Pursuant to Item 87.F. of Chapter 1, 2023 Acts of Assembly, Special Session I, this report details the assumptions included in Governor Youngkin’s introduced budget for the 2024-2026 biennium to the state employee health insurance program. This report includes the provisional premium schedule and proposed benefit changes. Consistent with Fiscal Year (FY) 2024 premiums, all premium schedules assume that available premium rewards have been earned by the employee (and spouse). Premiums will be finalized at the conclusion of the legislative process.

The budget assumes a 6.3 percent (%) premium increase, which is directly applied to the employee and employer rates. A total premium increase of 9.3% is projected, however 3.0% will be subsidized from the Health Insurance Fund (HIF) in FY 2025 (this represents 35% of the total premium increase, as represented on the Aon Schedule, Exhibit A). The HIF’s cash balance is expected to be reduced by $50.0 million in FY 2025. This scenario provides the best combination of reduction in the HIF cash balance and smoothing of premiums in FY 2025 and subsequent years. A 4.0 percent increase is projected for FY 2026.

The budget also assumes the following state benefit plan changes and enhancements:

• Anthem Health Keepers Network for the Anthem HDHP Plan (4% savings)

• Increased ER Copay to $300 (from $150) as the plan has experienced unnecessary ER utilization

• Talkspace service with Anthem and Aetna allows for texting to Behavioral Health providers for Mental Nervous conditions

• Cancer Care Navigator (Anthem) and Transform Oncology (Aetna) for cancer conditions. Cancer accounts for 12% of our total healthcare spend.

Description of Exhibit A - Aon Premium Schedule—November 15, 2023

Exhibit A contains the provisional premiums submitted on November 15, 2023, by Aon, the health plan’s actuary. These premiums contain the proposed plan design changes for FY 2025. They were developed using projected claims expenses with a trend of 6%. The Health Insurance Fund balance is sufficient to cover the Incurred But Not Paid (IBNP) claims without additional funding in FY 2024; therefore, no cost was added to the premiums to cover these claims.

Description of Exhibit B - Department of Planning and Budget Premium Schedule and General Fund Breakout – December 20, 2023

Exhibit B contains the proposed premium schedule and general fund breakout developed by the Department of Planning and Budget for Governor Youngkin’s 2024-2026 introduced budget. The proposed premium schedule reflects enrollment as of September 1, 2023, based on data provided by the Department of Human Resource Management, and does not include policy changes to the state employee health insurance plans. The proposed premiums in FY 2025 assume 35 percent of the projected 9.3 percent premium increase will be funded by the existing cash balance in the HIF for the state’s self-insured plans. The proposed premiums in FY 2026 assume a 4.0 percent increase. The premiums for the state’s two fully insured plans, Kaiser Permanente and Sentara Health, formerly Optima Health, are funded at the contractually determined premiums.