if the costs are far higher than $3,900 in a year.

The board rejected other options including a premium surcharge of up to $15 for all workers, adding a deductible to the HMO benefit plan and reducing the $25,000 life insurance policy the state provides all workers.

Kevin Ranft representing AFSCME-covered employees, said that union supports the recommendations by staff. He was joined by Priscilla Maloney who represents that union’s retirees among other officials.

But Ranft said in the future, state employees shouldn’t be the “fallback for every state budget crisis.”

“Every time there’s no revenue coming in, state employees get hit,” he said.

The 6 percent hit to PEBP’s budget is actually significantly smaller than what other state agencies are required to cut. First, PEBP isn’t required to cut the 4 percent other agencies have to find in the remaining two months of this year.

In addition, other agencies were told to present options for the coming fiscal year at not only 6 percent but also 10 percent and 14 percent. PEBP was only required to find 6 percent next year.