New Hires Get the Shaft

The West Virginia Public Employees Insurance Agency voted last Friday to eliminate subsidized retirement health care for new hires in an effort to cut the state’s other post-employment benefits liability.

The PEIA currently subsidizes about 72% of a retiree’s health care costs. The cut will not affect the state’s current PEIA retirees. The state’s current OPEB liability is about $7 billion, according to the agency’s Web site.

In response to the decision, the American Federated Teachers of West Virginia announced it intends to sue the PEIA board for failing to provide sufficient public notice and discussion about the action, according to published reports in the Charleston Gazette last week. The union said the decision will make it harder for the state to recruit new teachers.

The PEIA board also announced that the state’s current Medicare fee-for-service provider, Coventry Health Care Inc., will exit the fee-for-service market at the end of the year. The board is requesting a new provider, but said it may have to absorb $28 million from the Retiree Health Benefit Fund for the last six months of the fiscal year.

Separately, Gov. Joe Manchin announced last Friday that he will ask the Legislature to dedicate a portion of the fiscal 2009 budget surplus to full-time state employees as a one-time bonus.

Roughly 51,000 employees would get about $500. The state is expected to have $15 million to $20 million in extra revenue and $57 million in lottery surplus from fiscal 2009. By law, half of the general revenue surplus must go to the rainy-day fund. The remainder will be carried over to fiscal 2011.

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