The following statement was delivered to the PEBP Board at the 11/17 meeting, by Kent Ervin, on behalf of NFA:

Good morning. My name is Kent Ervin E R V I N. I am an active participant and today I am speaking on behalf of the Nevada Faculty Alliance, which represents NSHE faculty statewide. My comments are for the record.

We are concerned that the plan changed proposed in Agenda item 9 represent a significant reduction of benefits and net compensation.  While we appreciate that so-called “excess reserves” are being used to maintain some of the so-called “enhancements”, the net effect is a reduction of benefits.  Excess reserves are simply savings by PEBP due to overaggressive past cuts in benefits and poor cost projections, and enhancements are simply partial restoration of those benefits.  The 2015-2017 plan design, including those enhancements, should serve as the base model moving forward.  Changing plan design year-to-year is confusing for participants and likely contributes to the extremely bad streak of actuarial cost predictions over the past 5 years.

Regarding the specific proposed cuts, the worst for participants is the increase in deductibles from 1500/3000 to 1600/3200 or higher, well above the HSA minimums for HDHP plans, and the possible decrease of the 80/20 coinsurance rate.  These regressive cuts hit hardest those participants who have the highest health needs and the lowest incomes.  The HDHP out-of-pocket maximums are unaffordable for our starting classified employees.  

Decreasing HSA/HRA contributions has the same net effect as increasing the deductibles, and is also highly regressive. The reduction or elimination of HSA/HRA contributions for dependents is unfair because the rates and employee premiums are set based on the four tier groups, not the number of dependents. Effectively, you are decreasing the net deductible as the number of dependents increase. The HSA contributions should be a constant percentage of the deductible for all tier groups.  

The two options for supplemental HSA contributions each have problems. Treating HSA matches differently from HRAs in unfair to those ineligible for HSA.  Tying HSA contributions to a revived wellness program flies in the face of firm legislative guidance not to fund a wellness program and risks legislative pushback on the PEBP program.

The idea of taking back HRA balances over $5K is penalizing those who have carefully saved up most for future needs, which the proposal encourages for HSA participants. Furthermore, it will fail to realize savings because those participants will spend down their balances as soon as this scheme becomes known.

Decreasing life insurance to $5K for retirees and $10K would be restoring cuts from previous levels prior to the great recession, $10K/25K.  $5K isn’t even enough for a basic funeral. 

We are also highly concerned about the changes to retiree subsidies. Would retirees lose their Part B reimbursement?

Finally, the current proposals do not reflect the potential impacts of a flat state subsidy or a 5% reduction along with the medical cost trends.  You as board members should insist on a report on the full cost of maintain the current plan design including so-called enhancements.  Then we can start from there to address budget realities. The participants and legislators deserve to see the actual state of affairs, rather than have those hidden until it is too late in the process to make informed decisions.

Thank you. I look forward to working with all of you on behalf of the Nevada Faculty Alliance and NSHE participants.