CHARLESTON — PEIA is in good financial condition, and its managers are working toward establishing savings accounts dedicated to smoothing out premium changes in coming years.
“We had a great year last year, a great year. And so far we’re on pace to have another great year,” said Ted Cheatham, director of the Public Employees Insurance Agency.
PEIA is running a surplus of about $35 million on its budget that covers active employees and a surplus of about $70 million on the budget that covers retirees.
That’s the bottom line as PEIA moves toward the annual period when its managers start to prepare plan and budget proposals for the coming year.
PEIA has been a lightning rod for state employees and retirees who have experienced increased premiums and prescription drug costs over the past few years.
A PEIA Task Force created during the most recent legislative session has been working for months but still hasn’t completed its duties. In fact, subcommittee meetings that had been scheduled for this month were canceled.
“The preference would be the task force come up with some recommended solutions for us to implement and figure out how to fund long-term for what we want to do at PEIA,” Cheatham said.
Next month, Oct. 18, the separate PEIA Finance Board will hear proposals for funding the plan for the coming fiscal year. PEIA Director Ted Cheatham says the plan is so stable right now no influx of additional money is likely to be necessary.
“We’re working on a plan assuming, at the moment, that we don’t have any additional revenue,” Cheatham said. “That doesn’t mean we’re not going to get some and that we wouldn’t do something with it.
“But as I said, at the moment we don’t need additional revenue to survive the next year. And we’re going to go down that road planning that way as it is.”
The Governor’s Office is supposed to provide PEIA with financial information by Oct. 15.
Once the PEIA Finance Board settles on a proposal, there will be a series of public hearings.
Right now those tentatively include: a Nov. 7 teleconference, a Nov. 8 meeting at the Culture Center in Charleston, a Nov. 13 meeting at the Holiday Inn in Martinsburg; a Nov. 14 meeting at the WVU Erickson Alumni Center in Morgantown and a Nov. 15 meeting at the Beckley-Raleigh County Convention Center.
If PEIA remains a hot topic, all of those meetings come on the heels of Election Day, Nov. 6.
Right now, PEIA’s overall budget looks solid enough that its managers are planning to establish savings accounts dedicated toward smoothing out premiums over the long term.
“All we’re trying to do is take some of that operational money and set it aside so that we can offset premium increases in the future or benefit reductions in the future to help stabilize the plan long-term,” Cheatham said.
That doesn’t mean premiums wouldn’t go up, merely that there would be a cushion. PEIA’s financial managers referred to the line item as “premium stabilization reserves.”
“It should smooth them,” Cheatham said of future premium increases. “If we needed a 5 percent increase, then maybe we only need a 3 or 4 percent increase, for example. We’ll just smooth them over time. It’s not going to completely stop it from happening over the long run.”
