Northern Illinois University

FY2010 Budget

Proposed Budget and State Employee Health Insurance Premiums

MEMORANDUM

TO:  NIU Faculty and Staff

FROM:  Steve Cunningham, Associate Vice President, Administration and Human Resources

DATE:  May 5, 2009

RE:  FY2010 Proposed Budget and State Employee Health Insurance Premiums

Recently, a number of employees have made inquiries regarding the status of their health insurance premiums in relation to information contained in the Governor’s FY2010 Operating Budget proposal.  While the Governor's budget is still at the proposal stage, we feel it is necessary to distribute this information given the level of interest and concern.  We will continue to update the health insurance related information as it proceeds through the legislative process.

FY2010 Governor’s Budget - State Employee Health Insurance Status 

On March 18, Governor Quinn presented his FY2010 Operating Budget and related proposals to the Illinois General Assembly.  The budget proposal contained recommendations to adjust state health insurance premiums for employees and retirees.  The proposal appears in the Department of Healthcare and Family Service section of the budget because under Executive Order 2005-3, the Department of Healthcare and Family Service became responsible for “claims payment, contract administration, and vendor-facing while CMS maintained the administrative and member-facing benefit functions.”1  The proposal in the FY2010 budget proposal is as follows:

Reduce employee healthcare cost.  As the state faces a challenging fiscal year, the governor proposes to require both employees and retirees to bear a greater share of the state’s ever increasing cost of providing healthcare coverage.  The employee subsidy would be limited to the subsidy provided to state employees enrolled in managed care.  The retiree subsidy would be limited to the subsidy provided to retirees enrolled in Medicare.1

The proposal recommends that employees participating in non-managed care programs and retirees not enrolled in Medicare see an increase in premiums.  Until an April 21, 2009 Commission on Government Forecasting and Accountability meeting, the impact of the Governor’s budget proposal on employees and retirees was not fully known.  In the written report provided to the commission by staff detailing the budget proposal, the following was noted:

Employees, under the Governor’s FY2010 budget proposal, would pay increased premiums if they participate in the QCHP.  Currently, an employee in the QCHP pays an average of $89.57/month.  If the Governor’s proposals are implemented…employee monthly premiums will rise to $309.56 a month or 245.5% and a non-Medicare retire would see their premiums increase from $12.98 a month on average to $582.71 a month on average or 4,389%.2 

The proposal outlined above would significantly increase premiums for those employees enrolled in the Quality Care Health Plan (QCHP) and retirees who are not eligible for Medicare.  According to the report, an estimated 123,680 participants would be impacted.2 The report also indicates that requiring retirees to contribute towards their healthcare would require the State Employee Group Insurance Act of 1971 to be amended, (5 ILCS 375/10) (from Ch. 127, par. 530).2   Central Management Services (CMS), the administrator of the benefit plan, has indicated that a special enrollment or Benefits Choice period would occur should the rates for employees in the Quality Care Health Plan (QCHP) increase.  Thus, the current Benefit Choice program is unaffected by any aspects of the budget proposal.

This correspondence is for informational purposes only.  It is important to note that the FY2010 Budget Proposal of the Governor is the first step in the Illinois legislative process to establish the budget for the next fiscal year.  The health insurance-related proposals are part of the set of fiscal assumptions that underlie the budget.  However, any such proposals must be authorized by passage through the General Assembly before becoming law and are, therefore, frequently subject to revision and amendment.  This summary is for your information only.  The actual proposals can be reviewed in the Governor’s FY2010 Operating Budget available at http://budget.illinois.gov/documents/FY2010OperatingBudget.pdf and in the report to the commission http://www.ilga.gov/commission/cgfa2006/Upload/FY2010%20State%20Employees'%20Group%20Insurance%20Program%20MAR%2009.pdf.

SC/bjr
Via E-mail and Printed Copies

1 Illinois State Budget Fiscal Year 2010

2 Commission on Government Forecasting and Accountability – Liabilities of the State Employees’ Group Health Insurance Program Fiscal Year 2010