NC State Health Plan board approves higher costs for some retirees in 2027
AI-generated summary reviewed by our newsroom.
- Board approved higher copays for retirees in Medicare Advantage plans for 2027.
- Out-of-pocket maximums will increase to $4,500 for Base and $3,700 for Enhanced in 2027.
- Medicare Advantage plans are fully insured with $60/mo Base and $143/mo Enhanced in 2027.
Retirees covered by the North Carolina State Health Plan’s Medicare Advantage plans will soon pay more for doctor visits, hospital stays, imaging services and some prescription drugs under benefit changes approved for 2027.
The State Health Plan board of trustees voted Friday to make changes to the benefits of retirees covered by either the plan’s Medicare Advantage Base Plan or Enhanced Plan offered through Humana. As of April, 157,800 people were enrolled in the Humana Base Plan and 19,000 in the Enhanced Plan, per data presented Friday during the meeting.
Under the unanimously approved changes, the annual out-of-pocket maximum would increase from $4,000 to $4,500 for members in the Base Plan and from $3,300 to $3,700 for those in the Enhanced Plan. Copays for several medical services would also rise, with increases ranging from $10 to $75 depending on the service and plan.
Before the vote, retiree advocates raised concerns about the impact on people living on fixed incomes.
“We are deeply concerned that substantial cost increases from Medicare Advantage participants would place a disproportionate burden on a population that has very limited ability to absorb all these additional costs,” said Jackson Cozort of the N.C. Retired Government Employees Association.
“Unlike active employees, most retirees generally do not have the opportunity to offset these rising costs through promotions, salary increases, or additional years of employment. They live on fixed incomes that most everybody in this room knows has experienced little to no permanent growth for more than a decade,” Cozort said.
Suzanne Beasley of the State Employees Association of North Carolina said she agreed with Cozort and added that “these increases are going to turn our folks on their head.”
Beasley said that retirees have not seen a cost of living increase in years and “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 probably be pretty unbearable.”
The board voted unanimously to approve the changes. State Treasurer Brad Briner acknowledged the concerns but said rising medical costs left the plan with little choice.
“We’ve certainly heard the feedback about the population that we’re talking about here, issues of affordability across the spectrum that people are facing, and we respect that, of course. 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 proof from that perspective, but I understand that it’s not pleasant,” Briner said.
The Medicare Advantage plans are fully insured, meaning the state pays Humana a monthly amount per member rather than paying claims directly.
With the changes, the state will pay about $60 per month for each member of the Base Plan and $143 per month for each member of the Enhanced Plan in 2027, Friedman said. This represents a savings of approximately $54 million compared to an earlier forecast, said Tom Friedman, the plan’s Executive Administrator.
More premium changes coming for non-retirees
The State Health Plan previously raised premiums and changed benefits for non-retiree members, and more premium increases are expected to be voted on in July. Non-retiree members will also see in 2027 the implementation of a new preferred provider system, where some hospitals, doctor’s offices and specialist groups will be designated as preferred providers. Members will see lower costs when they use preferred providers, while costs at “access” providers will be held at current rates. Friedman said many rural providers will be access providers. Members who go to non-preferred providers will face higher costs, shifting from copays to a deductible and coinsurance model. Emergency care costs will be the same regardless of which tier a provider falls in.
Plan officials have said the system is aimed at helping the plan capture savings by steering members toward providers who offer lower rates in exchange for higher patient volume — with the plan having been working to close a previously projected $1.4 billion shortfall for 2027.
According to data presented Friday, in 2027, the plan is projected to fall below its target stabilization rate — the minimum cash reserve the plan is required to maintain.
That’s expected to happen even if lawmakers provide more funding. If they do, the plan’s projected cash balance would be $363 million in2027, which would still leave it $58 million below the target stabilization rate, according to data presented Friday. Friedman noted that the savings from the Medicare Advantage plans lower pricing is about that gap.
Lawmakers have said they expect to release a budget by mid- to late June.
July will be a big month. Beyond the vote on premiums, there will also be votes on benefit changes, preferred provider contracts, the pharmacy benefit manager contract and third-party administrator contract.
