Understanding Healthcare and the WV Public Employees Insurance Agency

Having health insurance coverage is one of the most important aspects of a person’s financial stability. Without it, a single health-related event or injury can put a person into debt and take years to recover from a financial standpoint. Unfortunately, the costs for maintaining health insurance continue to increase for both employers and their employees.

In West Virginia, public employees and their families typically receive health insurance through the WV Public Employees Insurance Agency, commonly known as PEIA. For over a year, many of the participants on the plan have taken up the mantle, “Fix PEIA,” stating that PEIA’s costs continue to increase. Many of these participants have demanded an increase in various taxes and a promise that benefits and costs for PEIA will not change.

But how does PEIA compare to other types of health insurance? Below is some information to help explain the costs of this public plan compared with what those in the private sector are typically paying.

 

Download the West Virginia Chamber's Quick Facts on PEIA

 

General Background

Most health insurance plans base costs on risk factors (age, smoker?, etc.), but PEIA has instead based premiums, deductibles and out-of-pocket maximums on income level. Currently there are ten income levels on PEIA, with the lowest for those making less than $22,700 per year and the highest for those making $127,701 or more. Coverage options include employee only, employee and children, family, and family with two public employee spouses.

Additionally, most private health insurance plans will no longer cover a spouse if the that spouse has the ability to receive coverage elsewhere, such as their employer. With PEIA, spouses can be added to the plan regardless of their income level, meaning that premiums, deductibles, and out-of-pocket maximums are determined solely by the income of the public employee purchasing the coverage.

Premiums

The premium is the amount that is paid each year to purchase health insurance coverage. Premium payments are typically made each month, and are usually shared by the employer and the employee. According to national data from the Kaiser Family Foundation, employees who receive family coverage from their employer are responsible for 31% of the premium on average, while employees receiving single coverage are generally responsible for 18% of the premium. By comparison, a public employee making $50,000 on PEIA with family coverage is responsible for 23% of the premium, while an employee at the same salary level with single coverage is responsible for 15% of the premium.

Across the nation, premiums increased 19% between 2012 and 2017. During that same time period, PEIA premiums increased an average of 16%.

In 2017, the national average dollar amount contributed by workers is $5,714 for family coverage and $1,213 for single coverage. Below are two charts to show the comparisons for those covered by PEIA:

 

 

Deductibles

The annual deductible is the amount a health insurance enrollee is responsible for paying before health insurance coverage kicks in. According to information prepared by PEIA , the average West Virginian with small group rate single coverage has an average annual deductible of $4,000, while the small group rate for family coverage is an average of $8,000. The average annual deductible for single coverage on the Affordable Care Act exchange is $4,750, with an average family coverage deductible of $7,350.

Deductibles for PEIA enrollees is considerably lower, both for single and family coverage. Additionally, family coverage for PEIA is designed so that no individual family member will pay more than the single deductible (half of the family deductible) before coverage is implemented for that individual. Below is a chart that shows the various deductibles based on income level for PEIA:

 

Out-of-Pocket Maximums

The annual out-of-pocket maximum represents the most a health insurance enrollee will pay in a year before their health insurance begins to cover 100% of any additional costs. The average out-of-pocket maximum for West Virginians with small group single coverage is $7,150, and for family coverage it is $14,300. Average rates on the Affordable Care Act exchanges is comparable to small group coverage, with an average single out-of-pocket maximum of $9,500 and family out-of-pocket maximum of $14,700.

Like the deductibles, the out-of-pocket maximums for PEIA enrollees are significantly less than what is common in the private sector. The out-of-pocket maximum on PEIA is also set up the same as the deductible, with no individual family member paying more than the individual out-of-pocket maximum before full coverage is enacted. Below is a chart to show the various out-of-pocket maximums on PEIA: